People’s views of their wealth have been impacted by the Covid-19 crisis, but more households are saving and stress levels reduced during lockdown. Tim Murphy reports
A third of Kiwis feel less wealthy now than just three months ago, according to a special Kiwi Wealth State of the Investor Nation survey.
The annual project is conducted in February each year, but because of the almost immediate effects from the pandemic and lockdown in 2020, was updated with an additional survey commissioned in June.
New Zealanders’ perceptions of their wealth have been hit almost across the board – with 32 percent overall believing the events of the past quarter have negatively affected their wealth. When asked in February, that view for the previous 12 months was reported by just 26 percent.
But Kiwi Wealth says the findings are more stark for those who have investments (with those feeling less wealthy up from 22 percent in February’s questioning to 31 percent), and among home owners (up from 23 to 31 percent).
Those with a household income of more than $130,000 have also noted the risk of the crisis to their economic fortunes, with 31 percent now feeling less wealthy compared with 13 percent in February.
Kiwi Wealth’s Melissa Vasta, acting general manager, retail and product, said of the results: “The market turmoil and gloomy outlook for unemployment and investments, including property, has hurt them more because they have more.”
Those who might have been less likely to have considered they had ‘wealth’ in the first place – employees with one source of income, young people and renters “don’t feel noticeably less wealthy or confident than they did in February.”
Vasta said young people, Māori and Pasifika already had low levels of wealth and confidence before Covid-19. “The prospect of more business closures and redundancies would likely disproportionately affect these groups who are much more reliant on employment income for their wealth.”
While the survey found “the gap between the haves and have-nots had grown in the 12 months before February”, this latest June survey found that stalled during lockdown.
“Young people, renters, Māori and Pasifika were already in an acutely vulnerable financial position and not feeling wealthy or confident about their financial futures,” she said. “The likelihood is they will be disproportionately affected as a recession begins to bite and wealth prospects remain bleak for many young renters.”
Confidence in economy and markets
As well as people’s views on the effects on their own wealth, the survey tested the public’s confidence in how the economy and markets will perform over the next five years.
“Confidence in the economy and financial markets over the next five years has reduced significantly,” the report says. An exception appears to be the property market, where between the February and June rounds of questioning, confidence stayed almost the same (63 to 64 percent).
Optimism for New Zealand’s ability to recover over the medium term was “particularly present in perceptions around the property market.”
In general, and unsurprisingly, the State of the Investor Nation found concerns over individuals’ personal financial stability increasing over the quarter. Those either reporting they are struggling to make ends meet or can’t afford luxuries but manage to get by rose from 31 to 33 percent of New Zealanders, and the proportion of Kiwis who now say they “can’t do all the things they want” now, nudged up from 48 to 51 percent.
People’s views about how they will get on in retirement are also more negative, with those reporting most confident they will have enough money for all they want to do slipping by four percentage points to 29 percent over the quarter, and those believing they “won’t be able to afford luxuries but will be able to get by” up four points to 28 percent.
“Home owners, mid-aged New Zealanders and Aucklanders show the biggest drop in confidence around retirement as a result of the pandemic,” the report says.
If perceptions of wealth can be an indicator of happiness, the survey also found Kiwis’ general happiness also down – with those responding they are ‘happy in your life at the moment’ dropping from 69 percent in February to 64 percent now, and those with a neutral view also down, from 29 to 24 percent. Those rating themselves ‘unhappy’ remained even at 7 percent.
The report found more people had investments or savings in June than in February, up from 80 to 84 percent – particularly mid-income earners and home owners.
“Most likely that’s because people were spending less during lockdown,” Vasta said, giving them more to put aside in savings or investments.
There was a big rise in those who made changes to their investments in the quarter – with almost a year’s level of changes occurring during that time. But it wasn’t all people taking money out.
“People were putting in more money into their investments rather than reducing it, which is very good to hear. In fact, fewer were with drawing money from their investments compared to February.”
For many with KiwiSaver with their primary investment apart from the home, the past months would have been nervous times and “the worst thing most could do was change their fund during a downturn,” Vasta said.
One trend noted in the savings findings was the higher proportion of younger Kiwis who had investments in company shares since the pandemic hit – up from 15 to 19 percent.
Kiwi Wealth found a big drop in confidence among those aged 35-54 (down 9 points), homeowners (down 10) and higher income earners (those above $130,000 – down 11) between February and June over prospects in retirement.
Overall those confident of creating enough wealth for their retirement fell five points in the quarter, from 41 to 36 percent.
Stress levels down
One positive noted in the survey was to the simple question: “How stressed are you at the moment?”
“Interestingly, a significantly higher proportion of New Zealanders have indicated they aren’t stressed in June, potentially speaking to the fact there is no longer an imminent health threat facing the country due to the pandemic.”
For the record, those stressed in June sat at 35 percent of us, down from 38, and people answering ‘not stressed’ rose from 26 to 30 percent.
– The State of the Investor Nation report is based on questions to 2105 people aged 18 plus nationally between February 4 and 17 and then a further 1081 responses between June 3 and 8.
* Kiwi Wealth is a foundation supporter of Newsroom