Investor sentiment in Canada continued to slide through the first half of 2012, according to the latest Manulife Financial Investor Sentiment Index.
The index, which measures Canadians’ opinions about investing in different asset classes and investment vehicles, currently sits at +24, down two points from December 2011, and five points lower than in June 2011.
Investor enthusiasm has decreased across almost all investment vehicles, including fixed income investments, investment properties, balanced funds and cash.
The exception during the first half of 2012 was the appetite for stocks, where sentiment is up by six points.
The index also asked about Canadians’ retirement goals. Feedback indicates that Canadians are increasingly considering retirement as a time where the focus is on surviving financially, rather than enjoying the freedom and lifestyle retirement brings.
Most Canadians surveyed (88%) indicated that covering the basic cost of living is their most important retirement goal. “Freedom” goals, including travel, building an estate for heirs and donating to charity, were deemed important by fewer than 50% of respondents.
Measured against the December 2011 results, the index shows that Canadians are less likely to agree it’s a good time to invest in savings vehicles. Attitudes to investing in mutual funds remain relatively steady, with a drop of only one point. And while overall sentiment toward TFSAs remains high, it did drop four points. Sentiment toward RRSPs and segregated funds dropped significantly—seven and eight points, respectively.
“Recent economic challenges, including the persistent financial instability in Europe, help us understand why Canadians remain cautious about investing,” said Paul Rooney, president and CEO of Manulife Canada. “As these global economic challenges dominate headlines without any significant signs of recovery, confidence in financial markets will continue to be uncertain.”
The importance of ‘covering the basic cost of living’ and ‘covering the lifestyle I’m accustomed to’ as retirement goals increase with family income. ‘Covering the lifestyle I’m accustomed to’ peaks at 84% among respondents with a family income over $100,000, compared to the national average of 72%.
Families with lower income are more concerned about leaving behind an estate. ‘Accumulating an estate to leave behind for heirs’ peaks at 52% for those with family income between $15,000 and $25,000, compared to 36% nationally.
“These results indicate that despite changing expectations about retirement goals and lifestyles across all those surveyed, families with lower income maintain a strong desire to leave their families with the resources to create better opportunities than they had for themselves,” noted Rooney.
The index also suggests that younger Canadians are strongly considering their future. Younger Canadians are more likely to identify covering healthcare needs (87%) and providing for family in case of illness/death (88%) as important retirement goals.
Another significant difference between generations is related to investment vehicles. Nineteen percent of young Canadians select CPP/QPP as their primary source of retirement funds, compared to the national average of 13%. This is probably because young Canadians are less likely to have other savings vehicles in place early in adulthood.