DIAGNOSING AUSTRALIA’S FINANCIAL ‘WEALTHBEING’

• CommBank National Wealthbeing Indicator rises to 17.3 from baseline score of 16.2 in August 2013, buoyed by increased confidence
• Female’s Wealthbeing score declines to just 4.7, falling further behind males at 29.2
• Retirees feeling most confident whilst Gen Ys feel the least optimistic
• ACT has the nation’s highest Wealthbeing score at 33.8
• The nation expects to invest an additional $85 billion in 2014, but less than half of all Australians have a good understanding of recognised strategies to create wealth

According to research commissioned by CommBank’s MyWealth, there has been an increase in confidence among Australians to invest and build wealth, with the National Wealthbeing Indicator increasing from a baseline score of 16.2 in August 2013 to 17.3 in January 2014. 

The National Wealthbeing Indicator was developed by MyWealth to gain insight into the nation’s ability to generate future wealth by examining an individual’s financial capacity, ability and performance.  Designed to provide an ongoing score to track the Wealthbeing of the nation, the Indicator is showing an increase since August 2013 – driven by an improvement in the current and projected investment performance of Australians. This moderate rise in confidence has offset slight declines in the nation’s current financial position and ability to generate income. 

The research reveals almost 40 per cent of Australians say they will invest more money during 2014, with 80 per cent of these expecting to invest at least $3,000 per year ($250 per month) more than they did last year.  Despite this commitment, less than half of all Australians have a good understanding of recognised strategies to create wealth – which is a contributing factor to the relatively low overall National Wealthbeing Indicator score. 

Jason Wilson, General Manager MyWealth, says the National Wealthbeing Indicator is a unique tool for measuring and tracking the financial health of the nation.

“The National Wealthbeing Indicator is unique in its ability to not only measure intent and attitude, but also what actions people will take.  MyWealth’s Indicator takes a broad view by examining financial capacity, ability and performance,” said Mr Wilson.

Commbank’s MyWealth research reveals more than three quarters (78 per cent) of Australians still consider sensible saving strategies such as cash, super and property as the most effective methods to build their wealth.  Shares and managed funds are the first choice for just 15 per cent of the population.

According to Diana Mousina, Commonwealth Bank Economist, the research highlights a disconnect between people’s intent and actions when building wealth. 

“The research shows an increased confidence in investing but it also suggests that many of us are sticking with what we know.  As a nation we are heavily focused on investing in property when we should be looking at diversifying our investment portfolios to build and protect our wealth into the future,” said Ms Mousina.

The Indicator reveals an overall improvement in confidence, although geography and demographic profiles vary greatly.

Geographical breakdown:

Australian Capital Territory has scored the nation’s highest Wealthbeing result, more than doubling since August 2013 from 16.0 to 33.8.  This is in contrast to South Australia which has the lowest Indicator score at just 12.1.

“Analysis of the results highlights that Australian Capital Territory residents are feeling more confident in their own knowledge, as well as the current and projected performance of their investments. 

“In contrast Queensland residents believe their current financial position and ability to generate income is far worse than in August last year, which could explain this state experiencing the largest drop,” said Ms Mousina. 

In addition, those living in metro areas have a higher Wealthbeing result than those in regional Australia, with a score of 19.4 compared to 13.3.

Demographic analysis:

The Indicator shows age and gender play a major role not only in attitudes towards wealth creation, but also in the ability to build wealth.

“Males have a higher Wealthbeing score than females (29.2 compared to 4.7) and this correlates to the fact that men are more likely to spend extra time focusing on wealth creation than females. The research shows nearly half of men spend more than one hour per week managing their investments, compared to just 37 per cent of women,” said Ms Mousina.

“The Wealthbeing Indicator also shows that confidence among retirees has more than doubled since August 2013. This result could be a reflection of the strong returns produced by super funds last year.  In contrast Gen Ys are increasingly concerned about their current ability to generate income,” she said.

Other key highlights from the research include:

• Australia is a nation of sensible savers with 85 per cent stating they are saving or investing to build wealth for the future;
• The average age when most people feel the need to start investing is 25;
• Owning property is the primary goal for 51 per cent of Australians when starting to build wealth, with only 6 per cent considering shares;
• 67 per cent of Australians are confident they will be financially comfortable or wealthy at retirement.

“Establishing, building and maintaining an investment portfolio doesn’t need to be complicated.  MyWealth offers tool and information designed to cover all levels of investment and all forms of assets from property to shares and funds. As such, MyWealth provides insights for experienced investors, right through to those starting their journey,” said Mr Wilson.

To find out more, visit www.mywealth.com.au