Confidence is a funny thing. When I was younger, I got a Dragster (bike) for Christmas. I thought it was the coolest thing ever and it provided me with an air of invincibility. So much so that when I was at Cubs, I told my mates I could ride down the hill to the Den (a meeting house for Cubs) faster than anyone else. Now, this was a steep hill and, to cut a long story short, I did indeed beat everyone down to the bottom. That said, it became apparent very quickly that riding on a shingle road, pedalling as fast as I could down a steep hill, are not the right ingredients for a positive outcome. Especially when applying the back and then front brakes rather heavily after realising I was going to crash into the Den. But more on that outcome later!
Leading up to December 2021 investor confidence was flying high due to strong markets, borders finally reopening and the Covid-19 fog starting to lift, revealing a far more settled year ahead, with the expectation that 2022 would be when everything got back to be normal.
Unfortunately, the opposite happened with the Ukraine conflict, global inflation, reserve banks around the world increasing cash rates and pushing up mortgage rates, and then homeowners experiencing the impossible: seeing their house values fall. This all contributed to one of the most difficult years on record, where pretty much everything went down in value and everything you needed to buy went up.
No wonder investor confidence took a hit, with markets falling. This impacted KiwiSaver and other investments, leading to prolonged negative returns and falling balances that tested the conviction of the most hardy investor.
An interesting question has been posed recently: did this environment affect the confidence of different demographics in different ways? The answer is yes.
A recent report released by Standard Life in Ireland, contained research on this very topic, along with a number of other financial wellbeing questions, and the results may come as a surprise.
Over 6,000 people took part in the research and it seems that women have become even less confident about their finances and long-term savings than men over 2022.
What the research said:
While this research is based in Ireland I suspect, if we conducted a similar piece of research here, the numbers may not be too different. They may even be higher, given the recent weather events over the past month in New Zealand and how that has impacted many people’s incomes, businesses, housing and other assets.
As we celebrate International Women’s Day on the 8th of March, this report and findings are a timely reminder that bridging the gender gap around retirement outcomes has still got a significant row to hoe. There are no simple answers but we, as a country, should continue to:
These would be incredibly powerful improvements that, over time, should not only improve women’s confidence, but also their overall financial wellbeing.
There are some basic actions that all Kiwis can take on board as well:
Interestingly, the research found that those who had a plan, no matter what income bracket they were in, were twice as likely to feel positive about their current financial situation - 50% vs 19% - than those who didn’t.
Thinking back to that day when I was 10, if I had planned my approach down that shingle hill better and taken into account the environment along with the possible risks, I suspect I would have had a better outcome. As it turned out I missed the meeting house by inches, however ended up falling off my bike, with bloody knees and a very bruised ego.
I guess, having loads of confidence by itself doesn’t always add up to better outcomes – you need some preparation too. Having a plan, applying your goals and objectives, and getting some professional advice, will most likely get you to where you want to go without too many bruises along the way.
As a footnote, Kantar just released some data based on the top three issues that are top of mind for Kiwis in January this year. They were:
As published on Stuff and listen to the discussion on RNZ
Disclaimer: David Boyle is Head of Sales and Marketing at Mint Asset Management Limited. The above article is intended to provide information and does not purport to give investment advice.
Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement.
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