CIBC Poll: Nearly half of Canadians don't know what investment return they need to retire successfully

Key is to build an investment plan constructed for the volatility that is the new market reality, says CIBC Asset Management President

TORONTO, Feb. 15, 2012 /CNW/ - Nearly half of Canadians don't know what rate of return they require on their investments to achieve their retirement goals, according to a new CIBC (CM: TSX) (NYSE: CM) poll conducted by Harris/Decima. This is causing many Canadians to delay investment decisions that put their retirement plans in jeopardy, says Steve Geist, President of CIBC Asset Management.

Key findings of the poll include:

  • 45 per cent of all Canadians say they do not know the annual rate of return they need from their investments to meet their retirement goals
  • In choosing investment products 57 per cent said they are most interested in low risk, guaranteed or no-risk (i.e. leave in cash) investment options
  • 28 per cent expect their 2012 rate of return to be less than in past years

"The fact that almost half of Canadians don't know what return they need to meet their retirement goals underscores why so many people feel angst about their retirement plans," adds Mr. Geist. "When you don't know what rate of return you need, it is very difficult to make an informed decision on what to invest in. This is where the input of an expert financial advisor can be invaluable."

Recent CIBC polling found that 31 per cent of Canadians aged 55-64 and 47 per cent of Canadians aged 45-54, say they do not feel financially prepared for retirement.

While nearly half of Canadians responded that they did not know what rate of return they require on their investments to ensure they are financially prepared for their retirement, most are looking at investing in products that generate little in the way of return - and in many cases less than the rate of inflation. The poll found:

  • Over half of Canadians (57 per cent) indicated they were most interested in low risk, guaranteed and no-risk (i.e. leave in cash) investment options
    • 29 per cent are most interested in low risk products
    • 16 per cent are most interested in guaranteed products
    • 12 per cent are most interested in no risk products (i.e. leave in cash)
  • 29 per cent were most interested in medium risk investment products, like Fixed Income and Balanced Mutual Funds.
    • 7 per cent are most interested in higher risk products

Mr. Geist is concerned that this investment approach is actually putting Canadians further out of touch with their retirement goals.

"Many Canadians don't realize the importance of the returns they achieve," he says. "For many people, adding a percentage point or two to returns can have more impact on the nest egg than their annual contribution."

He says that a different investing approach is required these days. "It is critical for Canadians to understand and manage to market volatility. With the help of a financial advisor, you need to review what is in your portfolio and look at new types of investment solutions, carefully constructed to give you an advantage in the volatility that is the new market reality."

KEY POLL FINDINGS

Annual rate of return Canadians need from their investments to meet retirement goals?
 
Less than 3%     7%
3% - 4.9%     10%
5% - 6.9%                                   11%
7% - 9.9%     8%
Over 10%     8%
Do you not know    45%       
   
Percentage of Canadians that do not know what annual rate of return they need from their investments to meet retirement goals, by region?
 
National Average     45%
Atlantic Canada    46%
Quebec     45%
Ontario     47%
Manitoba/Saskatchewan                56%
Alberta                                   40%
British Columbia    41%
   
Percentage of Canadians that do not know what annual rate of return they need from their investments to meet retirement goals, by age?
 
National Average    45%
18-24      66%
25-34      52%
35-44      57%
45-54      37%
55-64      35%
65 and over     36%

Types of investment products Canadians are most interested in, by region:

  Total Atl. Que. Ont. Sask./Man. Alb. B.C.
Medium risk        29% 27% 20% 32% 15% 36% 33%
Low risk 29% 31%    34% 28% 28%  24% 24%
Guaranteed 16% 8%       22% 16%   16% 10% 15%
No risk 12% 10%    19% 9% 19%  8% 11%
Higher risk 7% 7%     2% 7% 3% 13% 11%

Results are based on a CIBC poll conducted by Harris/Decima, via teleVox, which surveyed 1,005 Canadians. The associated margin of error is +/- 3.1%, 19 times out of 20. Polling was conducted between December 8th to 12th, 2011.

CIBC is a leading North American financial institution with nearly 11 million personal banking and business clients. CIBC offers a full range of products and services through its comprehensive electronic banking network, branches and offices across Canada, and has offices in the United States and around the world. You can find other news releases and information about CIBC in our Press Centre on our corporate website at www.cibc.com.

 

SOURCE CIBC

For further information:

Kevin Dove, Head of External Communications, 416-980-8835, Kevin.dove@cibc.com


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