The pain of falling KiwiSaver balances is hitting New Zealanders of Chinese ethnicity hard, while Māori and Pacific people are more likely to be feeling the burn of falling cryptocurrency values.
Indian New Zealanders are proportionally more likely to be rubbing their chins over the fall in rental property prices.
Data released by the Financial Markets Authority (FMA) provides a peek into the investments of choice for people of different ethnicities.
It was a by-product of the FMA’s annual investor confidence survey, which showed an unsurprising dip in confidence, as 2022 has seen investors having to cope with the emotional toll of rising interest rates and falling sharemarkets.
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Some caution has to be exercised in approaching the data because while the survey was of 2509 people, smaller numbers of ethnic minorities were among them than Pākeha.
There were 1903 people who identified themselves as NZ European/Pākehā, 259 Māori, 94 Pacific people, 105 of Chinese ethnicity, 106 of Indian ethnicity, and 127 of other Asian ethnicities.
The FMA found a high proportion of Māori answering its survey had money in cryptocurrencies like bitcoin, with 18% having some exposure to crypto, which some people call an investment, and others a speculative asset class.
Te Kahukura Boynton, chief executive of the Māori Millionaire website, says: “I think there are a lot of Māori who do a bit of crypto.”
“There’s a lot of information out there, and it’s a lot more accessible to Māori via social media,” Boynton says, though she is not a crypto investor.
It also offers the prospect of a route to a more equal financial footing with Pākeha.
“There’s a lot of speculation about becoming quite wealthy in a short amount of time through crypto. There’s lots of people who say they’ve chucked $1000 in and become millionaires overnight.
“When you are suffering from poverty, and don’t have money, that sounds quite exciting.”
Unlike property, or the slower game of share investing, barriers to speculating on cryptocurrencies are low.
“We don’t have six-figures deposits for property, whereas we have small amounts here or there to invest in cryptocurrencies,” Boynton says.
Some argue that Māori could use crypto to decolonise themselves by getting out of the mainstream financial system, and Boynton sees how that idea could be attractive.
“We’re still using a currency with the Queen’s head on it, which for me is a symbol of colonization that we still don’t have sovereignty over land and currency,” she says.
But pushing in the other direction is the environmental footprint of cryptocurrencies like bitcoin, which uses vast amounts of electricity.
“As Māori we do value our environment, and are kaitiaki for our environment,” Boynton says.
The FMA recorded the highest rental ownership among Indian New Zealanders answering its survey.
That doesn’t surprise Jas Singh, a mortgage advisor with Loan Market, whose wife’s family has been in New Zealand since the 1920s.
Singh says the Indian community is business-minded, and so was well aware of the tax benefits that used to attach to rental investing, but they were also focused on family.
Families were keen on getting their children into homeownership, and will make sacrifices to do so, he says.
“They want to secure their futures. Going into real estate is like saving for your kids,” Singh says.
Investment properties were family wealth to be passed to the children, with a reciprocal understanding that when the parents get old, their children will look after them.
The homeowning culture was also strong in India, and migrants making New Zealand their home prioritized ownership.
The FMA’s data showed KiwiSaver had been embraced by people of Chinese and “other” Asian ethnicities, but it also showed a smaller proportion of Pākeha respondents had taken up KiwiSaver than Māori and Pacific people.
David Boyle from Mint Asset Management, who used to work at Te Ara Ahunga Ora The Retirement Commission, says: “My gut feeling would be many Pākeha build their wealth through property and business.”
The Pākeha population also has an average older age than Māori and Pacific people.
There’s another possibility, Boyle says: “Are we just spenders relative to other ethnicities?”
Shares, term deposits, and managed funds
New Zealanders of Chinese ethnicity scored highly in owning shares in their own name, having money in term deposits, and also having money in non-KiwiSaver managed funds.
Auckland financial planner Huirong (Tina) Chen says that can be traced to a cultural savings ethic.
“Chinese are very good at saving. It’s just in our bones,” she says.
New Zealand’s ethnic Chinese population has a long history, but it has grown rapidly in the past 40 years through immigration. The collective memory of the need for self-sufficiency in China remains strong.
“We didn’t have something like NZ Super for the people, so we tend to save for our retirement,” she says.
“Chinese people work very hard to save for their future, and they really want to earn money,” she says.
Non-KiwiSaver super schemes
Māori and Pākeha are most likely to have a non-KiwiSaver super scheme, which Boyle says is a legacy of the past.
Before KiwiSaver, there was a proliferation of large industry and employer super savings schemes.
The advent of KiwiSaver saw many closed to new investors, or wound up entirely, but many remain quietly in existence, still looking after a portion of people’s retirement savings.
Many people have investments offshore, including property investments.
When the FMA asked the respondents to its investor confidence survey whether they had money invested offshore, a greater proportion of Chinese, Indian and other Asian New Zealanders said they did.
But there was still a significant number of Pākeha who also had money in offshore investments.