Last Updated on 11, August 2017
According Standard Chartered’s The Emerging Affluent Report - The Race to Save, a shocking low number of Singaporeans are confident enough to save for retirement. In fact, only 7% was confident.
As I looked at the detailed report, what I found even more shocking is that only 34% of those who are in the age 45 – 55 placed retirement as their top saving priority.
Comments:
May I suggest three reasons why the statistics are so bad.
Too much into low returns instruments
According to the report, 53% of Singaporeans use savings account to achieve their financial goals. 21% used regular deposit savings plan to do likewise.
With such low returns, it is very difficult to grow one’s wealth. $100,000 with a return of 5% per annum over 30 years will grow to $432,194. If the same amount is placed in a fixed deposit of 1%, the money would grow to $134,785.
Top priority in property, less money for others
26% of Singaporeans put their top priority in saving for a property. But this means a huge amount of money is being ‘wasted’ into an asset due to the huge cost of property purchase. Here is an excerpt of the report:
But buying a home is becoming harder as prices rise, particularly for consumers living in some of the most expensive cities in the world – Hong Kong, Mumbai, Beijing, Shanghai and Singapore have some of the world’s most unaffordable housing.
Too much faith in friends and family
From the same report, 38% of Singaporeans seek advice from friends and family members to plan their finances. On the other hand, only 33% seek advice from financial planner /adviser.
It is like saying whom will you seek advice if you are sick. For minor ailments, I don’t mind trying out old-wives’ tales remedies from friends and relatives. But for a brain surgery, I am not going to put my life in the hands of friends and family.
Similarly, it is fine to listen to friends and family members for tips if you are punting a few thousand dollars in stocks. But you definitely need to consult a professional financial planner if you are going to throw your entire existing life savings (and future savings) into buying a large purchase like property or signing up a super duper expensive 101 ILPs.
Besides, planning for your future retirement will always involve more than a million dollar of potential investments which cannot be entrusted to friends and family members for advice.
Conclusions
From what I see, many Singaporeans treat retirement like gambling and just hoping for the best. That is why the picture shows two dices.
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I bet many people will see this survey results as more snake oil from banksters. Which actually has quite a bit of truth to it. Hahahaha.
My comments:
1. Savings deposits as retirement funding:-
I can’t tell you how many times I dunno whether to laugh or cry when I see numerous so-called financial blogs analyzing & re-analyzing banks deposit rates and how many hoops for people to jump through like circus animals or chao recruits running SOC. And people having a brain aneurysm or spatzed out whenever banks change their hoops or obstacle course. Basically people are doing this becoz they have lost trust in so-called financial advisors / insurance agents, and lack sufficient financial education.
2. Persistence of believe that property is a 1-way sure bet, without realizing the state of maturity of market, population growth, maturity of economy, etc. Unlike 30 years ago where you can make money buying property irrespective at which stage of property cycle, now whether you make meaningful money or not almost completely depends at what stage of property cycle you buy. As long as there’s no major recession or major property crash, better to buy the cheapest property that still provides sufficient comfort for your family. Opportunities will always be ahead, but being already fully committed to your nose and not having anymore spare gunpowder to take advantage is a most sickening feeling.
3. Believing in family & friends:-
Basically the lack or lost of trust in financial industry & its representatives. The pro-biz legal system, caveat emptor principle, lack of easily enforceable strong fiduciary framework, by the book and not by the spirit culture, creates moral hazard viz a viz the financial industry helping itself instead of helping endusers.
I like this part “…analyzing & re-analyzing banks deposit rates and how many hoops for people to jump through like circus animals or chao recruits running SOC”
haha!
Trust friends and family….
Unless they too have vested interest. If family is insurance agent, also don’t trust him. All of them are looking for gullible people to push their products. These salespeople are so imbued in thoughts that most of them are incapable of appropriate situations to pitch their sales till it becomes common that when strangers introduced themselves as insurance agents, we distant ourselves from them. Kin folks or not.
Sad but that is the reality today.