The stock market crash of 1987, often referred to as Black Monday, saw global stock markets plummet in a matter of hours and gave New Zealanders the ultimate hangover when it comes to how we invest.

A generation of savers, mostly baby boomers but also their children who remember the aftermath, felt the impact of irresponsible investing and limited regulation.

Prior to the crash, there was a wave of exuberance among investors who were eager to get rich quickly. People were doing things that seem reckless today: borrowing money to invest in stocks that were soaring in value and using their homes as security fuelled by a belief that the market would continue to rise indefinitely.

The crash exposed the certain fragilities of the system and highlighted the need for more robust financial regulation. It profoundly impacted how New Zealanders invest and left a legacy of caution towards the stock market. Investors retreated to the perceived safety of real estate and term deposits and here many have stayed.

Investing today is a vastly different story. There is regulation. There are disclosure statements and responsible investment strategies.

Many investors today take a long-term view and find the support of an adviser helpful. They consider financial behaviours such as their spending and saving patterns and their risk appetite, versus their short and long-term goals.

But money is deeply personal and talking about it can be tough.

There are times when we’re not as financially literate as we should be, and this can hold us back when it comes to considering our options and in making decisions about how to manage and grow wealth.

We see this all too frequently with the set and forget nature of KiwiSaver. Checking that the fund you’re in and your contribution levels are a good fit for your ambitions can make a huge impact on achieving your financial goals.

For people looking for alternatives to term deposits or property investments, Managed Funds, (while being a different risk profile and investment timeframe) can help by offering a way to invest without being locked in for a period.

Last week’s news of a further reduction to the OCR of 50 basis points to 3.75% will be welcome news for those looking at home loans. It’s also likely to mean that term deposit rates will continue to fall, and when that has happened in the past, we have seen a greater interest in Managed Funds.

Talk to us

If you think it’s the right time to explore these options, get in touch. You can drop us an email, call us on 0508 347 437, or chat with us online.