Singaporeans hold too much cash, lose out on investment returns

On average, Asians hold 37 per cent of their assets in their local currency, while Singaporeans hold about 33 per cent in Singapore dollars. -- PHOTO: REUTERS
On average, Asians hold 37 per cent of their assets in their local currency, while Singaporeans hold about 33 per cent in Singapore dollars. -- PHOTO: REUTERS

SINGAPORE - Singaporeans who keep a high level of cash in their portfolios lose out on investment returns, according to a new report by Manulife Asset Management.

They face a potential annual returns shortfall of 3.6 per cent when it comes to matching the level of growth in the cost of their financial goals.

The cost of the top five financial goals for Asian investors has risen an average of 5.8 per cent a year over the past five years, while self-reported investment portfolios delivered average returns of just 2.2 per cent a year in the same period, Manulife says.

The five most cited financial goals in Asia are: saving for retirement, saving for a 'rainy day', saving for children's higher education, maintaining their current lifestyle and saving for or purchasing a home or paying down a mortgage.

Mr Michael Dommermuth, executive vice president, head of wealth and asset management, Asia, Manulife Asset Management, said: "For Singapore...we found that higher education has the potential to deliver attractive returns in the island nation's knowledge-based economy, justifying the astonishing 12.3 per cent a year cost growth rate over the past five years."

According to the survey, the average Singaporean holds 33 per cent of their assets in local currency.

This number is slightly lower than the average of 37 per cent of assets across Asia held in local currency.

The report, part of Manulife's Aging Asia series, examined eight Asian economies - China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, and Taiwan.