Inflation, high living costs push seniors to riskier investments

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Despite the rising cost of living and the need for more cash, even simple investing concepts still confuse many people, which helps explain why about four in 10 Canadian investors aren't sure what ETFs represent and don't know what a dollar costs. The average is, according to a recent CIBC Investor's Edge survey.

Overall, 48 per cent admitted they do not invest new money every year, and only 56 per cent said they were comfortable investing their own money, with 65 per cent citing a lack of knowledge and 57 per cent being afraid of losing money. .

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Despite the fear and lack of knowledge, four in five people say knowing how to invest is important and that having more information will help build their confidence.

Luka MarjanovicManaging Director and Head of CIBC Investor's Edgeoffers his perspective on what investors should know about investing.

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Q: What separates people's investment habits by age group and how important is it for older Canadians to stay or get into investing?

a: The cost of living is a major concern for Canadians of all ages. We know that 71 percent of investors are doing this to combat the rising cost of living. Where we see some difference is in the approach taken by different demographics.

Data suggests that compared to men, women tend to be more likely to own Guaranteed Investment Certificates (GICs), less likely to own stocks, ETFs, and mutual funds, and statistically less likely to own cryptocurrencies. People over 55 are more likely to own ETFs and cryptocurrencies, but are more likely to own GICs than their younger peers. The younger age group, between the ages of 18 and 34, is much less likely to own mutual funds.

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Risk plays a role in these decisions, but education and keeping up with the latest investment trends are factors as well.

Q: The traditional rule has been to move more to fixed income as you get older, but has that changed as we live longer and need more money?

a: Fixed income investments have long been an attractive option for seniors looking to lower their risk profile, but as interest rates decline, we are seeing increased appetite for risk among this group and a growing interest in stocks and ETFs.

Longer life expectancy and a sharp increase in the cost of living mean that older generations are seeing the purchasing power of their savings diminish, and high-risk, high-return investment vehicles are one way they are seeking to address it.

A 2023 survey by CIBC found that nearly two-thirds of Canadians who have not yet retired are concerned about running out of money during retirement and only 41 per cent feel confident they are saving enough to meet their retirement goals.

Q: What are some of the investment themes you see?

aInterest in government investment funds and fixed income products has declined since reaching its highest levels late last year, and interest in stocks and ETFs has also increased in light of market performance and expectations of lower interest rates.

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Across the board, Canadians are keen to build their investing knowledge: 79 per cent said knowing how to invest is important, and 73 per cent said they would like to know more, which is probably why more and more clients are adopting a mix of direct investing. and managed investment.

(By the way, European Training Foundation It stands for exchange-traded fund, which allows you to invest in stock indices, sectors, different topics and even Private equity At a much lower cost than mutual funds. Dollar-cost averaging is the practice of investing the same amount of money on a regular basis, regardless of the investment price. This strategy is designed to spread out the amount of money you invest over time so you don't have to worry about timing the market.)

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