A new study by New Zealand's Financial Markets Authority (FMA) has uncovered significant gaps between what New Zealanders say they want from investments and how they actually allocate their money, as financial stress continues to mount across the country.

Kiwis Talk Big Returns, But Invest in Savings Accounts

The research, which surveyed 3,169 New Zealanders and conducted in-depth interviews with 20 participants, found that while 43% of respondents prioritize high returns when choosing investments, fewer than one in three actually hold direct stock market investments.

New Zealanders predominantly favor accessible, lower-risk products over potentially higher-yielding investments. While 79% hold everyday bank accounts and 75% maintain savings accounts, only 30% invest directly in stocks, shares, or exchange-traded funds.

“New Zealanders’ stated financial goals don't always match their investment behaviors, or understanding of key financial concepts,” Daniel Trinder, the Executive Director of FMA’s Strategy and Design, commented. “There is a disconnect between their preferences and their investment choices.”

KiwiSaver, the country's retirement savings scheme, emerged as the most successful investment vehicle with 72% participation across income levels. The program's automatic enrollment and employer contributions have made it an effective tool for capturing savings that might not otherwise occur.

Term deposits and Portfolio Investment Entity funds showed much lower adoption rates at 31% and 13% respectively, despite offering potentially better returns than standard savings accounts.

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Financial Stress Reaches Concerning Levels

One in six New Zealanders reported feeling they are "sinking" financially, while 44% said they are merely "treading water." Only 39% described themselves as "swimming" or financially comfortable.

The study found clear demographic patterns in investment behavior. Younger investors showed greater appetite for potential returns, while those aged 65 and older demonstrated stronger preferences for guaranteed returns, often shifting from KiwiSaver to term deposits as they approach or enter retirement.

Income levels significantly influenced investment priorities too. Higher-income households were more likely to seek high returns, while those earning less than $50,000 annually prioritized certainty and immediate access to funds.

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Trust and Advice Remain Barriers

Despite widespread openness to financial guidance, with 67% of respondents expressing interest in learning how to make their money work better, significant barriers remain. The research found that 42% of New Zealanders feel uncomfortable discussing their financial situation with experts.

“While there is a strong interest in financial advice, many are hesitant to discuss their personal financial circumstances with others,” added Trinder.

Trust in financial institutions also presents challenges, with fewer than half of bank customers reporting high trust that their institution has their financial wellbeing in mind. Insurance companies fared worse, with only 26% of customers expressing high trust levels.

The research forms part of the FMA's broader "Good Cents" initiative examining New Zealand's financial capability and will inform future regulatory approaches as the authority takes on expanded responsibilities under new conduct regulations.