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KiwiSaver the favoured investor vehicle, survey shows

Tuesday 7th May 2019

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KiwiSaver is the country's favourite investment asset class, closely followed by an old-fashioned savings account, although Kiwis still largely see residential property as the way to get ahead. 

Kiwi Wealth's inaugural State of the Investor Nation report - based on a survey of 2,101 people - found 69 percent of respondents are currently invested in the government-sponsored KiwiSaver programme, and 62 percent have a savings account. After that, term deposits were the third most popular investment option at 34 percent, followed by direct share ownership at 20 percent, and residential property at 15 percent. 

While just one-in-seven people had invested in residential property, about 46 percent of respondents saw it as the key area to generate wealth for their retirement. KiwiSaver didn't feature on that measure and managed funds were picked by just 15 percent of those surveyed. 

About 32 percent picked a savings account to build their wealth. About 22 percent saw term deposits as the key wealth generator while 25 percent saw direct share ownership as their primary pathway to saving for their retirement. 

Residential property was typically the biggest investment at a median of $500,000 invested, compared to just $14,875 for the median invested in KiwiSaver. Of those respondents with money invested, the median aggregate investment was $27,000. 

In saying that, about 67 percent of respondents didn't know how much they need for retirement, even though 71 percent said they carefully plan for their financial future. And 52 percent said they don't invest money. 

"Owning property is still number one when it comes to Kiwis’ positive perceptions of wealth – especially among older people," said Joe Bishop, Kiwi Wealth's general manager for customer, product and innovation.

"We’re a risk-averse nation. Some 40 percent of New Zealanders sit on the risk-averse side and outside of property assets. Eighty percent are building their wealth through traditional investment vehicles such as KiwiSaver, savings accounts and term deposits." 

The government is reviewing the default KiwiSaver scheme and has asked the Retirement Commissioner to consider fees and investment practices in this year's review of retirement income policies. Ministers want to attract the missing million Kiwis not in the government-sponsored scheme and also want funds to invest more heavily into New Zealand. 

Reserve Bank figures show housing and land value accounted for about $828.1 billion of household assets as at Sept. 30 last year, compared to a net $715.2 billion of financial savings and investments after accounting for household debt. 

Of the $542.1 billion invested in equity, $70.3 billion was in unlisted companies and $359.1 billion was estimated to be invested in unincorporated businesses. Some $101.8 billion was invested in investment fund shares. 

Morningstar research last week showed KiwiSaver schemes managed $54.6 billion of assets at the end of March, of which about 32 percent was in cash and New Zealand bonds, 29 percent in international equities, 19 percent in international bonds, and 11 percent in New Zealand shares. 

The market value of the NZX's main board opened today at $147.9 billion while the debt market was at $29.2 billion. 

The Kiwi Wealth survey illustrated people's perceptions of the trade-off between risk and reward. Thirty-five percent of respondents thought people should generally choose lower-risk investments, and 41 percent saw high-risk investments as something to avoid. 

(BusinessDesk)

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