Most Canadians invest, but nearly half stash savings as cash

Poll uncovers near-even split between investors and advisors, as well as Canadians’ reliance on financial advice

Most Canadians invest, but nearly half stash savings as cash

While more than three fourths of Canadians (77%) have investments, it seems many are still playing it too safe when it comes to their savings — and possibly missing out on long-term opportunities.

According to BMO’s latest RRSP study, which drew from an online survey of 1,500 Canadian adults, there’s a near-even split between Canadians who invest their savings (53%) and those who keep those savings as cash (47%).

"There is a place for cash or short-term investments when meeting your short-term goals,” said Robert Armstrong, Director, Multi-Asset Solutions, BMO Global Asset Management. “However historical evidence suggests individuals who hold short-term investments, such as cash, to meet their long-term goals clearly miss out on creating longer-term wealth.”

From a generational perspective, millennials were more likely to hold savings in cash (57%); Gen Xers and Boomers, meanwhile, were more prone to putting their savings in investments (54% and 64%, respectively). Geographically, residents of the Atlantic provinces showed the greatest bias toward holding their savings in cash (51%), while only 43% of those in the Prairies held the same preference.

Focusing on Canadians who are investing, just over six tenths (62%) said they have cash in their TFSAs, which makes up 41% of their account holdings. Another 43% said they have mutual funds in their TFSAs, with mutual-fund assets representing a 24% share of their TFSA account. Another 29% and 26% of respondents said they hold stocks and GICs in their TFSAs, respectively.

Meanwhile, 45% said that their RRSPs include mutual funds, which make up 42% of their account. Roughly a third (32%) said they have cash in their RRSP, with an average cash makeup of 22% in those accounts. Stock and GIC use in RRSPs was reported by 22% and 20% of respondents, respectively.

“Every Canadian is unique with their personal investing strategy,” Armstrong said. “It is important to understand the benefits of owning a diversified investment portfolio via different investment solutions.”

The survey also found that among Canadian investors, just over a third see themselves as knowledgeable in it; two thirds of all Canadians (67%) said they could not list the differences between an RRSP and a TFSA. Against that psychological backdrop, a majority of respondents consistently expressed a belief that they need advisors to help them meet their financial goals.

The percentage of people who rely on advisors varied across jurisdictions, with the highest share observed among Atlantic Canadians (78%) and the lowest among Albertans and Ontarians (62% and 65%, respectively). Among those who depend on professional advice, 36% admitted being uncomfortable when making unadvised financial decisions, and 25% don’t know how to manage investments by themselves.

For half of Canadians, the main reason to seek financial advice is that a financial advisor is better equipped to help them meet their goals. Two thirds of Canadians (66%) said they talk with their advisor at least a few times every year; that includes 37% who have conversations a few times a year and 22% who do so once every few months.

“All Canadians should strive to develop a comprehensive financial plan,” Armstrong said. “A financial professional can help understand and identify the right mix of investments to allow Canadians to take their plan to the next level in order to achieve their long-term goals and dreams.”


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