One question households may increasingly start to consider is: am I happy with my rate of return?
A turbulent time over the past four years has had many opt for the relative security of bank deposits (or, in the case of KiwiSaver, conservative funds that are heavily weighted to cash or fixed income).
However, interest rates are low, and future lifts are likely to be gradual and still seemingly distant. Sharemarkets have delivered strong capital gains at times since the Global Financial Crisis started to abate, and some shares have been delivering high dividend yields. But share prices can get whipped around by global volatility, and Europe has plenty of potential to snatch market dislocation from the jaws of stability.
Households are increasingly getting their financial house in order and are in a position to build up cash. If a benign risk environment prevails, they may develop an appetite and greater understanding for a wider range of assets than past favourites of bank deposits and bricks and mortar.
Households have improved their savings since the recession ended. Recent household deposit growth within the banking system has touched 8-9 per cent per annum growth rates recently, after dipping to around 2 per cent in the immediate wake of the recession. The household measure of saving (income less expenditure) turned marginally positive in 2011 for the first time since 1993. Households have clearly been able and willing to accumulate spare cash, notwithstanding the modest nature of the economic recovery and low level of interest rates relative to the last boom.