In the wake of the latest property collapse to hit Australian wallets, research has shown that investors are too busy chasing returns to worry about company stability.
Australian and New Zealand investors are too focused on chasing returns and are ignoring the fundamental stability of the companies they invest in, according to new research sponsored by investment bank Rabobank.
It showed that 72 per cent of New Zealanders said interest rates were the most important factor when choosing an investment product but less than a third considered the guarantees and protection offered by the company.
"With the collapses of a number of financial institutions in Australia and New Zealand recently, investors have lost over a billion dollars chasing higher returns without concerning themselves enough with the credit rating of the institutions," Rabobank Australia and New Zealand head Bryan Inch said.
He said it was a common misconception among retail investors that most banks have an AAA credit rating from an agency like Standard & Poor's or Moody's.
In the last 18 months, Australian investors witnessed the collapse of four Australian financial institutions with disastrous results for those involved.
Property financier Bridgecorp was the latest institution to implode, following the Westpoint debacle in November 2005, the failure of Fincorp in April this year and the collapse of property group ACR in May.
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