Kiwis’ attitudes to saving and investing in 2020
It’s fair to say 2020 has been a challenging and unpredictable year for all of us. COVID-19 has impacted many Kiwis’ lives, and has changed the world in more ways than one.
After such a bewildering year, understanding Kiwis’ attitudes toward saving and investing was more important to us than ever. To capture these attitudes, we ran our third annual Colmar Brunton investor survey. For the first time, we included Sharesies investors in the survey. This meant we could compare their attitudes with people who don’t invest with Sharesies—or at all!
To summarise our key findings:
Kiwis are more likely to invest in shares when there’s a dip in the share market, compared to previous years
there’s an ethnic divide between Pākehā, and Māori and Pasifika communities when it comes to investing knowledge, but the willingness to get started is evident
among Kiwis who aren’t Sharesies investors, there’s a significant increase in motivation to invest but no increase in people who actually own shares.
To spend, or to invest?
Despite 2020 being a curveball year, nearly half (44%) of Kiwis who aren’t Sharesies investors have remained comfortable with their financial situations compared to previous years. This is despite 18% of people in this group saying their personal financial situation was negatively impacted by COVID-19.
Their spending levels have also dropped:
about 42% are spending less than before COVID-19
55% are saving the same amount
nearly a quarter (22%) are saving more than before!
Despite the ups and downs in the share market, 17% of Kiwis who aren’t Sharesies investors and more than half (53%) of Sharesies investors indicated they’re investing more since COVID-19 hit.
Some people (23%) suggested they’ll buy more shares when there’s a dip in the share market, which is up from 13% in 2019 and 12% in 2018.
There’s a clear gap between Pākehā, and Māori and Pasifika communities when it comes to investing.
Māori and Pasifika people are less likely to:
own shares (6% vs 15% of Pākehā)
consider using their savings to buy shares (26% vs 33% of Pākehā)
know how to invest in shares (17% vs 25% of Pākehā)
know how investing works (19% vs 36% of Pākehā).
But, more agree that investing in shares is a good thing no matter how much money you have (31% vs 24% of Pākehā). Nearly half of Pākehā (43%) agree that they can understand financial jargon, compared to Māori and Pasifika at 35%. This shows there may be a knowledge gap between the ethnicities.
At Sharesies, we’re committed to reducing inequality, lowering the levels of poverty, creating a healthier environment, and building stronger communities. We believe that we all share a responsibility in this culture shift to build a more inclusive economy by engaging with underrepresented communities to improve their financial wellbeing.
Saving vs spending
Despite dwindling interest rates from banks, Kiwis still perceive savings accounts and term deposits as a safe bet compared to the share market.
When Sharesies investors were asked what they’d do with their savings:
85% said they would buy shares
71% would purchase property
40% would keep it in a bank account
37% would place it in a term deposit.
Of those who aren’t Sharesies investors:
33% said they’d buy shares
47% would purchase property
49% would keep their savings in a bank account
40% said they’d place it in a term deposit.
When those people were asked about what they’ll do if interest rates fall even further:
46% say they’ll keep saving
32% will invest in shares
28% will put their money towards a house deposit.
Sharesies investors have the same thinking, but with different priorities:
81% will invest in shares
41% will put their money towards a house deposit
32% will keep saving.
If given $50 today, only 10% of people who aren’t Sharesies investors would invest it, 38% would save it, and 29% would spend it. When compared to Sharesies investors, 53% say they would invest it, 23% say they’d save it, and 14% say they would spend it.
Appetite to invest
From our findings, there’s an increase in motivation to invest, with 37% of Kiwis who aren’t investing with Sharesies wanting to invest in shares in the next five years (up from 28% in 2019).
Even so, 32% of people who aren’t Sharesies investors said they don’t have enough money to invest and 28% think it’s too risky. This highlights a gap in Kiwis’ knowledge and confidence when it comes to the share market.
Intentions and goals
There’s a common theme of Kiwis investing towards a home, despite the rising challenges faced within the housing market. In 2020, there was an increase in non-Sharesies investors saying they’ll be able to buy a house within five years (55%, up from 49% in 2019, and 50% in 2018).
There’s also a perception within this group that saving is more about short-term rewards. In previous years, 46% (2018) and 43% (2019) were saving for travel or a holiday. However, with the current travel restrictions in mind, just 32% of people surveyed said they would use their money to travel domestically over the next 12 months.
Thinking about retirement
When it comes to saving for the long term, 35% of Kiwis think investing in shares is a good way of preparing for retirement. There’s still some uncertainty about how much money Kiwis will need for comfortable retirement.
Half of Kiwis who aren’t Sharesies investors (50%) think under $1 million is about right, and another 34% who believe over $1 million should go the distance. These numbers flip when comparing with Sharesies investors, where more than half (55%) believe you need over $1 million and just 37% think under $1 million will suffice.
Kiwis are demonstrating a desire to invest, but feel held back by their lack of confidence and knowledge about investing. However, the drive to increase knowledge is there—nearly half of Kiwis (45%) are taking the steps to educate themselves more online, compared to 76% of Sharesies investors who turn to the internet to learn.
When it comes to attitudes towards money, Kiwis (including Sharesies investors) agree they like to plan for the future, find dealing with money interesting, and feel in control of their spending. Kiwis have also demonstrated a sense of resilience through the COVID-19 pandemic, being more conscious about their spending habits, while also establishing clear goals when managing their money.
To see how this year’s survey findings compare with previous year’s, check out the following posts:
This year's Colmar Brunton panel didn’t include Sharesies investors, as we interviewed them separately. Where we’ve made comparisons with findings from 2018 and 2019, we haven’t included Sharesies investors in the data. This means some numbers we quote might be slightly different from those in previous blog posts.
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.