Kiwis vague on risky money options

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New Zealanders have a solid understanding of low risk investments such as term deposits, but are less knowledgeable about more risky options like shares, according to research commissioned by the Financial Markets Authority.

The survey, done by Colmar Brunton for Money Week, asked respondents to assign a risk level to a range of investments including stocks, KiwiSaver funds, term deposits, bonds and residential property.

More than 80 per cent of respondents correctly identified term deposits as low risk, with 73 per cent saying KiwiSaver conservative funds also fitted into that category.

See the full research here:

However, only 34 per cent of respondents said KiwiSaver growth funds, which tend to be more heavily weighted towards riskier equity investments, were high risk.

Twenty-one per cent thought growth funds were low risk, while 44 per cent identified shares as medium or low risk.

"Most experts would accept that shares are a higher-risk investment choice, but with higher potential returns over the long-term," the FMA said.

FMA's head of primary markets and investor resources, Simone Robbers, said the survey showed there was some confusion around the levels of risk in growth-focused investments.

"We want to help people become more comfortable about discussing all kinds of investment products so they can make more informed decisions," she said.

"It's important to understand what level of risk is more suitable for you and the mix of investments that will help you reach your investment goals."

The survey also found there was some confusion over whether investments were guaranteed or not, with 52 per cent of respondents saying term deposits came with a guarantee and 42 per cent thinking KiwiSaver was guaranteed.

"The Government does not guarantee these investments and nor do providers," the FMA said.

Read about the research here: