Australian investors have hit a conservative patch, shunning shares and property and favouring bank deposits.
The latest Mercantile Mutual-Melbourne Institute savings report found that people were saving more but were putting their savings in bank deposits following recent gyrations in the share market and property sector.
“The upward trend in savings and debt reduction levels continues, but people appear to be more conservative in their investment outlook,” says Mercantile Mutual funds management general manager Ross Bowden.
“Turmoil on share markets will come and go, so it’s best to stick to a financial plan and focus on investing for the long term.”
The survey of 1200 households around Australia found only 30.7 per cent of households reported holdings shares in the December quarter this year, down from 36.3 per cent in the September quarter 2000 and 34.2 per cent for the same time last year.
While Australia is ranked as one of the largest nation of stockholders per capita in the world earlier this year, a global downturn in April has deterred many investors.
In particular, the sale of the second tranche of Telstra II received a sour reception from hundreds of thousands of novice investors after shares from the initial offer fell below issue price.
Confidence in property is also low. Only 11.5 per cent of respondents say they hold property investments, compared to 16.6 per cent two years ago.
And 15.9 per cent say they will invest new savings in real estate compared to 22.3 per cent surveyed in the same period last year.
Mercantile Mutual says people with credit card debt and other bank loans continue to rise, while the number of households with a mortgage fell.
The report attributed Australia’s strong economy, employment growth and possibly extra income from tax cuts combined to yield an improvement in household savings.
In the December quarter, about 52.9 per cent of households reported saving some part of their income. This was up from 50.4 per cent this time last year and 46.4 per cent in 1998.
