A new study
by New Zealand’s Financial Markets Authority (FMA) has uncovered significant
gaps between what New Zealanders say they want from investments and how they
actually allocate their money, as financial stress continues to mount across
the country.
Kiwis Talk Big Returns, But Invest in Savings
Accounts
The
research, which surveyed 3,169 New Zealanders and conducted in-depth interviews
with 20 participants, found that while 43% of respondents prioritize high
returns when choosing investments, fewer than one in three actually hold direct
stock market investments.
New
Zealanders predominantly favor accessible, lower-risk products over potentially
higher-yielding investments. While 79% hold everyday bank accounts and 75%
maintain savings accounts, only 30% invest directly in stocks, shares, or
exchange -traded funds.
“New
Zealanders’ stated financial goals don’t always match their investment behaviors,
or understanding of key financial concepts,” Daniel Trinder, the Executive
Director of FMA’s Strategy and Design, commented. “There is a disconnect
between their preferences and their investment choices.”
KiwiSaver,
the country’s retirement savings scheme, emerged as the most successful
investment vehicle with 72% participation across income levels. The program’s
automatic enrollment and employer contributions have made it an effective tool
for capturing savings that might not otherwise occur.
Term
deposits and Portfolio Investment Entity funds showed much lower adoption rates
at 31% and 13% respectively, despite offering potentially better returns than
standard savings accounts.
Financial Stress Reaches
Concerning Levels
One in six
New Zealanders reported feeling they are “sinking” financially, while
44% said they are merely “treading water.” Only 39% described
themselves as “swimming” or financially comfortable.
The study
found clear demographic patterns in investment behavior. Younger investors
showed greater appetite for potential returns, while those aged 65 and older
demonstrated stronger preferences for guaranteed returns, often shifting from
KiwiSaver to term deposits as they approach or enter retirement.
Income
levels significantly influenced investment priorities too. Higher-income
households were more likely to seek high returns, while those earning less than
$50,000 annually prioritized certainty and immediate access to funds.
Related to New Zealand: FMA Identifies Almost 100 Fraudulent Trading Platforms, Including Saxo, IG and ATFX Clones
Trust and Advice Remain
Barriers
Despite
widespread openness to financial guidance, with 67% of respondents expressing
interest in learning how to make their money work better, significant barriers
remain. The research found that 42% of New Zealanders feel uncomfortable
discussing their financial situation with experts.
“While
there is a strong interest in financial advice, many are hesitant to discuss
their personal financial circumstances with others,” added Trinder.
Trust in
financial institutions also presents challenges, with fewer than half of bank
customers reporting high trust that their institution has their financial
wellbeing in mind. Insurance companies fared worse, with only 26% of customers
expressing high trust levels.
The
research forms part of the FMA’s broader “Good Cents” initiative
examining New Zealand’s financial capability and will inform future regulatory
approaches as the authority takes on expanded responsibilities under new
conduct regulations.
A new study
by New Zealand’s Financial Markets Authority (FMA) has uncovered significant
gaps between what New Zealanders say they want from investments and how they
actually allocate their money, as financial stress continues to mount across
the country.
Kiwis Talk Big Returns, But Invest in Savings
Accounts
The
research, which surveyed 3,169 New Zealanders and conducted in-depth interviews
with 20 participants, found that while 43% of respondents prioritize high
returns when choosing investments, fewer than one in three actually hold direct
stock market investments.
New
Zealanders predominantly favor accessible, lower-risk products over potentially
higher-yielding investments. While 79% hold everyday bank accounts and 75%
maintain savings accounts, only 30% invest directly in stocks, shares, or
exchange -traded funds.
“New
Zealanders’ stated financial goals don’t always match their investment behaviors,
or understanding of key financial concepts,” Daniel Trinder, the Executive
Director of FMA’s Strategy and Design, commented. “There is a disconnect
between their preferences and their investment choices.”
KiwiSaver,
the country’s retirement savings scheme, emerged as the most successful
investment vehicle with 72% participation across income levels. The program’s
automatic enrollment and employer contributions have made it an effective tool
for capturing savings that might not otherwise occur.
Term
deposits and Portfolio Investment Entity funds showed much lower adoption rates
at 31% and 13% respectively, despite offering potentially better returns than
standard savings accounts.
Financial Stress Reaches
Concerning Levels
One in six
New Zealanders reported feeling they are “sinking” financially, while
44% said they are merely “treading water.” Only 39% described
themselves as “swimming” or financially comfortable.
The study
found clear demographic patterns in investment behavior. Younger investors
showed greater appetite for potential returns, while those aged 65 and older
demonstrated stronger preferences for guaranteed returns, often shifting from
KiwiSaver to term deposits as they approach or enter retirement.
Income
levels significantly influenced investment priorities too. Higher-income
households were more likely to seek high returns, while those earning less than
$50,000 annually prioritized certainty and immediate access to funds.
Related to New Zealand: FMA Identifies Almost 100 Fraudulent Trading Platforms, Including Saxo, IG and ATFX Clones
Trust and Advice Remain
Barriers
Despite
widespread openness to financial guidance, with 67% of respondents expressing
interest in learning how to make their money work better, significant barriers
remain. The research found that 42% of New Zealanders feel uncomfortable
discussing their financial situation with experts.
“While
there is a strong interest in financial advice, many are hesitant to discuss
their personal financial circumstances with others,” added Trinder.
Trust in
financial institutions also presents challenges, with fewer than half of bank
customers reporting high trust that their institution has their financial
wellbeing in mind. Insurance companies fared worse, with only 26% of customers
expressing high trust levels.
The
research forms part of the FMA’s broader “Good Cents” initiative
examining New Zealand’s financial capability and will inform future regulatory
approaches as the authority takes on expanded responsibilities under new
conduct regulations.
This post is originally published on FINANCEMAGNATES.
