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New Zealanders look to the stockmarket as a haven for investing in the face of a housing downturn

by Anita Poppi SA FIN | 01 Apr 2019
Savvy New Zealand investors will up their stakes in managed funds and KiwiSaver over the next 12 months as they steer clear of pumping savings into property.

The continuing sluggish housing market is behind the switch from bricks and mortar to investment in the share markets, according to a new survey by the Financial Markets Authority.

With economists warning of three major factors - including the foreign buyer ban, the possibility of the axing landlords' tax deductions, and the introduction of a capital gains tax - property has become an investment area of concern for 2019. 

Now the regulator has published a guide for investors on the nuts and bolts of choosing, buying, owning and selling shares.

It deals with the steps involved in investing as well as the potential risks to help the growing market - including mum and dad investors, as well as millennials - decide if shares are right for them.

The 13-page guide gives the basics for first-timers, with a jargon-busting page and tips on how to avoid the kind of scams that have cost New Zealanders millions over the years.

“Shares can provide good returns, but this is balanced with higher risk of loss, and the time required to research companies and track performance,” said FMA Acting Director of External Communications and Investor Capability, Scott McMurray.

“Our guide provides an unbiased, independent, overview to enable people to be better informed about investing in shares and understanding the risks involved."

“They should also be aware of the need for more active interest and monitoring of the companies they are invested in.”

“We want to help New Zealanders choose and use investment products, such as shares, as part of our focus on improving Investor Capability.”

The guide was developed with input from the NZX and the NZ Shareholders Association.

In a survey conducted last year, the FMA found the number of people saying they intended to invest in residential property fell from 19 per cent to 14 per cent. It’s the most significant drop, according to the survey.

“The proportion considering investing in residential property in the next 12 months has significantly decreased in comparison to 2017,” an FMA spokesman said.

Those intending to contribute more into KiwiSaver or put more into managed funds rose, according to survey results which showed 23 per cent putting more into the fund.

“Around a quarter of those with an investment are considering increasing their KiwiSaver contributions in the next 12 months,” the survey said.

What is perhaps obvious but most notable about the survey is those customers expressing a desire to continue in the share market are those who have “rated their recent interaction with their financial provider as excellent”.

The conclusion that a professional, customer-focused business will thrive is apparent. 

Those clients who have experienced a culture of openness are the ones “likely to be considering investing more” compared to investors who didn’t have a good experience.”

It is especially important for the financial services sector as, “more than half of those with an investment were considering making changes to their investments”.

The survey added: “Those who said their financial provider communicated with them about the performance of their product are more likely to be considering buying managed funds in comparison to those who haven’t been contacted.

“In comparison those who mentioned they’re not sure whether or not they have been contacted about the performance of their investment product are more likely to not be considering any of the changes asked in the next 12 months.”

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