Your money: Internet becoming vital tool for managing money

One of the greatest new tools available to investors these days is the internet.

Personal finance is one of those areas that is ideally suited to the net because it is "information hungry". Now, instead of having to rely on the limited amount of information that can be fitted into a newspaper or magazine, the net can handle much bigger volumes of news and data in a manageable fashion.

The other great thing about the internet is its interactivity. For example, sites can include calculators which allow you to work out the level of savings you need, or what your mortgage repayments are likely to be under varying scenarios.

The net's importance to investing is illustrated by two recent developments. First, many big organisations such as Telecom (through its Xtra site) and the Herald (through www.nzherald.co.nz and www.stockwatch.co.nz) are providing services in this area. Second, a medium-sized sharebroker was recently promoting a computer package to its clients, encouraging them to get online to stay up to date with investment information.

Currently the net is being used as a way of disseminating huge amounts of information.

There is evidence that people are using the net as a way of learning about savings issues and products before actually making the buying decision.

At Good Returns we find many real investors - people with money looking to invest, as opposed to "tyre kickers" - are visiting the site and trying to find out more information on a product or service.

But the evidence suggests that while people are lifting their skills with information, they are not yet doing savings and investment transactions online in a big way.

There are a number of reasons for this. One major one is that people are not yet totally comfortable with the idea of making large-scale transactions online. (However, research shows they will use the internet to get information about big ticket items such as cars, houses and investments).

When it comes to making actual sales, the net is still being used mainly for smaller transactions such as buying books and software.

Research from the United States predicts that over the next few years there will be a major shift towards financial services business being done online. In fact it predicts that financial services is the area which has the greatest growth potential.

Looking at it from a practical Kiwi perspective it seems reasonable to suggest New Zealanders will be doing more of their savings and investment online.

Consider these facts. New Zealanders are considered to be leaders in the uptake of technology. First there were ATM and EFTPOS machines. That was followed by telephone banking and now there is online banking.

Given that New Zealanders are leaders in the use of such machines and technology, it stands to reason that the potential for buying savings and investment products online is significant.

* Philip Macalister is the editor of online money management magazine Good Returns. Good Returns provides news on managed funds, mortgages, insurance, superannuation and financial planning.

Links:

www.nzherald.co.nz

www.stockwatch.co.nz

www.goodreturns.co.nz