Youngsters Fund Lavish Lifestyle Through Risky Trading Practices, Warns Edelweiss' Radhika Gupta

Radhika Gupta, Managing Director and Chief Executive Officer of Edelweiss Mutual Fund, regularly takes to social media to share financial tips. This time, she took to X (formerly Twitter) to express her thoughts on how today's young people are funding luxurious lifestyles by making risky investments. "I have seen people in their 20s saying they don't need to work, because they are busy doing F&O. Young women who say their lifestyle and handbags are funded by trading gains," she wrote. 

In her post, Ms Gupta also shared a screenshot of the Economic Survey 2023-24, saying, "The Economic Survey highlights this in some very strong language. Other regulators have also rightly and repeatedly warned us about this." She claimed that since this type of liquidity is hazardous for individuals as well as the economy, it is finally time for action to be taken.

Take a look at the post below: 

According to the survey, there has been a notable surge in the activity of retail investors in India's capital markets. On the National Stock Exchange, there are now 9.2 crore unique tax IDs as of FY24, up from 2.7 crore in FY19. This surge includes many young investors, with many of them jumping into derivatives trading, especially on expiration days, the survey noted. 

"Derivatives training holds the potential for outsized gains. Thus, it caters to humans' gambling instincts and can augment income if profitable," the Economic Survey read. It further highlights that although derivatives can give high returns, they come with big risks that many young investors might not fully understand. 

"A significant stock correction could see losses that are more considerable for retail investors participating in capital markets through derivatives," the Economic Survey added. It noted that retail investors using derivatives to participate in the capital markets may suffer losses that tend to be large in the event of a significant stock drop. It also pointed to the possibility that significant losses might deter future market participation by retail investors, which would be bad for both the economy and them.

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Ms Gupta shared the post just a few days back. Since then, it has accumulated more than 437,000 views. In the comments section, opinions varied. 

"20-25 year olds are talking about crores they have made with trading where they don't feel the need to ever work. This is all on YouTube podcasts peddling fire and financial freedom to people in their 20s. Something is seriously wrong when there is such a dearth of jobs on one side and educated youngsters entering the workforce. About time something is done," wrote one user. 

"Government is worried about derivatives but not worried about online gaming platforms which are nothing but casinos !! People loose more money on that platforms then stock exchanges !" commented another. 

"Till the Govt is able to provide jobs for young and finacial stability for old, there is nothing wrong! Making money in market also requires skill and knowledge, it is not that everyone can just invest and make crores!!!!!" expressed a third user. 

"Its a high time. There is a difference between traders and investors. There is a need of financial literacy in the nation," added another.