Where people on $100k or more are investing

New Zealanders are investing more and have greater confidence in the resilience of financial markets due to the strong recovery from the pandemic crash, a survey by the Financial Markets Authority shows.

The FMA’s annual investor confidence survey of 1,000 New Zealanders found confidence has been steadily increasing over recent years and has hit its highest level since 2013 at 72%.

Survey respondents said the strong bounce back from covid-19 was the top reason for increased confidence, as they perceived NZ as having recovered better than other countries.

“I think we are dealing well with covid and are in a much better financial position than a lot of other countries,” one anonymous respondent said

Those who lacked confidence in the market often said it was because they lacked knowledge about how to invest or how the market worked.

This is the cohort Sharesies has been enormously successful at re-introducing to the share market.

One unconfident investor simply gave their reason as: “[I] don't know anything about investments.”

Another said they were unsure because of the pandemic and because they “really don't understand the share market – find it too risky”.

Term deposits losing ground

Despite some still feeling unsure, money continues to flow from term deposits into KiwiSaver and other share market investments.

Investors with term deposits have fallen from 34% in 2019 to 21% in the past 12 months, while investors buying shares themselves climbed from 17% to 21%.

“Term deposits have tended to be the most prevalent investment product outside KiwiSaver, but in this low interest rate environment, with changing behaviours and preferences, individual shares are closing the gap,” said FMA chief executive Rob Everett.

“This aligns closely with the rise of DIY, or fractional, digital share investing over the last few years, with 60% of share investors now buying shares through these platforms.”

The majority of those investors bought their shares using an online DIY platform – such as Sharesies, InvestNow, or Hatch – versus 33% who used a traditional sharebroker.

Those who used an online platform to buy their shares were significantly more likely to be aged between 25 and 40, be in full-time employment with an annual income above $100,000.

The FMA included a question about investing in cryptocurrencies for the first time and found 13% of those who made investments in the past year were purchasing these digital assets.

KiwiSaver wins converts

A significantly higher number of people signed up for KiwiSaver this year, making it the most common change to retirement savings. Roughly twice as many investors either joined KiwiSaver or increased their contribution this year as did in 2020.

The number of people who have other investments but hadn’t joined KiwiSaver was down more than 10% for every age group under retirement age in 2021.

Investors surveyed are predicting domestic financial markets will fare better than international markets. 40% think NZ markets will increase, while less than 30% think international markets will increase.

This is the opposite to what has actually happened in financial markets during the year, with share markets in the United States and Australia making enormous gains while the NZ market has fallen.