KiwiSaver overtakes managed funds and shares

KiwiSaver has jumped ahead of managed funds and shares as the investment option offering the best returns, and an increasing number of people see the scheme as their primary means of retirement.

Monday, February 7th 2011, 6:18AM

by Benn Bathgate

The findings have been revealed in the latest ASB Investor Confidence Survey which found KiwiSaver the third most favoured investment option behind term deposits and rental property.

"For the first time KiwiSaver jumped ahead of managed investments and shares as the investment offering the best returns," said ASB head of private banking and wealth management Jonathan Beale.

"In addition a record 61% of respondents indicated that KiwiSaver would be their primary means of retirement, a percentage which has steadily increased in recent quarters."

The survey revealed the expectation that KiwiSaver would be enough to retire on was strongest among those under 50, with 22% aged between 18-49 believing KiwiSaver would be enough for retirement, up 5% from the last quarter.

In the over 50 age group, 12% believed KiwiSaver alone would be adequate for retirement provision, also up 5%.

"It's very encouraging to see those aged under 50 being so positive about their prospects with KiwiSaver, as this age group needs to start now to ensure they build up a sufficient nest egg for their retirement," Beale said.

"KiwiSaver will be an important contributor to the future wealth of our country, so it is heartening to see this positive attitude."

The survey found that overall investor confidence has begun to rise, with the three months to December 31 seeing the number of investors expecting to see their returns improve climb 4% to 19%.

Term deposits retained their top spot as most favoured investment choice, up 1% on the previous quarter to 21%.

While Beale said term deposits had returned to their highest level of popularity since the 2008 third quarter, he said the data indicated a dip in sentiment in December.

"Investors are likely to have been influenced by the December Reserve Bank announcement cautioning a slowdown on interest rates, which they again repeated in January."

Rental property was the second most favoured investment option with 14% followed by KiwiSaver, managed funds (9%) and shares (6%).

Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz

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