According to the 2021 Schroders Global Investor Study (GIS), 86% of South African investors have spent more time thinking about their financial wellbeing since the onset of Covid-19.
This has translated into certain behavioural changes or motivations, which played out within the framework of a pandemic-stricken world and a turbulent economic environment.
As a result, when compared to the rest of the world, South Africans have not been able to save (or invest) as they had planned over the course of 2020, but are driven to save more in general, and towards their retirement in particular, in the “new normal”.
The independent, online survey garnered the views of over 23 000 investors from 32 locations around the globe, including South Africa. The sample group of investors who were surveyed plan to invest the equivalent of a minimum of €10 000 (+R173 000) in the next 12 months and have made changes to their investments within the last 10 years.
Schroders acknowledges that the survey investor criteria does not apply to the typical retail investor in South Africa. However, the results of the study make for and insightful read.
“According to the study, only 59% of South Africans were able to save and invest according to their plans,” explains Kondi Nkosi, Schroders country head in South Africa. “This is in contrast to the 90% of respondents in the US and the Netherlands who saved as planned or more than planned. The pandemic has clearly had a direct impact on investors’ financial wellbeing in South Africa.”
The study also looked at the drivers behind lower saving rates in some regions. In South Africa, 47% of investors reported that a “change in personal circumstances” such as “new dependents” or “needing to move homes”, was the main reason for decreased saving. For the rest of the world, “reduced salary” as well as “more spending on non-essentials” like “entertainment, food and deliveries,” were the leading reasons for lower-than-expected savings.
The results of the Study beg the question: will the pandemic leave a lasting legacy on people’s finances? It seems as though it will. It was found that South Africans are most likely to restart their savings ambitions post the lockdown restrictions than respondents in other regions. The findings show that following the lifting of the lockdown, 54% of respondents have put more money towards their savings generally.
“It’s encouraging that South African investors seem driven to focus on recovering their financial wellbeing once the effects of the pandemic have been quelled,” says Nkosi.
When it comes to retirement, most retired people around the world are more cautious around spending their retirement savings in the wake of the pandemic. This includes 61% of respondents across South Africa, Australia and the UAE.
“The study also shows that the impact of the pandemic in South Africa is evident in investors’ retirement plans, with 69% wanting to save more for their retirement as a result of the pandemic,” Nkosi says. “It’s interesting that there’s only a 3% difference between those non-retired individuals that believe they will retire later in the wake of Covid-19 (31%) and those that think they will retire earlier (28%). Less than half (41%) responded they believe they will retire at the same age as initially planned.
He says that the pandemic has presented an opportunity to recalibrate personal finances and to focus on financial wellbeing. “This sentiment is representative of the investor landscape on a global scale, and despite the pandemic leaving a lasting impact on South African investors, it’s positive to note that they are determined to return to a place of financial wellness.”