As we begin a new year, results from the latest Manulife Financial Investor Sentiment Index released today indicate that, while Canadian investors appear to have ongoing concerns about the economic environment, they are taking deliberate steps to achieve their financial goals and they remain optimistic about their future financial position.
“The good news is that Canadians remain optimistic about their financial future and they are taking some very simple, but concrete steps to continue making progress on their financial goals,” said Paul Lorentz, Executive Vice-President, Investment and Insurance Solutions. “Canadians continue to be cautious about investing and with global economic challenges continuing to dominate our headlines, this is a trend we’ve been seeing for several quarters.”
Overall, the Manulife Financial Investor Sentiment Index, which measures Canadians’ perceptions about whether or not this is a good time to invest in a variety of savings and investment vehicles, showed that investor sentiment in Canada softened slightly through the second half of 2012. Results from the second half of the year show the Index now sitting at +20, down four points from July 2012 (+24) and down six points from December 2011 (+26).
“Canadians are now more focused on paying down debt which may be causing them to be more cautious about investing,” added Mr. Lorentz. “The slight decline returns the Index to the December 2010 level, however it is positive to see that investor sentiment continues to remain significantly stronger than during the height of the economic downturn in 2008-2009.”
Canadians optimistic about the future
Interest in investment and savings vehicles remains flat indicating a continued cautious outlook toward investing, however, Canadians say they are optimistic about their financial future. Currently almost eight in ten Canadians feel their financial position is either the same (43 per cent) or better (35 per cent) than it was two years ago. Optimism for the future is higher with more than 90 per cent of Canadians indicating that two years from now their financial position will be either the same (39 per cent) or better (53 per cent) than today.
Consistent with this optimistic view, 77 per cent of Canadians say they are either on track when it comes to their current financial goals (40 per cent), or they are behind but are likely to catch up (37 per cent).
Taking a conservative approach
The index reveals that, overall, Canadians are heeding the advice of the Minister of Finance and the Governor of the Bank of Canada to reduce consumer debt and they are taking a more conservative approach to help achieve their financial goals. Nearly 50 per cent of Canadians indicate they have taken steps to reduce their spending, with 31 per cent saying they are saving money on a regular basis.
Other ways that Canadians are taking greater control of their personal finances include: talking to a professional financial advisor for advice (22 per cent), working more or increasing their income (19 per cent), calculating how much they need to achieve their financial goal (17 per cent), and saving ‘found’ money like bonuses and tax refunds (14 per cent).
“It appears that Canadians are taking to heart the importance of having a balanced financial plan in place that includes a healthy focus on debt reduction and saving,” added Mr. Lorentz. “Trimming household budgets, paying down debt and saving for a rainy day are all important steps that will put Canadians in a better financial situation for their future.”
Top Financial New Year’s Resolution for 2013, by a huge margin
Nearly four in ten Canadians say “trimming the household budget” is their top 2013 financial New Year’s resolution. Next on the list were “creating a will or estate plan” and “creating an emergency fund,” both garnering 13 percent of responses.
Canadians say their top financial priority for 2013 is paying down debt or maintaining their current lifestyle. Paying down debt is the top financial priority for 31 per cent of respondents. Twenty-two per cent indicate that maintaining their current lifestyle is their financial priority for the year.