OCBC Bank’s Financial Wellness Index 2021 reveals that more women and young millennials in Singapore have started investing this year.
The bank adds that the economic uncertainties that Covid-19 brings may have spur more people to pay more attention to finance management.
Why and how younger millennials invest
The percentage of millennials who are in their 20s and are investing recorded the largest change in 2021, as compared to other age groups.
OCBC found a 22 per cent point jump for this group, from 64 per cent in 2020 to 86 per cent in 2021.
The bank attributed this trend to mainly three reasons:
- Fear of missing out (FOMO)
These millennials started investing to benefit from the market rally following the stock market crash in February 2020, when the Covid-19 pandemic hit the markets hard.
- “Historic low” interest rates
- Investing became more accessible and less intimidating
More people in Singapore go digital during Covid-19 pandemic and more become comfortable with the use of digital investment platforms or other digital money management tools. Digital investment platforms also provide a wide range of investment options.
Millennials are also more digitally savvy when it came to investments. The report reveals that more millennials are investing via robo-advisory platforms as compared Singaporeans from other age groups.
According to OCBC, as compared to the 15 per cent of Singaporeans in general, 21 per cent of millennials use such robo-advisory platforms to invest and grow their funds.
Millennials in their 20s are also moving away from Singapore stocks and unit trusts, and increasingly going into more volatile foreign stocks and cryptocurrencies instead.
Their investments in Singapore stocks fell to 40 per cent this year from 43 per cent last year, while their unit trust investments fell to 29 per cent from 31 per cent last year.
Simultaneously, 35 per cent and 22 per cent of millennials invest in foreign stocks and cryptocurrencies respectively.
This is higher than the average of 29 per cent and 16 per cent of Singaporeans’ that invest in foreign stocks and cryptocurrencies. respectively.
More women want to grow their wealth
The percentage of women with investments grew from 60 per cent in 2020 to 79 per cent in 2021.
OCBC attributed this to a shift in women’s priority from their family to their own financial needs.
The bank reported a 5 per cent increase in women prioritising growing their wealth, from 51 per cent in 2020 to 56 per cent in 2021, many of whom are doing so through investments.
Women who do not invest feel that it is too risky or too complicated, and that they did not know where to start. Some also still felt that their savings alone would be enough for them to retire comfortably.
Prioritising a simpler retirement, and adopting better financial habits
The latest OCBC Financial Wellness Index also found that Singaporeans are increasingly prioritising their retirement.
51 per cent of Singaporeans listed retirement planning as among their top priorities in 2021, as compared to 45 per cent in 2020.
Additionally, 66 per cent of the respondents in 2021 had made a retirement plan, as compared to the 63 per cent in 2020.
Those in their 20s and 30s reported the biggest growth in retirement planning in 2021, with 64 per cent of millennials started planning for retirement, compared to 57 per cent in 2020.
Based on broad considerations of dining out, travel, car ownership, home ownership, 40 per cent of respondents chose a “simpler retirement lifestyle” which requires an estimated S$2,300 a month. This is more than the 36 per cent reported in 2020.
88 per cent of Singaporeans are consistently saving at least 10 per cent of their salary, and Singaporeans on average save 27 per cent of their salary.
At the same time, fewer Singaporeans have unsecured debt in 2021, 24 per cent in 2021 as compared to 30 per cent in 2020, and more Singaporeans are able to pay off their housing loans, 69 per cent in 2021 as compared to 62 per cent in 2020.
OCBC Bank’s Head of Wealth Management Singapore, Tan Siew Lee, said:
“The Covid-19 pandemic and its drag on the economy has made many of us more aware of our financial situations. Being stuck in Singapore for over 18 months has possibly also made us review and take stock of our financial plans. What stood out in this year’s survey is how Singaporeans persisted in exercising healthier financial habits such as consistently saving, sticking to a budget and investing to grow their funds – perhaps in response to the Covid-19 pandemic – and these had a positive impact on our overall financial wellness.”
OCBC Financial Wellness Index
A total of 2,051 working adults between the ages of 21 and 65 in Singapore were surveyed online between Aug. 17, 2021 and Sep. 16, 2021, for the OCBC Financial Wellness Index 2021.
On the whole, Singaporeans’ financial health has improved by one point, scoring 62 out of 100 for the OCBC Financial Wellness Index 2021.
The index takes into consideration of 10 pillars that define financial wellness. They are savings and gambling habits, regular investing, protection from emergencies, regular investing and financial reviews, excessive speculation, borrowing money, spending beyond means and managing debt.
Each respondent is assessed on these 10 pillars and another 24 indicators to derive an individual score.
The resulting scores from all the respondents were then averaged out to derive the index score.
OCBC’s survey in 2020:
Follow and listen to our podcast here
Top image from Tech Daily/Unsplash