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Security of money a focus after finance company collapses

Security of money has become a key focus of New Zealand investors after finance companies collapsed, according to a survey by Rabodirect.In a survey by the online bank in 2007, the number one priority of 72% of people investing money was the interest rate

NZPA
Mon, 20 Sep 2010

Security of money has become a key focus of New Zealand investors after finance companies collapsed, according to a survey by Rabodirect.

In a survey by the online bank in 2007, the number one priority of 72% of people investing money was the interest rate paid, with just 30% considering security when investing.

A similar survey this year found security of money was the first priority on 73% and a high interest rate second on 52%. Fees and charges ranked third (47%), followed by access to money (46%) and the reputation of the financial institution (39%).

About 50 finance companies have collapsed in New Zealand since 2006, with accumulated losses of $6 billion.

The RaboDirect survey also found that a personal savings account is by far the most popular option for investors at 79%, while nearly 20% have term deposits. Other investment channels were bonds 8%, shares 7% and property 7%.

But Rabobank argues that people are missing out on income by leaving money in transaction accounts each month, which typically pay no or low interest.

"According to Reserve Bank figures, there is more than $27 billion of retail funding in these transaction accounts. Our research shows more than 50% of New Zealanders leave more money in their transaction accounts each month than is necessary to cover expenses. These people are potentially missing out on interest that is available to them," RaboDirect general manager Mike Heath said.

"One very simple way to increase your savings and maximise returns is to make sure you put any extra money left in your transaction account each month into a higher interest savings account. For example, if those $27 billion were deposited in an on-call account earning 4% interest, that's $1 billion worth of interest for the taking."

The survey found 46% of New Zealanders are not saving in stark contrast to Australia where a similar survey highlighted just 9% are not saving.

NZPA
Mon, 20 Sep 2010
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Security of money a focus after finance company collapses
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