This mindset represents the traditional Kiwi dream (owning a primary residence, a holiday home or bach, a boat, and a luxury vehicle) as the pinnacle of achievement. While ‘BBB’ aspirations have driven individual wealth accumulation for many, it has paradoxically contributed to limitations in New Zealand’s broader economic development.
The focus on acquiring these personal assets – and in particular, property – has diverted capital away from productive investments that could drive innovation, create jobs, and boost national prosperity.
Instead of passing on a business to generation, funding start-ups, investing in research and development, or supporting scale-up businesses that could create high-wage jobs and export earnings, significant portions of New Zealand’s investment capital have been tied up in holiday homes and recreational assets that don’t contribute meaningfully to economic productivity.
And to make up the lack of investment in our own economy, Kiwis have long been moving the productivity needle by working longer hours.
The Property Exception - And Its Recent Challenge
New Zealand has mostly stood apart from other developed nations by never experiencing prolonged property market declines – until now.
While countries like Ireland, the United Kingdom, and the United States have weathered significant property market corrections, New Zealand’s residential property market had previously maintained remarkable resilience.
The current market represents a turning point, with some Wellington suburbs and North Island rural areas seeing values decline by up to 32% from their 2021 peaks, challenging long-held beliefs about property’s invulnerability.
Baby Boomers: The Property Pioneers
Baby Boomers (born 1946-1964) have maintained a conservative approach to investing, achieving the traditional Kiwi success markers of house, bach, boat, and BMW. Their strategy centres on tangible assets, particularly directly owned real estate, which rewarded them through multiple property booms in the 1980s, 90s, and early 2020s.
Many Boomers are now experiencing their first significant property market correction – meaning what might have always worked in past isn’t looking so certain, and their worldview may be challenged.
Gen X: The Slow Shift
Generation X (born 1965-1980) represents a bridge between traditional and modern investment approaches.
While many aspired to the traditional ‘bach, boat, BMW’ model of success, rising property prices and changing economic realities have forced a reconsideration of this framework. Their growing embrace of diversified investment portfolios, including equities, managed funds, and ETFs, suggests a gradual shift away from the asset-accumulation mindset of previous generations.
The current property market decline may actually accelerate Gen X’s trend toward portfolio diversification, as they witness firsthand that even real estate isn’t immune to significant market corrections. This generation’s more balanced approach to wealth creation might herald a broader shift in New Zealand’s investment culture.
Millennials: The Forced Innovators
Economic circumstances have largely dictated Millennial (born 1981-1996) investment strategies, marking a departure from previous generations.
While many grew up with the classic aspirations of their parents, achieving even home ownership has proven challenging – leading to more innovative approaches to wealth creation.
Their focus has shifted to sustainable investments, ethical returns, and portfolio diversity, potentially benefiting New Zealand’s economy through greater willingness to consider productive investments.
Gen Z: The Digital Natives
Gen Z (born 1997-2012) largely rejects the traditional paradigm from the outset, recognizing it as increasingly unattainable and perhaps undesirable.
Their investment strategies reflect a more global outlook, emphasising sustainable returns and social impact over asset accumulation.
Their comfort with digital assets, international markets, and innovative investment vehicles might help redirect capital toward more productive enterprises.
While the old standard of ‘success’ markers served individual NZ investors well in previous decades, the changing economic landscape demands a broader perspective. Future success might be better measured by contribution to economic productivity and sustainable returns rather than asset accumulation alone – a thought which may be prompted in many minds with the property market as it is.
The transition from a ‘house, bach, boat, BMW’ mindset to a more sophisticated investment approach is already under way. Part of it is due to age and shifts in generational thinking, but the economic straits of the present and recent past can’t be discounted either.
For New Zealand to thrive in an increasingly competitive global economy, this evolution in investment thinking may prove crucial.
Success in the future might depend on directing more capital toward productive investments to drive innovation and economic growth, while still providing attractive returns for individual investors. A balanced approach like this could help create a more resilient and prosperous economy, combining traditional wisdom with new opportunities.
And unlike previous generations, who often took a DIY approach to investing, younger investors are increasingly seeking professional guidance. This reflects both their time-poor reality and specialised career focus - while they may be experts in their own fields, they recognise the complexity of modern investing deserves its own expertise.
So, what’s next? The instinct to focus on tangible assets remains embedded in our culture like a nail in a fence (pinning some no. 8 wire down, of course). But if you have been thinking of a new approach, you need not go it alone. Consulting a trusted financial adviser is a great start. They can help you develop a strategy help you reach your goals.
The shift from purely asset-based investing to a more diversified approach can seem daunting, but it’s one that considers both wealth preservation and economic growth – two things that will make your life (and the life of generations to come) easier in the long run.
- Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke’s Bay-based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 344.
- The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz
