What if you don't have a 'bank of Mum and Dad'?
Monday, 6 May 2019
New Zealand's wealth is not being distributed evenly, and more attention needs to be paid to how those left behind can be helped.
That's according to Joe Bishop, head of customer, product and innovation at Kiwi Wealth.
It has released its first State of the Investor Nation survey.
The report shows that, despite strong economic growth and low unemployment, more than a quarter of New Zealanders feel less wealthy than they did a year ago.
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About the same number feel better off.
Only 22 per cent said they had enough money to do all the things they wanted to do. Thirteen per cent said they expected to struggle in retirement.
Bishop said there were significant numbers of young and low-income people who were being left behind by the 'rock star economy'.
Many had completely missed out on the decades of strong share market returns, and, for them, years of strong house prices were an impediment to their financial wellbeing rather than a wealth boost.
The survey found residential property was a key way that New Zealanders were saving for retirement - 15 per cent of respondents had invested in this asset class. The median investment value was $500,000.
But equally there were people who felt even buying their own home was out of reach.
'It's clear wealth isn't being distributed evenly,' Bishop said.
'What can we do to help those who are left behind?'
Only fifty-three per cent of respondents said they were in a position to help their children out financially.
Getting people to engage properly with KiwiSaver to maximise their returns in the scheme was one way to help people who could not tap into the 'bank of mum and dad', he said.
Eighty per cent of respondents had some investments or savings and the majority of those held KiwiSaver. The median amount invested in the scheme was just under $15,000.
But about 40 per cent were risk-averse. People can miss out on significant returns over their investing lives if they are in a fund that is too conservatively invested.
'In an environment of historically low interest rates they're potentially chasing returns at the low end instead of opening up to more diversified solutions,' he said.
Fifteen per cent of New Zealanders with a KiwiSaver account did not know what fund they were in. That was primarily true for young people, renters and those on lower incomes.