The global financial crisis is still having its effect on Singapore investors, who are now among the most conservative in the world, according to a new survey.
It found that 63 per cent of Singaporeans feel that their investment decisions are still "somewhat" or "strongly" affected by the financial crisis that erupted in 2008.
This figure is the highest in Asia, surpassing Hong Kong (61 per cent), Taiwan (57 per cent) and China (53 per cent), and above the global average of 56 per cent.
The survey, which was conducted by Legg Mason Global Asset Management between January and February, polled 900 respondents in the United States, 7,200 in Europe (Britain, France, Spain, Italy, Germany, Switzerland, Belgium and Sweden) and 4,500 in Asia, including 900 in Singapore.
CASH IS KING AMID GENERALLY PESSIMISTIC INVESTMENT OUTLOOK
Singapore respondents identified unemployment as a top concern and they were also less optimistic than many of their global peers in terms of the investment outlook for the coming year.
They report net optimism of just 9 per cent, significantly lower than the Asia (ex-Japan) average of 18 per cent and the global average of 20 per cent.
This pessimism is clearly reflected in asset allocation. Singapore investors showed an overwhelming preference for defensive assets, which accounted for about 68 per cent of their self-reported allocations. This comprised 38.5 per cent in cash, 16.8 per cent in fixed income, 8.7 per cent in investment real estate, and 3.8 per cent in gold and precious metals.
Asia actually led the globe in allocation to cash, with Singapore trailing only Japan (53.4 per cent) and Hong Kong (39.7 per cent) and well ahead of the global average of 32.7 per cent.
Mr Ajay Dayal, investment director at Legg Mason Global Asset Management, says: "We see an opportunity for Singaporeans, who are generally knowledgeable about investments and investment markets, to potentially boost their investment returns by shifting a portion of their cash holdings to higher risk and potentially higher return assets such as equities."
Interestingly, Singapore investors themselves identify domestic (29 per cent) and international (32 per cent) stocks as the assets that offer the best opportunities over the next 12 months.
SINGAPOREANS SAVE TO MEET AMBITIOUS GOALS
Reallocating assets to drive potentially higher returns could help Singapore investors meet their ambitious work, home and retirement goals.
The survey found that most respondents had yet to achieve work goals such as "earning as much money as I can" and "starting a business/working for myself".
By contrast, work goals not yet achieved such as taking regular career breaks, working just enough to have a nice lifestyle or doing something to give back to the community take a back seat to boosting earning power through career pursuits.
Maximising investment returns could also help Singapore investors reach certain goals, such as seeing the world, building an inheritance for children and being financially comfortable.
COMBINING PUBLIC PENSION AND SAVINGS TO SUPPORT RETIREMENT
The study noted that 71 per cent of Singaporeans prioritise the need to have enough money to maintain a pre-retirement standard of living.
This is the second highest level in the world, alongside Brazil and behind only Mexico (77 per cent). Among the other most frequently cited goals were enjoying a good retirement income (this was cited by 75 per cent), retiring early (74 per cent), travelling extensively (68 per cent) and having enough money so that "I can help with the expenses of my grandchildren" (68 per cent).
Although pension pots globally fall well short of required retirement income, savings are highest in countries with mandatory retirement plans like Singapore and Australia.
Mr Lennie Lim, Legg Mason's Singapore-based regional head for Asia, says he expects most Singaporeans to finance their retirement via a combination of mandatory pension benefits and income from their retirement portfolios.
"This once again raises the importance of ensuring that returns on savings are maximised by reallocating a portion of high cash holdings towards more growth- or income-oriented asset classes," he adds.