SINGAPORE investors face a potential shortfall of 3.6 per cent in annual returns on their investments to keep up with the rising costs of their financial goals, including saving for retirement and higher education.
But even if half of their cash holdings were shifted to local equities or bonds, the potential shortfall would improve only marginally to 2.69 per cent and 3.08 per cent, said Manulife in a report on Wednesday.
"Thus, we feel that it is important for Singaporean investors to take advantage of their economy's strong ties to the rest of Asia and the world and to diversify their current cash holdings into multi-asset portfolios that mix exposure to the Singapore market and other global markets, with the potential to deliver attractive returns," it said.
The Singapore investor is also slightly worse off than his counterpart elsewhere. The average investor in Asia faces a potential investment returns shortfall of 3.3 per cent a year.
This is a result of their financial goals rising in costs by 6 per cent a year, and their self-reported investment portfolios delivering an average of 2.7 per cent total returns each year, said Manulife.
Indonesian investors face the highest shortfall of up to 6.6 per cent, while Japanese investors have it the best, with extra returns of 2.7 per cent.