Kiwis save and invest less in 2022Kiwis save and invest less in 2022

From 2020 we started comparing the results of New Zealanders with the behaviour of Sharesies investors, in an effort to measure the impact we were having. There have been some interesting comparisons between the two groups. In general terms, Sharesies investors appear to be more confident with their finances, more ready to take risks, and more in touch with their financial wellbeing. 

When Covid hit in March 2020, we asked how people were coping with the lockdown and whether the pandemic was influencing their savings and investing behaviour. Interestingly, 2020 saw massive growth on the Sharesies platform, suggesting that people could see an end to the pandemic and were able to recognise there were some good opportunities as an investor.

It’s a different situation this year. There’s a world-wide economic downturn and this is having an impact on behaviour. New Zealanders are being more cautious, and cost-conscious, and are taking fewer risks with their money. Sharesies investors are also being cautious, but seem to be better equipped to weather, or accept, the ups and downs of the markets.

Kantar surveyed 1,000 New Zealanders (who aren’t on Sharesies) and compared their responses to around 600 Sharesies investors. 

Check our previous investor surveys from 2018, 2019, 2020, and 2021.

Key findings

• Most Kiwis are concerned about the future of New Zealand’s economy. As a result, they’re changing the way they manage their finances, being careful with spending on food and discretionary items

• People with KiwiSaver are keeping a close eye on their balances as inflation hits retirement plans. We found that the amount of money people think they need to retire comfortably is creeping up. 

• More than half New Zealanders surveyed don’t feel like they received sufficient financial education at school—a continuing trend. This sentiment is even stronger among Māori and Pasifika communities.

• Sharesies investors tend to be more considerate with their investments, and more likely to make larger contributions towards their KiwiSaver. They are also more likely to 'hold tight and ride out the wave' compared to Kiwis.

Navigating through the economic downturn

There’s no doubt we are in an economic downturn, not just in New Zealand but around the world. Rising inflation, supply chain disruption, the war in Ukraine, and the Covid zero-tolerance in China, has contributed to political and economic instability. 

It’s no surprise then that around two thirds of Sharesies investors (61%) and Kiwis (65%) are concerned about the future of New Zealand’s economy. 1 in 4 people (26%) are hopeful that things will get better in the next 12 months. 

Half of the New Zealanders interviewed (46%) say they’re happy with their current personal financial situation. Despite the state of the economy nearly half (45%) of Sharesies investors are planning to increase their investments in shares. 

The majority of Kiwis (60%) have changed the way they manage their day-to-day expenses. 48% say that after covering their expenses, they have only a little left over to spend,  save, or invest. A third say they’ve reduced spending on food and groceries. 

Kiwis taking control of their KiwiSaver

Recent changes to KiwiSaver default providers has prompted many people to reconsider who their KiwiSaver providers are. 

More than 80% of Sharesies investors, and over 70% of New Zealanders surveyed have chosen their own KiwiSaver providers rather than accept their default provider. In the cohort closer to retirement (50-64 years) Sharesies investors (89%) and Kiwis (76%) have chosen their provider, suggesting that as they near retirement they are more actively considering the best way to grow their wealth. 

Sharesies investors' top reasons to change KiwiSaver provider includes getting a better return on investment (35%), being charged lower fees (26%), and making it easier to see how their Kiwisaver was tracking (25%). Investors are prioritising building their wealth in order to meet financial goals, such as a first home deposit, or for their retirement. 

Nearly three quarters of Kiwis (74%) don’t think their KiwiSaver will be enough to fund their retirement. More than half (56%) of Sharesies investors believe that they’ll need more than $1M to fund their ideal lifestyle in retirement, compared to 39% of New Zealanders. Since 2020 when we started asking this question the percentage of people who think they’ll need between $1M and $2M to fund their retirement has been steadily increasing.

While KiwiSaver has been the vehicle of choice for many looking to fund their retirement, we're continuing to see Kiwis investing in shares as part of their long-term plan. Two fifths of Kiwis (41%) believe that investing in shares is a way to save for retirement, up from 35% in 2020. The percentage of Sharesies investors who have a similar view is considerably higher (74%).

Investors sticking to the game plan

Investing is a barrier for 32% of New Zealanders as the cost of living has an impact on disposable income. Contrast that with Sharesies investors who believe that regardless of the amount available, it’s worthwhile to regularly invest (82% compared to 56% for New Zealanders). 

Despite having less money to save or invest, people are still sticking to their investment strategies. 78% of Sharesies investors say they would either ride out a market dip or buy more shares. This suggests they value ‘time-in-the-market’ versus ‘timing-the-market’, continuing to dollar cost average. 

Financial literacy is something that continues to be an issue. Half of the New Zealanders surveyed (51%) feel that they didn’t receive sufficient financial education at school. This is particularly the case for Māori (62%) and Pasifika (60%) communities although this is reducing year on year. In 2021 84% of Māori and 75% of Pasifika felt this way. 

Nearly half (42%) of Kiwis say they understand how investing works, a big improvement from 2018 when that figure was 31%. Sharesies has played a big part in this education with our Shared Lunch webinars,Share Club Facebook group, and Go-to Guides.

Saving for turbulent times

As inflationary pressure continues, New Zealanders are building up their savings in preparation for more uncertainty ahead.

Just over half of New Zealanders (54%) are saving between 1-10% of their income, and many are trying to save even more. 10% of Sharesies investors are managing to save more than a third of their income. In the face of continued economic pressures, a third of Kiwis (32%) are planning to set aside more money for emergency funds in the next 12 months, similar to what we saw in 2021.

In terms of home ownership, it seems that more Sharesies investors have jumped on the property ladder before interest rates reached historic highs, with home ownership jumping to 64% compared to 53% in 2021.

More generally, Kiwis’ focus on purchasing property seems to have decreased from 2021, as interest rates spike and borrowing and servicing mortgages becomes more difficult. Only 36% of Kiwis are considering buying property—a decrease of 10% from 2021 (46%). One in four (non-property owner) Kiwis feel like they will not be able to ever afford a house (23%)—an increase from 16% in 2020. Only 3% of Sharesies investors are considering putting their money toward a house deposit. This is a huge drop from 41% just two years ago.  

With nearly half (44%) of mortgages set for refixing in the coming months and mortgage interest rates currently sitting around 6%, mortgage repayments and paying rent were the second biggest concerns on the minds of the nation—particularly among Aucklanders (13%) and Wellingtonians (15%).