Canadians remain confident about their financial futures despite challenging circumstances, according to one of two studies commissioned by Canada Investment and Savings, the Special Operating Agency of the federal Department of Finance responsible for Canada Savings Bonds.
The agency released the study to accompany today’s launch of the 2003-2004 Canada Savings Bond season. It runs until April 1, 2004.
The National Savers Study, which is conducted annually to shed light on Canadians’ personal savings habits and goals, found that that 61% of Canadians expect their personal financial situation to improve over the next four years, down only slightly from 63% in 2002, and above the levels of 58% in 2000 and 54% in 1997.
The study also found eight in 10 Canadians are satisfied or somewhat satisfied with their financial situation, a trend that has remained stable over the past five years.
This year, close to half of those surveyed said they were more conservative than aggressive in their approach to investing.
“Canadians right across the country are resilient and remain optimistic about their financial future,” said Jacqueline Orange, president and CEO of Canada Investment and Savings. “Having a savings plan and minimizing the risks they take with their money are two of the biggest ways to help bolster Canadians’ confidence and outlook for the long term. Not surprising, the study also found that security of savings ranked as the number one priority for 68% of those surveyed, ahead of potential rate of return.”
Overall, when it comes to financial goals, Canadians ranked “achieving greater financial security” at the top of the list. Over the past two years “paying off debt” has become an even greater priority than “saving for retirement.” The study showed that middle income Canadians in the 25-45 age group are currently paying significant attention to paying down debt.
The results of the Savers Study represent the opinions of 1,500 Canadians interviewed by telephone in September 2003. The margin of error is +/- 2.5% 19 times out of 20.
A second study benchmarked the performance of Canada Savings Bonds and Canada Premium Bonds against other investment products such as GICs, Canadian equity and bond funds, and the TSX Composite Index Fund over the past 1, 3, 5, 10 and 15 years.
The study showed that both CSBs and CPBs outperformed the other product categories measured more than 60% of the time, based on holding the bond to maturity and reinvesting in a new issue. In addition, CSBs and CPBs were the top performers in the five-year term category, showing that they also performed well in the medium term.
The study, conducted by an industry financial analyst and writer, also found that CSBs yielded better returns than the average one-year GICs in nine out of 15 years, while CPBs, introduced in 1998, always outperformed the average one year GIC from major financial institutions.
Three reasons are given for the top performance of the bonds: first, multi rate guarantees cushioned CSB investors as interest rates went down; second, in years when interest rates rose, CSBs increased their rates too, so that investors would continue to receive a competitive return; and third, CSB and CPB investors were able to maintain their principal and interest during recent market fluctuations.