Rates down, risk up: A million Sharesies investors hanging on Trump's chaos market as term deposits tank
Wednesday, 21 January 2026
Approximately 40% of mortgage holders are set to roll over onto cheaper mortgages in the first half of 2026.
But beyond the jubilation and celebration of homeowners who will be enjoying the respite of expensive repayments, we’re also starting to see the concerns of savers. They have been hit with the realisation that term deposits currently offer meagre returns, barely capable of keeping up with the inflation rate, which ASB forecasts will stubbornly remain in the vicinity of 3% when the Reserve Bank releases the latest figures later this week.
As of January 2026, the current average one-year term deposit rate in New Zealand is approximately 3.50%, down from 4.8% a year ago.
Savers with cash on hand have two choices when confronted with the harsh reality of a low-interest-rate environment: they can leave their money in a term deposit and watch inflation chew at the returns, or they can look to invest elsewhere.
The decision to invest elsewhere might offer the potential of better returns, but it also comes with added risk. An investor subject to the whims and fancies of the equities market amid the current geopolitical tension doesn’t have the soft comfort of a guaranteed rate of return on a yearly basis. They need to accept added risk if they want to make more money.
No matter how stoic you might be, that added risk can weigh on you. Holding onto your investments might offer good, long-term results, but the process of getting there doesn’t always feel fantastic – particularly not when you’re watching Danish troops assemble in Greenland.
The retail investment surge
Over the course of the 2025 calendar year, deposits into Sharesies more than doubled from the year before to a record $1.7 billion as retail investors looked to benefit from the sharemarket.
But the latest sentiment data shows that this isn’t always an easy ride, with investor confidence sliding significantly in the last two months of 2025.
By analysing the behaviour of more than 930,000 retail investors, the quarterly Sharesies Index offers decent insight into how Kiwis are feeling about investing and their wealth. The mood of retail investors is presented on a scale of 100 (extremely confident) to 0 (concerned).
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In the last two months of the year, that rating dropped from a three-year high of 62 to 45 (which was also down from the rating of 56 we saw between July and September).
Commenting on the shift in sentiment, Sharesies head of data and analytics Jordan Cunningham says this dip can be attributed to increased volatility in the market.
It’s worth remembering that this was the period when all eyes were on the Nvidia result and what this could mean for growing concern about a burgeoning AI bubble on the verge of popping. Uncertainty was rife, and the tension across the market was thick enough to stop a Ninja blender from spinning.
Cunningham says that the other thing that happened during this period was a drop in the OCR to 2.25% in late November, bedding in those lower interest rates.
Low rates, high nerves
These lower rates have led investors to put more into the share market, as evidenced by the Sharesies net deposit rate, which tracks the amount of money deposited versus that which is withdrawn.
Cunningham says that by late December, for every $1 withdrawn, Sharesies investors were depositing $2.38.
When market volatility increased in November, Sharesies savings accounts saw an uptick in deposits, compared to the buying of shares. But following the Reserve Bank rate cut in late November, investor data suggested a shift back to share markets.
In simple terms this translates into cash (which would otherwise be put into term deposits) being used to buy shares. Historically, a higher net deposit rate has correlated with higher confidence, but this time, confidence is trending a bit lower than it has.
Those nerves are being reflected in the investments investors are choosing.
'People [are] taking a bit more of a cautious, more thoughtful approach, shifting back towards exchange-traded funds and managed funds versus a more potentially risky appetite that would have them looking at individual investments,' says Cunningham.
This quarter also saw also saw 80% more Sharesies customers trading in gold-focused funds compared to previous years, which is important because gold is often viewed as a safer haven amid broader market volatility.
When the mood is brighter, investors are simply more likely to take punts on individual stocks they believe might be able to deliver strong returns in the coming years, but this isn’t the case right now. They are instead using things like index funds and exchange traded funds, which allow them to spread their risk across a pool of investments.
It’s also worth noting that October saw high sell-off rates as investors looked to lock in their earnings at a time when many were concerned about the state of the market and the potential of the tech bubble bursting.
All of this data is incredibly revealing in the way that shows the powerful impact external stimuli have on investor behaviour.
We’re often told to hold the line and invest for the long-term, but in the harsh light of extreme volatility and market fluctuations, this is easier said than done. When headlines are screaming at you and Reddit commenters are predicting the end of the world, the anxiety that comes with staying the course can become overwhelming for some.
Setting your risk profile
John Berry, the chief executive of Pathfinder Asset Management, recently stressed the importance of setting your portfolio’s risk at a level you’re comfortable with.
“I would just challenge people to think about how they would feel if previous market volatility came again,' says Berry.
Recent history offers some good examples we can lean on.
“In 2020, when Covid struck, the S&P 500 was intially down 34%… And in April 2025, when Liberation Day was announced, the S&P 500 was down 12%. If you were an investor then, how did you feel about that? That should give investors an indication of their risk tolerance.”
In both those instances, we saw the S&P 500 recover relatively quickly, but there’s no guarantee that this will happen if there’s another deep crash in the future, says Berry.
After the dotcom bubble burst, it took approximately seven and a half years for the market to return to the highs seen before the crash – an important insight for those who will be relying on their investments in the near term.
First-home buyers looking to tap into KiwiSaver and Kiwis near retirement, both need to take their timelines into account when setting their risk strategy.
Your personal needs and timeline should inform your strategy rather than any external factors beyond your control.
More chaos to come
It’s important to note at this point that the volatility and uncertainty hitting investor confidence in the last three months of 2025 didn’t even factor in the US administration’s actions in Venezuela or the recent advance on Greenland.
“As we’ve entered 2026, the global backdrop has become a lot more uncertain, with a stark increase in geopolitical tensions,” Westpac senior economist Satish Ranchhod tells me.
“The consequences of such events are hard to predict and take a long time to emerge. And that lingering uncertainty can be a dampener on investor appetites.”
The economics team at Westpac also warns that if the Greenland and Iran issues spill over to significant falls in stock prices, then financial conditions will start tightening and we’ll see the impact here in New Zealand.
The point is that volatility across the market is going nowhere any time soon.
And with low interest rates and relatively stagnant property prices, investors will have to start feeling comfortable with the risk that goes hand-in-hand with investing in stock markets. The jitters aren’t going to disappear overnight. It’s just a question of whether you can resist the temptation to hit sell every time your portfolio takes on a red hue during a market dip.