Kiwi investors cautious despite risk taking image
Kiwi investors cautious despite risk taking image
New Zealand may be world famous for extreme sports but when it comes to investing, we’re a nation of ‘aqua joggers’ - we like our financial investments to be low impact and contain few surprises.
A key finding of AC Nielsen / RaboPlus research, released today, is that the majority of New Zealanders (69 %) are only willing to take limited, or very limited, risks when it comes to investing their hard earned money.
Overall more than seven out of 10 New Zealanders use savings accounts as the main way of investing money. Property and term deposits are the second and third most favoured investment options.
Registered Psychologist Sara Chatwin reviewed the research for RaboPlus, and developed a set of five investor profiles which she matched with a range of popular sporting activities.
Aqua joggers (40 %) take very limited risks with their financial investments. They don’t want any surprises or high impact options. Power walkers (29 %) take limited risks with their financial investments. They are eager to reap rewards but don’t want to put any pressure on themselves. Mountain bikers (16 %) are good at judging their financial investment risk. They like to study the options, and pick one to suit the level of excitement they feel like taking. Snowboarders (6 %) take some risks with their financial investments and enjoy the thrill of the chase. Bungy jumpers (1 %) take high risks with their financial investments. There might be a bungy cord but you never know how tightly it’s attached.
Sara Chatwin says it’s incredible that New Zealanders are so conservative in their approach to money matters and investment.
“We live in the ‘thrill seekers capital of the world’ but this is certainly not reflected in our financial affairs.”
The General Manager of RaboPlus, Mike Heath, says the research was commissioned because, as a new provider in New Zealand’s online savings and investment market, RaboPlus was keen to ensure its investment products meet customer needs.
“Given that the majority of Kiwi investors are risk averse, we are confident that RaboPlus’ range of low risk investment options will continue to have widespread appeal,” he said.
RaboPlus offers high interest online on call savings accounts and term deposits, and recently became the first bank in New Zealand to launch online access to managed funds. Investors can choose managed funds from three of New Zealand's most reputable funds providers: AMP Capital Investors, Tower and Asteron.
The research highlighted that females aged 35+ on high incomes are more likely than their male counterparts to invest in managed funds.
Mr Heath says he isn’t surprised by this finding.
“We chose RaboGirl to be the face of RaboPlus because we know there are a lot of career women in their 30s and 40s who are internet and financially savvy. They like being in control of their finances and are comfortable making investment decisions without the aid, and unwanted cost, of financial advice from a third party,” he says.
When asked what would make them more likely to buy investment funds instead of just savings or term deposits, just under half of the survey participants (46 %) stated more money. Other reasons mentioned were better returns, greater security, a trusted ethical company and lower costs.
Survey accuracy AC Nielsen’s findings are based on 1,000 telephone interviews conducted in May. Based on a total sample size of 1,000 respondents, the results shown in this survey are subject to a maximum error of +4.2 per cent at the 95 per cent confidence level.
Go to www.RaboPlus.co.nz and find out what kind of investor you are by using the online calculator in the “Investment Tools” section of the website.
About RaboPlus Designed to complement consumers' existing banking arrangements, RaboPlus offers New Zealanders a high interest, no fees, on-call savings account as well as term deposits and access to managed funds – all available 24/7 online. Rabobank Group is the only banking group in New Zealand to have a AAA credit rating from Standard & Poor's and Moody's, the highest available - a reflection of the bank's financial security. Global Finance Magazine has rated The Rabobank Group as one of the world’s safest banks over three consecutive years (2004, 2005 and 2006). Rabobank is one of the largest financial institutions in the world, for comparison purposes, the total assets of Rabobank Group is larger than the combined global assets of NAB, ANZ and Westpac (Source Global Finance Magazine, October 2006.)
Summary of AC Nielsen / RaboPlus research findings
Overall, more than seven out of 10 New Zealanders use savings accounts as the main way of investing money;
Property and term deposits are the second and third favourite options people use for investments;
Nearly half (45 %) of all New Zealanders do their own research on the web, or by reading the newspaper and books. However, family, friends (38 %) and banks (31 %) also have an influence when people make decisions on investments;
As expected, people aged 25-44 are more comfortable using the Internet for investing compared to the older age groups;
Wellingtonians are more likely to invest in property, whereas Cantabrians are less like to have property investments;
Over half of New Zealanders claim to have some understanding of the different investment options. There are no significant differences across regions, although those who feel they have a good understanding of investment options are more likely to be male (particularly in Auckland);
Wellingtonians are nearly twice as comfortable to use the Internet to invest money, compared with the rest of the country;
When asked what would make them more likely to buy investment funds instead of just savings accounts or term deposits, just under half (46 %) stated more money. Other reasons mentioned were better returns, greater security, a trusted and ethical company and lower costs; and
Those aged 25-34 years said they needed more information / advice to invest in more than just savings accounts or term deposits.
AC Nielsen’s findings are based on 1,000 telephone interviews conducted in May. Based on a total sample size of 1,000 respondents, the results shown in this survey are subject to a maximum error of +4.2 per cent at the 95 per cent confidence level.
Investor Personality Types
Registered Psychologist, Sara Chatwin, reviewed the AC Nielsen / RaboPlus research and developed five investor personality types using a “sport” analogy to describe the level of risk each investor is prepared to take.
This demonstrates we are primarily a nation of Aqua Joggers!
1. Very Limited Risk – Aqua Joggers
40 per cent of New Zealanders are only prepared to take Very Limited Risks when making decisions about where to put their money. Aqua jogging would be their chosen sport as it is low impact and contains few surprises – just the way they like their investments to behave.
Typically, this group are: aged 65+, female, retired / not working, personal income over $20k, singles and/or 1-2 people households and often reside in Christchurch.
These appear to be very cautious people overall or are unsure about investment, so elect simple savings and investment products.
Are you an Aqua Jogger when it comes to your investments? You don’t want to worry too much about your investments. The aim is a return which is higher than a savings account can yield – but with very limited risk.
You are more likely to use savings accounts and term deposits and less likely to use: unit trusts, managed funds, shares or property. You are more likely to get advice from the bank and less likely to get advice from a share broker, financial advisor, lawyer and accountant or to do their own research.
You are more likely to say you have little understanding of the different options and rely on advice from the experts to guide their investment decisions.
You are less likely to be comfortable investing online or by telephone.
You are more likely to have said you don’t know, declined to answer, asked what would make you more likely to buy investment funds instead of just savings accounts or term deposits to save money.
2. Limited Risk – Power Walkers
29 per cent of New Zealanders are willing to take Limited Risks. They would enjoy a game of ultimate frisbee where play is safe and solid but with a few more bells and whistles than a basic frisbee game. This is the same approach they apply to investment choices.
They are likely to be full-time workers with a personal income of $80k+ and to be a young couple with no children.
Are you a Power Walker when it comes to your investments? You want to achieve a decent return on your investment. To do this you take calculated risks – but not too many.
You are more likely to use unit trusts or managed funds, shares and / or property.
You are more likely to get investment advice from investment / financial advisor and share broker. You will have some understanding of the different investment options but listen to advice from others to help them choose.
You are more likely to be comfortable using all three options for investing money: online, face-to-face and telephone.
You are more likely to have said that more information / advice and a trusted ethical company would be a reason to buy investment funds instead of just savings accounts or term deposits to save money.
You are willing to use more than just the basic savings / investment products and although claim to have some understanding, you still want more advice before investing more funds.
3. Good at Judging the Risks they are Willing to Take – Mountain Bikers
16 per cent of New Zealanders are Good at Judging the Risks they are Willing to Take. These people would enjoy a day’s mountain biking where they could study the tracks and choose one suitable for the level of excitement they feel they can tolerate.
They are typically aged 35-54, less likely to be living in the South Island or provincial areas, working in an administration / managerial role or home duties with a personal income $60k+, with a child under five years old and a household of four or more people.
Are you a Mountain Biker when it comes to your investments? You are prepared to give investment a go. You are good at judging the risks you are willing to take. The concept of investing is not new to you and you aim for a good return in the long run.
You are more likely to use property or shares and less likely to use savings accounts.
You are more likely to get investment advice from an accountant, family member or friend or do your own research and less likely to get no advice at all.
You are more likely to say you have some understanding of the different investment options but listen to advice from others to help you choose and less likely to say you have little understanding of the different options and rely on advice from the experts to guide your investment decisions.
4. Some Risk – Snowboarders
Six per cent of New Zealanders are willing to take Some Risk and would spend their winter holiday on the mountain ski fields.
They are likely to be male, working part-time, with a child(ren) at home and with a household of four or more people.
Are you a Snowboarder when it comes to your investments? The aim for you is to achieve a higher than average return on investment and you are willing to take some risks to achieve this.
You are more likely to use bonds and get investment advice from your accountant, lawyer or do your own research and slightly more likely to use advice from financial advisor and / or share broker. You are also less likely to get no advice at all.
You are slightly more likely to be comfortable investing by telephone.
More time would make you buy investment funds instead of just savings accounts or term deposits to save money. Also, small fees and low administration costs.
5. High Risk – Bungy Jumpers
Only one per cent of New Zealanders are High Risk takers– those who would enjoy an exhilarating bungy jump. There is a bungy cord….but things can and do go wrong and that’s part of the thrill.
Are you a Bungy Jumper when it comes to your investments? You are a risk takers who are prepared to look at all options. You have a clear directive to make your money work for you and not the other way around. You are proactive and interested in what is going on around you in the world of finance. In order to achieve the highest possible return you are willing to accept very high risks.
*8 % of respondents did not know.