SINGAPORE - Investors here have unrealistic expectations and a short-term investment horizon.
Nevertheless, they also have a strong confidence in their investment understanding, a survey by global asset management company Schroders revealed.
Schroders surveyed 20,000 retail investors in 28 countries, including 500 in Singapore, and found that investors here are overly optimistic about income returns.
An average investor here expects a minimum return of 9.2 per cent per year. This seems unrealistic given the current average stockmarket yield of 3.8 per cent, said Schroders.
This "over-optimism" is particularly pronounced among Millennials, who expect a 9.6 per cent return on their investment per year compared to 8.9 per cent for investors aged 36 and over, said Schroders.
Investors in Singapore also have a short-term investment view, the survey found. While a minimum of five years is usually recommended by asset managers, investors here only stay invested for 3.06 years on average. Millennials are even more short term-oriented, as they hold their investments for an average of 2.61 years, compared to 3.47 years for their older counterparts.
But Singapore investors' self-belief is high, with more than half (55 per cent) describing themselves as having a "higher-than-average" understanding of investments.
This confidence is higher among Millennials, with 61 per cent of them holding to this view, compared to 50 per cent of older investors. Very few Millennials - 11 per cent - feel they have "less-than-average" understanding.
Said Susan Soh, country head of Schroders Singapore: "In today's low interest rate environment, Singapore investors' return projections are extremely high.
"In order to minimise income shortfall, investors need to actively consider their investment needs and align their risk-adjusted return profile in light of current market conditions."
Schroders also said investors should think long term when they invest - and stay invested for at least five years.
Any period shorter will often prove insufficient to counteract the volatility associated with various investment types, such as stocks, Schroders added.