The expectations of Australian investors remain high, despite the circumstances.
While the behavioural implications of COVID-19 are likely to be studied for decades to come, early data suggests that the pandemic had a big impact on the financial attitudes of investors.
According to research released as part of Schroders Global Investor Study 2021, financial wellbeing became increasingly important for investors during the pandemic.
Globally, 74 per cent of investors surveyed said that they were more focused on their finances now than they were before COVID-19. In Australia, that figure remained high at 68 per cent.
“The pandemic seems likely to have a long-lasting effect on people’s finances, with many investors looking to save more for retirement and prioritise saving over spending,” Schroders Australia CEO Sam Hallinan explained.
For many investors, the goal proved to be property. Schroders found that 43 per cent of respondents said that investing or purchasing in this asset class was their priority as the world begins to come out of lockdown.
According to Mr Hallinan, the pandemic presented investors with the opportunity to recalibrate their personal finances and focus on financial wellbeing.
“Due to decreased spending on non-essentials, investors around the world have been able to save according to plan or indeed exceed their targets for savings,” he said.
For Australia, investing and purchasing property ranked second among financial goals at 39 per cent. That figure put it just behind paying off old debt, which sat at 40 per cent.
“In terms of post-pandemic priorities globally, while property is the frontrunner, luxury and leisure purchases are also a priority, with 35 per cent of people looking forward to spending more money on holidays, vehicles and special occasions,” Mr Hallinan revealed.
As with previous years, the Schroders study’s latest look into investing among Australians found that expectations remained “unrealistically” high relative to global aggregates.
On average, they found that Australian investors are expecting total returns of around 10.6 per cent over the next five years. This puts them below the global average of 11.3 per cent, but a step above the 8.9 per cent seen in 2020.
Older Australians and those between the ages of 38 and 50 were particularly optimistic about their investments. An expected return of 11.4 per cent put this cohort above their global counterparts.
“As we come out of the pandemic, Australian investors continue to have high expectations for returns on their investments over the next five years, and in fact these expectations have risen since last year,” Mr Hallinan said.
Mr Hallinan said that it may be too soon to predict the long-term legacies of the pandemic, but he expressed confidence that both this heightened confidence and increased interest in financial affairs would continue into the future.
“With Australians becoming more fiscally conscious by changing their spending and saving behaviours going forward, it is ever more important that the financial industry provides sound advice to help navigate people through these turbulent times,” he said.
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Article courtesy of Nestegg