Speaking at the 2012 New Zealand Finance Colloquium, held at Massey University's Albany campus last week, Dr Matthews said demographic characteristics had a substantial impact on the choices people made about KiwiSaver funds and retirement savings more generally.
When it came to funding selection, she found there were significant differences based on gender. Men are more likely to invest in aggressive and growth funds, while women are more likely to choose conservative funds.
"Males are risk-takers, it's in their choice of car or their investment fund," she says. "But when it comes to long-term savings, risk-taking can actually be an advantage."
Dr Matthews also found that men are more likely than women to have prior savings when joining KiwiSaver. Just over half of male respondents said they had savings already, while only 38% of women did.
"These figures reflect and confirm, quite disappointingly, the difference between males and females and the level of interest they take in financial planning," Dr Matthews says. "It's important for all New Zealanders to be better educated about their personal finances, but this is particularly so for women."
Other demographic factors, including age, ethnicity, education, and income, can also influence the choices made about retirement savings. Dr Matthews found that those with bachelor and higher degrees, and those in households with a pre-tax income of $100,000 or more, were more likely to choose aggressive and funds.
On the other hand, both the youngest and oldest age groups were more likely to be invested in funds. While this might be appropriate for the life-cycle stage of older investors, it might not be so appropriate for younger, longer-term investors.
Result:
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Correct answer: whether
Explanation: 'Whether' is used to introduce alternatives or choices, fitting grammatically and contextually as it presents the idea of risk-taking in various contexts, such as car choices or investment funds.
Meaning: 'Whether' indicates a choice between two or more possibilities, in this case, the different areas where risk-taking is evident.
Wrong options:
- shatter: 'Shatter' means to break suddenly into many pieces, which does not fit the context of discussing choices or risk-taking.
- rather: 'Rather' is used to express preference and does not appropriately introduce the idea of alternatives in this context.
- other: 'Other' implies an additional option but does not grammatically or contextually connect the two examples of risk-taking.
Correct answer: being
Explanation: 'Being' serves as a gerund that fits grammatically in the phrase, indicating the state or condition of making choices about retirement savings, aligning well with the surrounding context.
Meaning: 'Being' refers to the state of existing or occurring, in this case, the act of making choices regarding retirement savings.
Wrong options:
- about: 'About' is a preposition that does not fit grammatically in this context, as it does not convey the state of making choices.
- therefore: 'Therefore' is a conjunctive adverb that indicates a conclusion, which does not fit the grammatical structure of the sentence.
- rather: 'Rather' expresses preference and does not appropriately convey the state of making choices in this context.
Correct answer: stimulating
Explanation: 'Stimulating' is an adjective that describes the type of funds, fitting grammatically and contextually as it aligns with the idea of aggressive investment options that are appealing and engaging.
Meaning: 'Stimulating' means exciting or encouraging, suggesting that these funds are designed to attract investors looking for growth.
Wrong options:
- fulfill: 'Fulfill' is a verb that means to complete or satisfy, which does not fit grammatically as it does not describe the type of funds.
- growth: 'Growth' is a noun that could describe a type of fund but does not fit in this context where an adjective is required to describe the funds.
- tax: 'Tax' is a noun that refers to a financial charge and does not appropriately describe the nature of the funds in this context.
Correct answer: conservative
Explanation: 'Conservative' is an adjective that describes a type of fund, fitting grammatically and contextually as it aligns with the investment strategy typically favored by older investors.
Meaning: 'Conservative' refers to a cautious approach to investing, often prioritizing capital preservation over high returns.
Wrong options:
- exact: 'Exact' is an adjective that means precise or accurate, which does not fit the context of describing a type of investment fund.
- special: 'Special' is an adjective that implies uniqueness but does not appropriately describe the nature of investment funds in this context.
- reserve: 'Reserve' is a noun that refers to a supply kept for future use and does not fit grammatically or contextually as a description of funds.
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