Singapore investors - cash-rich and risk-averse

Singapore

CASH-RICH Singapore investors are confident about their financial future and in the local stock market, and save proportionately more than their peers around the world. But they are also reluctant to take risks, and typically seek guaranteed returns from their investments, a survey of 1,000 local investors by asset manager BlackRock has found.

Sabrina Gan, BlackRock's Singapore head of retail distribution, said: "Investors need to understand simple concepts like risk and return. If they want everything to be guaranteed, that will not meet their return requirements and might not even beat inflation expectations."

Apart from pushing investor-education initiatives, BlackRock is introducing more investments that generate income, are easy to understand and have lower volatility, she said. The survey found that Singaporeans are holding 46 per cent of their assets in cash, even as they recognise that the ideal cash allocation is lower - at 33 per cent.

Asked for the key reasons for holding cash in their portfolios, 61 per cent said that they want to be flexible and keep their options open; 46 per cent said that having cash makes them feel safe and 41 per cent said that they are cautious with their money. Asked what would encourage them to invest more, 59 per cent said that they want a guaranteed return from their investments; 42 per cent said that they want to know that they will not lose their initial investments, and 40 per cent said that they are seeking more information about investing.

BlackRock has US$4.5 trillion under management. Its Global Investor Pulse Survey held in July and August polled 27,500 individuals across 20 markets for their views on investing and savings. The Asian markets surveyed included Hong Kong, Taiwan, China, Japan and India.

In the Singapore market, almost two-thirds of the 1,000 individuals surveyed were retail investors with less than S$200,000 in investable assets; a total of 350 investors had assets above that threshold.

In Singapore, 57 per cent of those surveyed said that they were positive about their financial future, roughly in line with the global average of 56 per cent. About half were optimistic about the local stock market's performance in the next 12 months; a third were pessimistic and the rest, undecided. The survey noted that Singaporeans typically save 29 per cent of their take-home pay, significantly higher than the global average of 20 per cent. Some 59 per cent said that they have started saving for retirement.

Their top three financial concerns are high living costs, healthcare costs and rising prices. Their top three financial priorities are saving money, investing for retirement and growing their wealth. For them, these priorities came in higher than global averages.

Singaporeans are reasonably well-read compared to their peers in Asia. Their top information sources are specialist finance and news websites (50 per cent in Singapore, versus 51 per cent in Asia) and newspapers and magazines (45 per cent, versus 40 per cent in Asia). Compared to the rest of Asia, they are somewhat less likely to get information from fund supermarket platforms and material, family, friends or financial advisers, brokers and wealth managers.