Survey shows it’s easy to go from “average investor” to “smart saver” in three easy steps

Think you’re too busy to stay on top of your finances? BlackRock’s Investor Pulse survey revealed that spending just a bit more time each month could have a positive impact on your future financial well-being.[i]

Karrie Van Belle, managing director of BlackRock Canada’s marketing and communications, answers questions about the survey findings.

What is a “smart” saver, and what can we learn from them?

Smart savers are individuals engaged with their money.[ii] We found that what makes them smart is that they care – they make time for it.

When we looked at the data and compared smart savers to the average investor, we were surprised to find that it only takes a few small changes. One of them is finding just a bit more time. The average Canadian spends about 2.4 hours each month reviewing their finances, while the smart saver is spending about four. It’s a difference of less than half an hour each week.

In that extra time, you can read a little bit more and get a little bit more educated. You’re paying that much more attention. You’re making it a priority. It’s not nearly as overwhelming as people tend to think – that extra 1.6 hours each month is within reach for most people, and our survey results demonstrate that they can make a difference.

Smart savers also seek advice. It could be conversations with informed family and friends, it could be professional advice, it could be credible online education – whatever form it takes, the result is that they’re more informed about their money and about investing.

It adds up to a remarkable difference in outcome: Savings and investments for the average Canadian is $46,600; for the smart saver it is almost triple that with a median of $148,500, while the smart saver’s personal income is only, on average, a third more.

The survey results also show that the investment portfolios of smart savers are generally more diversified than those of the average Canadian. Do you have any insight into why that is?

Smart savers are willing to take on a bit more risk and are more likely to invest in stocks. They’re putting more of their cash to work and they have a bit more diversity in their asset allocation.

On average Canadians have 62 per cent of their portfolios in cash and cash investments, but when we asked, “How much do you think you should have in cash?” they said 27 per cent. They recognize that they are holding on to too much cash. They’re trading off one risk for another: They have the short-term safety and flexibility cash provides, but they’re ignoring the long-term risk of potentially not having enough in retirement, as cash comes with a cost after factoring in inflation and taxes.

Smart savers are more diversified – they’re balancing short-term and long-term risks to achieve their financial goals. While smart savers are still holding onto more cash than the average Canadian thinks they should, they have at least reduced levels to 53 per cent. Furthermore, smart savers believe they should have even less in cash at 23 per cent.