Uncertain Times See Bank Savings Rate as Top Investment Cass
- Bank savings hit a record high as favoured investment class
- Investment confidence drops to its lowest level in over a decade
- KiwiSaver support constant with a modest increase
In the opening quarter of 2009, bank savings accounts, often seen as the most conservative investment class, came in tops for the first time in the ASB Investor Confidence survey, rising 5 points to a net 21% as investors opt for safety, security and accessibility in these uncertain times.
Conversely, term deposits were knocked off the number one perch they have held for the past year losing 5 points to end the quarter in third place at a net 13%.
Jonathan Beale, Head of Investment Services at ASB says “Uncertainty over investment options, job security and the world economy has put people into a ’wait and see’ mode, making readily accessible money in the bank a clear winner as people play their cards closer to their chest.”
Rental property continued to hold strong in second position, polling in at a net 15% which is to be expected in the current lower interest rate environment.
While the share markets have had a bumpy ride over the past year there was less volatility in investors’ perceptions over the first quarter of 2009, shares registering just a 1% drop in confidence from a net 7% to 6%.
“Learning to cope with possible further dips and bounces in equity markets, as well as fluctuating exchange and interest rates in the current climate has become an important skill to develop in times like these,” says Beale.
Overall investor confidence continued its fall from grace to its lowest level in a decade to -25% in Q1 of 09, down from a net -20% in 2008’s final quarter.
“We aren’t surprised by the results. Overall, the report confirms that investors are in a holding pattern while the markets fluctuate. Results have now rebounded from their negatives earlier in the quarter, with signs of stabilisation in March thanks to the announcements from the US banks.”
The proportion of people who say KiwiSaver will be enough to support them in their retirement has increased by 1% to 20%. However, the number who believe they will not be able to rely on KiwiSaver exclusively is also very high suggesting a majority of people see it as a supplementary scheme that is not able to fulfil their complete retirement needs.
“During these challenging times it’s even more important to keep your long-term investment objectives in mind, as well as focusing on the real value of assets rather than their short term price fluctuations,” Beale concludes.
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