According to financial services industry insiders, Canadians are putting more of their money in savings accounts and less in higher-risk investments. Normally, an increase of three to five percent in the amount of Canadians opening chequing and savings accounts is expected annually, but this year the number has grown by 20 per cent.
David McVay, a financial services consultant, told the Canadian Press that the change in Canadians opening up bank accounts is a substantial increase.
“Canadians are more conservative than they were in 2007,” McVay told CBC News. “We’re seeing a shift from stock investing into keeping more money in savings accounts because of the financial crisis,” he said.
Soon-to-retire baby boomers are trying to play it smart, rather than take risks that could have them putting off retirement even longer.
Banks are also picking up on Canadians’ uncertainty, and according to McVay, “the banks are marketing to the uncertainty that Canadians have about their savings and retirement plans caused by the financial crisis.” Banks can also make more money through savings accounts opposed to stocks or bonds that are doing poorly, and cater to consumers with points incentives and cash-back options.
Potential homeowners did take advantage of the better outlook during the early stages of recovery though, jumping on lower interest rates.
“We did see households, spurred by ultra-low interest rates, accumulating debt, largely for the purpose of homeownership,” said McVay, “but going forward that does need to slow and households do need to save more in order to rebalance their finances and bring down the potential vulnerabilities that households would face as interest rates rise.”