Six of 10 Canadians say they’ll enter 2008 financially better off than five years ago
WATERLOO, ON, Dec. 20 2007 – Canadians’ interest in investments regained ground early this month despite continued concerns about U.S. sub-prime lending and swinging equity markets, according to a national poll for Manulife Financial, Canada’s leading insurance and wealth management company.
The 36th quarterly Manulife Investment Sentiment Index gained seven points to reach +27, after losing 11 points in the previous quarterly poll in September.
“Canadians overall continue to remain generally positive about long-term investing, despite news about the dollar, sub-prime lending and other issues,” said Paul Rooney, President and CEO, Manulife Canada. “We’ve seen some strong resilience among investors over the past number of months and the economy overall remains relatively stable as well.”
The survey of 1,000 Canadians by Maritz Research, in late November and early December, found eight among 10 investment categories and vehicles gained ground from the previous index reading in September.
“For much of the past two years the overall index had remained above +20 – running near six-year highs,” Mr. Rooney added. “In December’s poll we’re seeing some signs of renewed optimism in a range of investment areas.”
Better off than five years ago
Responding to a separate question, six of 10 Canadians polled said they’re better off now than five years ago, up from 56 per cent a year earlier. Another 23 per cent said they feel they are in the same financial position as in 2002, while 16 per cent said they feel they’re worse off.
When asked about their financial goals for 2008, those surveyed said their top priority is to pay down their consumer debts. Twenty per cent chose overall debts as their top concern, down from 25 per cent a year ago.
Paying down the mortgage ranked second, with 14 per cent choosing to reduce their mortgage as their top priority. That’s identical to a year ago and just ahead of saving for retirement (10 per cent). Nine per cent said saving for big-ticket item was their top financial priority for 2008, while seven per cent said their top concern is ensuring they have enough money if they become disabled or ill.
The overall index
Since its launch in 1999, the Manulife Investment Sentiment Index has remained in positive territory overall. It peaked at +35 in early 2000, but fell to a low of +11, in December 2001.
The quarterly index monitors how Canadians say they feel about investing in 10 different categories and vehicles. The index reflects the percentage of those who say they believe it is a good or very good time to invest minus those who feel the opposite.
“More than one in five Canadians are served by Manulife’s wide range of financial services and products and among our key objectives is to help them make better financial decisions,” Mr. Rooney said. “We always encourage investors to work closely with their advisors, particularly given short-term changes in the economy and markets. That helps them to balance guaranteed versus variable investments, as well as stay focused on their short- and long-term goals.”
Four of six investment categories gain ground
Fixed income and cash both gained 13 percentage points from the previous survey, reflecting some general concerns about equity and real estate markets across North America. Balanced funds gained 12 points.
Among investment categories, investment property and stocks both showed slight declines, down two and one points respectively. Investing in their own home gained eight points and still remains the favourite investment destination cited in the survey.
The Manulife Investment Sentiment Index is determined by the following six
investment categories, shown by order of their overall ranking in the survey.
- Investing in their own homes (either through renovations or paying down the mortgage) remains the most popular place for Canadians to put their money – a consistent finding since 1999. The index for investing in their own home regained eight points points to +50, after losing 14 points in the September survey. The index reflects 63 per cent of those surveyed who said it’s a good or very good time to invest in their own residence — minus 13 per cent who believe it’s a bad or very bad time.
- Balanced funds continued to rank second as the most-popular investment target, up 12 points to +34. Among those surveyed, 50 per cent felt balanced funds are a good or very good place to invest, compared to 16 per cent who said the opposite.
- Fixed income investments (including GICs and annuities) was a close third place behind balanced funds among favourite investment destinations this quarter, up 13 points from September. At +32, the index remains relatively high compared to its low of +4 in mid-2004.
- Cash (including savings accounts) gained 13 points this quarter to reach +23. Cash has traditionally been the least favourite among places to put money, but surpassed investment real estate in the most recent poll.
- Investment real estate continued to fall in the rankings, from its traditional third place ranking to fourth in September and now fifth in the latest poll. At +16, investment real estate showed the largest drop in the quarter, off two points.
- After marginal gains in the past year, the index for equities lost a single point in December to sit at +6, the only single-digit category. The stocks index reflects 34 per cent who said it’s a good or very good time to invest in stocks, either directly or via mutual funds, while 27 per cent view equities as a bad choice. Another 23 per cent felt it’s neither a good or bad time to buy shares.
As well as evaluating the six investment categories, the same question was asked of four investment vehicles.
- Among Canadians’ favourite investment vehicles, Registered Retirement Savings Plans regained territory by climbing back 11 points in December. At +53, the latest result reflects 65 per cent of respondents who feel it’s a good or very good time to put money into RRSPs, while 12 per cent said they feel it is a bad or very bad time.
- Registered Education Savings Plans also gained 11 points, to reach +44 in the latest poll. Some 58 per cent of those surveyed said now is a good time to invest, compared to 14 per cent who disagreed.
- At + 28, the index for mutual funds was up seven points from the last quarterly survey, reflecting 46 per cent who said now is a good or very good time to invest in mutual funds, while 18 per cent said it was a bad or very bad time. Another 22 per cent answered that it was neither a good or bad time for funds.
- Segregated funds, perhaps the least understood of the investment vehicles, showed a six point increase in the latest poll to stand at +17.
The poll by Omnitel, a division of Maritz Research, was conducted with 1,000 Canadians aged 18 and older between November 29 and December 4, 2007. The results have a margin of error of +/- three percentage points, 19 times out of 20.
About Manulife Financial
Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$399.0 billion (US$400.5 billion) as at September 30, 2007.
Manulife Financial is one of two publicly traded life insurance companies in North America whose rated life insurance subsidiaries hold Standard & Poor’s Rating Services’ highest “AAA” rating and Moody’s Investor Services’ second highest “Aa1” rating, both representing financial strength.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘0945’ on the SEHK. Manulife Financial can be found on the Internet at www.manulife.com.