Latin Americans Facing Their Financial Future with Optimism,
Confidence
Majority of Latin Americans Would Like to Invest Internationally
Yet, Many Are Not Saving Enough for Retirement, See a Need to Make
Their Money “Work Harder”
NEW YORK--(BUSINESS WIRE)--
Latin Americans are far more optimistic and confident than the world
generally when it comes to their financial future as well as their
savings and investment decision-making, according to results of the
latest BlackRock (NYSE: BLK) Global Investor Pulse survey.
Yet, Latin Americans have a critical challenge: In general, they have
saved far less than they will likely need to sustain themselves
financially in retirement.
The BlackRock survey, one of the largest of its kind globally, is
conducted annually on a broad range of financial and investment
management topics. This year BlackRock polled 27,500 individuals in 20
nations including, for the first time, 4,000 Latin Americans -- 1,000
each from Brazil, Chile, Colombia and Mexico (for more on the survey and
its methodology, please visit www.blackrock.com/pulse).
“The Global Investor Pulse survey clearly shows that Latin Americans are
strongly motivated to be successful savers and investors, yet have
fallen behind in some key planning areas, especially retirement,” said
Armando Senra, Head
of BlackRock’s Latin America & Iberia Region. “Across the
region, individuals urgently need to strengthen their knowledge of
effective financial behaviors, and take steps to ensure that they are
deploying their money in ways best suited to meet their important
long-term goals.”
Nearly three-quarters of Latin Americans (74 %) have a positive view of
their financial future, particularly Colombians (84%), compared with 56%
of respondents globally, the poll indicates. Nearly seven of 10 (68%)
Latin Americans are confident that they are making the right savings and
investment decisions.
Latin Americans do see risks to their financial futures, in particular,
their national economy (58%) and the high cost of living (54%). Many
Latin Americans also see worsening conditions in both their national
economy (44%) and job market (46%).
Retirement: Knowing What You Want Doesn’t Make It Happen
Latin Americans seem to have the best intentions regarding retirement
planning. They are more likely than global investors to have begun
saving for retirement (67% vs. 62%), and nearly two-thirds (63%) say
they understand how much they need to save for retirement (vs. 50%
globally).
Yet, good intentions don’t necessarily translate into effective action.
Across the region, the total amounts that Latin Americans have saved for
retirement typically equal just one to two years of their desired annual
retirement income.
For example, Colombians have saved on average $13.3m COP for retirement
– but estimate that they will need $14.9m COP in annual retirement
income. The gap between expectation and reality is even wider for
Brazilians, who have $10,069 BRL in retirement savings on average, but
say they will need $47,500 BRL annually in retirement.
Balancing Retirement Saving with Daily Obligations
Many Latin Americans report being challenged to maintain a focus on
retirement saving. Among those not yet fully retired, eight in 10 say
that they find it hard to keep up with their bills and save for
retirement at the same time. Among Latin Americans who have not started
saving for retirement, half cite “not having enough money” as a serious
impediment.
Yet, as with their financial lives generally, Latin Americans are highly
confident about their retirement prospects. Though many are concerned
that they will not be able to live comfortably in retirement, 85 % of
Latin Americans who have prioritized this goal are confident that they
will get there.
“Making retirement a financial priority is essential, but Latin
Americans need to make this commitment real by strengthening their
savings and investing efforts,” said Senra. “Increasing longevity – the
prospect of spending as much as two or three decades in retirement – has
made it more vital than ever for individuals globally to plan, save and
invest throughout their working years toward the goal of a financially
secure retirement.”
Cash Is Favored, But Many Interested in Other Opportunities
Saving money is important to Latin Americans, but they are not
necessarily putting their money in the best places now to achieve their
long term financial goals.
For Latin Americans, day to day living expenses, including routine bills
such as mortgages, rent and utilizes, consume a smaller percentage of
monthly household income than across the world generally (27% vs. 32 %).
As a result, Latin Americans are able to save (21% vs. 20%) and invest
(22% vs.17%), slightly more than the global average.
Yet, Latin Americans, like global investors, have 59 % of their
investable assets in cash -- more than double what they think they
should be holding. Four in 10 say they hold cash because it “makes them
feel safe.”
The BlackRock poll indicates that many Latin Americans do want their
money to work harder for them. Latin Americans are more willing than
global investors to take on higher investment risks to achieve higher
returns (43% vs. 32%), and many are more interested in stocks today than
they were five years ago (44% vs. 27% globally).
And even though only 13% of Latin American investors hold investments
outside their home country, 56% say they would like to be able to invest
in different countries and stock markets.
Effective Investors Do the Right Things
About one-quarter of Latin Americans (27%) are taking the right steps to
manage their finances. These "highly effective" investors live within
their means, manage their spending, limit their debt and make a greater
commitment to growing their savings and investments. These good
"financial behaviors" yield benefits both for the retirement planning
process and the investors’ overall positive outlook on their financial
futures.
Highly effective investors are often among the Millennial Generation
(40%) and Generation X (33%), with a near equal balance of men and women
(55% men vs. 45% women). These investors are also likely to be married
(55%) and typically with dependent children (70%).
A defining characteristic of highly effective investors is that they
find a way to juggle life’s immediate costs ─ such as monthly expenses,
education costs, mortgage payments ─ and still plan for long-term goals
such as retirement. They are action-oriented when it comes to
encountering both planned and unplanned life events rather than letting
things just happen, and therefore are less likely to get pushed off
track by life’s immediate pressures.
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
September 30, 2014, BlackRock’s AUM was $4.525 trillion. BlackRock helps
clients meet their goals and overcome challenges with a range of
products that include separate accounts, mutual funds, iShares®
(exchange-traded funds), and other pooled investment vehicles. BlackRock
also offers risk management, advisory and enterprise investment system
services to a broad base of institutional investors through BlackRock
Solutions®. Headquartered in New York City, as of September 30,
2014, the firm had approximately 12,100 employees in more than 30
countries and a major presence in key global markets, including North
and South America, Europe, Asia, Australia and the Middle East and
Africa. For additional information, please visit the Company’s website
at www.blackrock.com
About the Poll
One of the largest global surveys ever conducted, the BlackRock Global
Investor Pulse poll interviewed 27,500 respondents, in 20 nations: the
US and Canada; in Europe, Belgium, France, Germany, Italy, the
Netherlands, Spain, Sweden, and the UK; In Latin America, Brazil, Chile,
Colombia, and Mexico; in Asia, China, Hong Kong, India, Japan, Singapore
and Taiwan. The Latin American sample comprised 4,000 respondents. No
income or asset qualifications were used in selecting the poll's
participants, making the survey a truly representative sampling of each
nation's entire population. Executed with the support of Cicero Group,
an independent research company, the survey took place from July to
August 2014. For both the global sample and the Latin American sample of
4,000 respondents, the margin of error is +/- c.1.5%.
BlackRock
Melissa Garville, 212-810-5528
Melissa.Garville@blackrock.com
Source: BlackRock