Those earning S$5,000-S$10,600 monthly in S'pore not investing money as wisely as richer peers

A new report by Standard Chartered has found out how people in Singapore and Asia manage their savings and that it makes them less well-off over time.

And it appears the rich have ways to secure their riches that are not utilised by the emerging rich.

The bank’s Wealth Expectancy Report 2019, published on Thursday, Dec. 19 surveyed 10,000 emerging affluent, affluent, and high-net-worth individuals across Asia on their saving and investment habits.

The respondents included 976 from Singapore.

Definitions

In Singapore, the monthly incomes of the different groups were defined as:

Emerging affluent

Monthly incomes between S$5,000 and S$10,600.

Financial goal: Saving for retirement.

Affluent

Monthly incomes above S$10,600.

Financial goal: Saving for their children’s education.

High-net-worth

Assets worth S$1.3 million and above.

Financial goal: Property investments.

Differences in how they invest

Over 70 percent of Singapore’s emerging affluent use savings accounts to hold their wealth.

Just over 20 percent of this group use real estate investment trusts (Reits).

In contrast, more affluent and high-net-worth individuals parked their savings in equities and Reits, which historically give better returns.

The report said this move could have helped them grow their wealth faster.

Some 40 percent of people in these two wealthier groups used digital investment tools and online investment portfolios, the report also said.

About one-quarter of the emerging affluent did so in comparison.

Savings eroded by inflation

This indicates that savings accounts to grow wealth is a favoured method, as it affords capital protection and liquidity.

However, this method comes at the expense of returns once inflation has been factored in, Standard Chartered’s Singapore head of retail banking, Dwaipayan Sadhu said.

The bank’s predictions are dire for all three groups of respondents though.

The three groups were likely to have insufficient retirement savings to maintain their lifestyles, despite their affluence.

The report estimated that the Singapore respondents would have incomes of about S$9,000 a month during retirement, compared to their average current monthly spending of around S$17,000.

This is based on a projected life expectancy of 91 years.

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