08-85 Investor research report
Thursday 24 April 2008
ASIC has today released the findings of research relating to Australian consumers’ understanding of investments and their levels of financial literacy.
A survey of 1,200 Australian investors and several focus groups showed:
- less than half of the investors (47%) had a long-term financial goal and a plan to reach that goal. Many (37%) had neither a plan nor a goal;
- around half of the investors (49%) had only one type of investment (eg shares only). The mean number of investment types was 2.19; and
- investors often came to invest due to external, life-stage pressures such as divorce, inheritance, redundancy or retirement, rather than a proactive plan to become an investor.
The research also found that while the concepts of risk and return were among the most important factors investors considered, only half of those surveyed (51%) were able to select correctly from a multiple choice list the ‘reasonable’ rate of return to expect from a fixed interest product over a ten-year period. Even fewer investors were able to do this for other asset classes (46% for shares and 35% for property and growth super).
Similarly, while most investors had heard of ‘diversification’ (78%), over a third had difficulty applying the concept, with 36% saying that investing 100% of their money in Government bonds was good diversification.
The research also showed that:
- investors tend to believe that property investments are inherently safe;
- women are more likely to be at risk of underinvestment.
- high interest savings accounts are the only investment type that women are more likely to have than men;
- men are over-represented among those attracted to risky investments; and
- SMSF investors:
- are the most likely to choose the least diversified option in a diversification scenario;
- have the most trouble calculating adviser fees; and
- are more than twice as likely as all other investors to be unable to give a tip about avoiding fraud/scams.
ASIC will use the findings of this research to help inform its thinking on retail investor issues going forward.
End of release
Download the report: Australian investors at a glance
ASIC Website: Printed 02/09/2010
