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Survey shines spotlight on Kiwis’ financial resilience

How financially resilient are Kiwis?

In January 2022, the Financial Services Council (FSC) surveyed 2,000 New Zealanders to investigate their views on five key resilience indicators: financial confidence, job security, financial preparedness, financial literacy, and well-being. And the findings paint a mixed picture…

Headwinds to rising financial confidence

Let’s start with some positives first. Financial confidence has increased by 5 per cent from April 2021 (the previous survey), with 86 per cent of respondents being either reasonably, very or extremely confident in making financial decisions.

Job security was also on the rise, and with the unemployment rate being at its lowest level on record, it’s probably not surprising. Despite 40 per cent of people surveyed reporting that Covid-19 had impacted their job security, 86 per cent felt reasonably to completely secure in their employment.

However, there were headwinds as well. Kiwis’ improved financial confidence was clouded by concerns about the economy, rising interest rates, the housing market, and a lack of reported savings.

Lack of savings puts New Zealanders at risk

Of course, things have been shifting fast since the FSC survey was conducted. The pressure on house prices has eased almost everywhere, however slightly. And as for concerns about the economy, the phased border reopening may bring substantial respite (and newfound confidence) in the coming months.

More of interest is that 28.9 per cent of respondents could only support their lifestyle for less than a year without earning an income. Also, two in five respondents said they would be unable to access $5,000 if something unexpected were to happen.

It’s a sobering reminder of the importance of having a plan, especially now that inflation and rising interest rates are putting pressure on Kiwis’ cost of living and ability to save. Like to know how insurance and other financial tools can help you build a robust safety net? Get in touch with the team at SHARE today.

Only 43 per cent are financially prepared for retirement

When it comes to financial preparedness for retirement, the indicator was stable in January 2022 compared to 2021, with only 43 per cent of respondents considering themselves prepared. Worryingly, half of retirees surveyed said they could last for less than 10 years on current balances.

On a more positive note, the number of people who indicated that they had no investments in place has dropped again, this time by 6 per cent.

With all this in mind, the key question is: how prepared do you feel for retirement? Investing – whether through KiwiSaver or other investment vehicles – can be a great way to create an appropriate retirement nest egg. If you’d like to explore your options or take a closer look at what you currently have in place, please don’t hesitate to contact us. The earlier you plan for the future, the more options you’ll likely have.

‘Investing’ in your financial literacy

According to the FSC survey, unfortunately financial literacy has dropped by 5 per cent year-on-year.

People were asked to rate their understanding across five knowledge areas – relationship between risk and return, diversification, current investment market themes and trends, asset allocation, and the risk-return profile for different types of investments. Apart from the latter, all ratings were lower than March 2020 and April 2021.

It also emerged that KiwiSaver was the most common type of investment (78.3 per cent of respondents), whereas far fewer people invested in NZ shares (31.4 per cent), managed funds (19.9 per cent), and international shares (19 per cent).

As the Financial Market Authority (FMA) pointed out in recent years, some ‘myths’ are stopping people from taking part. For example, you may think that investing is too risky for you, too difficult and time-consuming, or that you’re not wealthy enough to invest. The reality is, there are options for all risk profiles and goals, and with expert advice and guidance, investing doesn’t need to be daunting or overly complicated.

Once again, our SHARE advisers can help you. If you’d like to discuss your investment options and financial goals, please feel free to get in touch anytime. And in the meantime, we also encourage you to browse our articles here. You’ll find plenty of tips and insights for your financial journey.

Like to have a chat?

As always, our SHARE financial advisers are just a phone call away. We can talk through your options in detail – be that new cover, a mortgage, or your investment strategy. Click here to find an adviser near you.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.