Money in the Bank

For about a dollar, anyone can buy the fantasy of being wealthy. For many Americans, lottery tickets are worth the price for the daydream of a lavish home (or no mortgage), an exotic trip, and financial freedom. Outside of the United States, however, many people's first priority for a windfall is to save or invest.

Ipsos World Monitor asked respondents in China (including Hong Kong), Japan, urban Mexico, urban Russia, South Korea, and Taiwan what they would do if they unexpectedly received a large sum of money, equivalent to a year's household income. In each country except Russia, the majority said they would save or invest the money.

Marketers expecting their own windfall of consumer spending in prosperous Asian economies might take note of deeply ingrained habits of saving that are strongest in the fastest growing economies of Hong Kong, urban China, and Taiwan. Japanese and South Koreans have loosened their purse strings slightly, but are slowly recovering from a deep recession. Is it just a coincidence that consumers in the economies that are flooded with new money from overseas markets are also the ones most inclined to save and invest?

Urban Mexicans seem to be emulating Asians in their commitment to thrift and paying off their debts with any new windfall while, ironically, Russian consumers, who are without doubt the poorest of the bunch in terms of their incomes and relative purchasing power, are the ones reporting they would spend with the most enthusiasm--if only they could get a little ahead of the game. Perhaps because of long-time economic instability or privations, Russians would spend first and save second.

Investing in Confidence While American investors seem eager to invest in the burgeoning Asian economies--particularly in China--brokers have some trust building to do before most of the survey respondents would consider putting their windfall into stock markets. Only 18% of Taiwanese and 15% of Chinese and Japanese respondents chose the stock market as a worthy place to invest most of a windfall. Stock-shocked South Koreans (6%), Mexicans (4%), and Russians also displayed very little interest in investing in equity markets.

The real estate boom, however, seems to be going global. The preferred investment option for Russians (43%), and a popular option for South Koreans (38%), Mexicans (32%), and Chinese (25%), the dream of home ownership or investing in real estate held more appeal than the stock market or gold or jewelry. Japanese, however, almost totally shun real estate as an investment, with only one in twenty (5%) indicating they would risk investing in their country's expensive real estate market, even though prices have fallen from the astronomical values of a few years ago.

Money in the Bank But nothing was `money in the bank' like, well, money in the bank. While a bank or credit union might seem an obvious choice to North American savers accustomed to federal depository insurance schemes and other safeguards, this decision represents a significant vote of confidence in countries such as China, where the banking system is of more recent vintage--half of the urban Chinese in the sample (52%) feel confident enough to entrust their windfall to the banks instead of other alternatives.

Japanese savers and investors are the most likely to choose banks, with fully two-thirds (66%) making this choice, even though the interest on savings is paltry (only a fraction of a percentage point) and the financial health of many large banks has been questioned by overseas investors. Roughly half of urban Mexicans (52%), South Koreans (47%), and Taiwanese (47%) are comfortable stashing their windfall in a bank, compared to the lure of other investments. Russian banks stand out as least likely ones to get a share of any windfall, with only about one in five (22%) urban Russians indicating that they would entrust their loot to a bank instead of another alternative.

Bankers and other purveyors of low-risk investments are likely to find many prospective clients among Asian and Mexican investors who are reluctant to risk much of any financial windfall on their recovering stock markets. Outside of Japan, the real estate brokers are likely to do better than stockbrokers, as many people dare to dream of home ownership or investing in real estate. Even in urban Russia, the possibilities of real estate as a place for a nest egg hold more appeal than riskier investments like stocks or last-ditch alternatives, such as gold or jewelry. Stock markets haven't regained their luster anywhere, but the prospect of a bank account or foothold in the real estate market captured the imagination of those consumers who can contemplate the possibilities of having some spare cash to invest.