How do Kiwis invest during volatile economic times?

A new report has revealed 65% of New Zealanders are making risk-based decisions to safeguard their wealth during this economically turbulent year.

This compares to just under 33% of people who are choosing investments with higher potential returns, even if that means the risk is higher.

The Financial Services Council’s research report Money and You: Investing in volatile times, is the latest in FSC’s research series tracking Kiwis’ attitudes to investments and their finances.  

During its research, the FSC also found that four in five New Zealand investors were heading online to manage their finances, with 88% of respondents currently using or have used online digital finance tools for banking, insurance and KiwiSaver.

FSC CEO Richard Kilpin (pictured above) said the research came at a time when consumers in New Zealand and around the world were facing significant economic pressures.  

“Many of us are now experiencing the effects of these economic uncertainties, inflation and the impact that rising interest rates have on our daily lives – some for the first time in our adult lives,” Kilpin said. “While it’s good news that the majority of Kiwis are investing, the research also reflects concerns and trends that need to be addressed.”

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The FSC found the number of Kiwis micro-investing continued to grow with 18.6% using or having used micro-investing platforms and 15% planning to. It also found cryptocurrency was trending down with 14% fewer Kiwis investing than at the same time 12 months ago.   

“A fifth of Kiwis that do not have KiwiSaver say it is because they have no confidence in the scheme or that they are confused,” he said. “Compared with 2021, fewer respondents stated that they understand the relationship between risk and return.”  

Kilpin said with so many Kiwis now investing, it was more important than ever that the wider financial services community continued to educate New Zealanders on good investment practices.

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“Financial literacy continues to be a top priority, with respondents rating their understanding of concepts including risk and return, diversification, investing approaches and strategies lower than the year before,” he said. “The increase in those investing and a simultaneous decrease in cash investments is a sign that despite increasing living costs, Kiwis are increasingly seeking to grow their wealth through investing.

“We as an industry now need to work hard to ensure increasing number of Kiwis investing have the information they need to make informed decisions about their financial futures.”