Investing and Saving Attitudes in New Zealand

When we hear investing in New Zealand, we automatically think of buying houses. Be it buying our personal home as an “investment”, or buying a property that we can rent to tenants. But there are many more investment vehicles than property out there. The problem in New Zealand is our attitude to investing. So let’s first look at the attitudes of New Zealanders towards money and investing.

Recently a survey was done to try to take a snapshot of kiwis attitudes to investing. A total of 1000 kiwis were surveyed, and the results were weighted by age and gender to try to make the results more representative of the New Zealand Population. Thanks to all the hard work done by Sharesies and Smartshares. It is a fascinating read, and you can check it out here.

So what did they find out? Here are some of the main takeaways.

Attitudes towards money

It was great to see that the majority (around 70%) of kiwis felt confident in their financial lifestyle.  We Kiwis generally felt in control of our spending, and we are planning for our financial future. Even better is that half of Kiwis felt that dealing with money was actually interesting! I couldn’t agree more. I love dealing with numbers and tracking my spending and investing.

Millennial felt like they needed the most help with financial planning and managing their money. This doesn’t surprise me at all. As a millennial myself, I did not receive any financial education throughout the entire education system. This needs to change. How can we go through formal education and not learn about money management? It affects everyone everyday!

Even though Kiwis receive a very limited formal financial educations, more than half of us (51%) are comfortable talking about money to friends and family and can understand financial jargon. Money has always been taboo for many people, and it is great to see that we can now talk to others about it!

The not so great

Some things weren’t so great and are worth mentioning. There is a significant minority of Kiwis who feel guilty spending money on themselves. I don’t know why they felt guilty about this spending, maybe because they were supposed to be saving or spending money allocated to something else.

There is a large group (41%) that feel stressed about their money situation. This is not good at all. Stressing over anything is very bad for you and can dramatically impact your life expectancy if you leave it unchecked for many years.

Some people struggle to make ends meet with 31% said that they often run out of money. This needs to be addressed if we are going to prosper as a country. And I don’t have the solution for this.

Day to Day Priorities Money Can Helps You With

Keeping healthy, spending time, and taking care of family were all priorities for which money can help. A large chunk was also focusing their money on keeping out of debt (30%). And more alarmingly only 17% said they were saving for retirement.

Saving and Investing.

The results in the savings and investing area of the survey were interesting, to say the least. Since this was a survey from  Sharesies and Smartshares, one of the aspects they wanted to look at was kiwis attitude to investing in shares. And the results show that there needs to be more education about investing in shares as a whole.

Below is a spread of the percentage of participants and where they chose to invest their money.

Kiwis attitudes to investing and saving a varied as our landscape- what are your attitudes towards money and investing

There is not a lot of diversification in that figure. The majority save and invest in 3 main categories, a saving account, KiwiSaver, and their own home. And a few years ago this was me- actually I was worse- I didn’t even sign up for KiwiSaver.

Arguably, your home should not be seen as an investment. But it is a good method for saving money. And paying a mortgage does automate the process quite a bit. A large majority perceives homeownership as the best form of investment, with half believing that it is less risky than the share market.

Investing in Shares and Managed Funds

Shares and managed funds are the main investment vehicle recommended by many to gaining financial independence. They have a low cost of entry, and low service cost can be automated.

When asked if investing in shares was risky, 62% of participants agreed, and 50% thought investing in shares was riskier than investing in property. I’m no expert, but when I analysed the data on the risk of investing in the NZX-50 over different periods, there was 0 risk of losing money over any given 25 year period from 1949 until today.

So I don’t think that you can say that shares are riskier than property Rather, this is solely based on perceptions and the fact that people don’t understand how investing with shares work (35%). There needs to be more education on the basics of investing in share markets.

There was another myth about investing in shares that 35% of kiwis agreed with. That is that shares are only for people with a lot of money. This is also simply not true, especially with low-cost index fund providers such as Sharesies and Smartshares around.

It would be interesting to repeat the survey and ask whether participants actually know where their KiwiSaver money is invested. There would probably be a large proportion who may not know that their KiwiSaver is actually invested in shares.

The survey conducted by  Sharesies and Smartshares is well worth having a read through. You can find it here. Definitely have a read through it!

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