Singaporeans rely too heavily on cash in their investment portfolios and should diversify, a global investment manager has concluded from a survey of 1,000 people here.
Another key finding of the BlackRock Global Investor Pulse survey was that people aged 25 to 34 want to retire early - but underestimate how much they will need to do so.
The survey polled more than 31,000 people across 20 markets in July and August last year.
According to the survey, Singaporeans value flexibility and security in investments.
Saving money was ranked by 53 per cent of Singaporeans as their top financial priority over growing wealth at 50 per cent.
BlackRock said that was reflected in most investment portfolios, which are overweight in cash - average actual cash holding is 48 per cent compared to the ideal cash holding of just 36 per cent.
Singaporeans' allocation to other asset classes includes equities (18 per cent), property (8 per cent), bonds (5 per cent) and other alternatives (3 per cent).
The survey found the reliance on cash is likely to continue into retirement, with 38 per cent of Singaporeans planning to hold their savings in cash upon retirement.
The findings showed that Singaporeans target an annual return of 8.4 per cent across all their savings and investment products.
Mr Kevin Hardy, country head of Singapore at BlackRock, said: "There is a significant gap between current holdings and financial goals, which makes it even more challenging for Singaporeans to generate their target annual investment returns of 8.4 per cent.
"They should take positive steps to correct this by diversifying their portfolio - it is key to step out of cash for higher yields in order to meet their income expectation."
He added that some recent changes to Central Provident Fund rules had created an awareness among Singaporeans on the need to save and invest, "but they need to cultivate the right investment habits".
BlackRock also found that Singaporeans underestimate how much they need to support a comfortable retirement income because they misjudge their life expectancy.
Respondents' projections of their expected lifespan vary from 71 to 80 years, falling short of the average Singaporean's official life expectancy of 82 years.
They also underestimate the cost of retiring - most pronounced among the young, who expect to retire quite early and draw higher yearly incomes.
People aged 25 to 34 expect to retire at 52 on average and expect a yearly income of $54,792 on average.
Individuals between 55 and 64 expect to retire at 65 on a yearly income of $43,214.
Most Singaporeans also want to be financially independent in retirement, the survey found.
Of those who are not fully retired, 58 per cent say they will not rely on their children for anything, and 25 per cent will rely on their children to fund no more than 10 per cent of their retirement income.
"With a longer lifespan and rising cost of living, more needs to be done to make savings last through retirement," Mr Hardy said.
BlackRock also noted that confidence about being able to live comfortably in retirement is relatively low, with 72 per cent of Singaporeans very or somewhat concerned about this.
Forty-two per cent are not confident about being able to achieve the annual income level needed for retirement.
The majority (66 per cent) have started saving for retirement, while 34 per cent have not started preparing at all.