SINGAPORE — The proportion of Singaporeans aged in their 20s who are on track to meeting their investment goals has plummeted to under a third (32 per cent) from 75 per cent in 2019, a new OCBC survey has found.
In publishing the results on Wednesday (Nov 8), OCBC suggested one factor could be a lack of rigorous research, with more than a fifth of these younger investors getting their news and investment advice only from social media.
The bank warned this could leave these Singaporeans with a “blind spot”, given that more than a third (35 per cent) of these young investors manage their own investments.
The OCBC Financial Wellness Index 2023 survey found that while 79 per cent of respondents have investments and 40 per cent of them are on track with their investment goals, this figure is lower among respondents aged in their 20s and 30s.
Among those in their 30s, 36 per cent were found to be on track with their investment goals, a fall from 38 per cent in the same age group in 2022.
Responding to queries from TODAY, OCBC said that it uses various factors to assess whether a respondent is “on track” to meeting their retirement and investment goals.
These factors include assessing their retirement preferences, cost estimates of said retirement preferences, level of cash savings, risk appetites, and investment goals.
SURVEY METHODOLOGY
The OCBC Financial Wellness Index is an annual survey measuring the state of Singaporeans’ financial wellness.
Into its fifth edition this year, the index surveyed 2,000 working adults aged between 21 and 65 in August.
The respondents, comprising Singapore citizens and permanent residents, were assessed on 24 indicators within 10 pillars of financial wellness — such as their saving habits, manageable debts, investments, and retirement planning.
Their performance across these indicators are then distilled into a single Financial Wellness Index score.
This year’s survey found that Singaporeans had deteriorated on 15 of the 24 indicators, including their ability to pay off their housing loans, defray major medical expenses, and sustain themselves financially for six months in the event of unemployment.
The Financial Wellness Index Score for 2023 is 60, the lowest since the survey’s inception in 2019.
WHY IT MATTERS
In July, national daily The Straits Times reported that young investors — under the age of 30 — were emerging as a force in the markets, as technology widened their access to financial information. The proliferation of investing apps also made investing more accessible.
Unlike older investors, these young investors also tend to seek their own investment information from online sources.
Yet, relying on such self-help channels for financial advice could spell trouble, OCBC warned.
The bank found that among those in their 20s, that is, Gen Zers and young millennials, 22 per cent sought investment-related advice and news only from social media channels and chat groups such as TikTok and WhatsApp.
This figure is the highest among all age groups surveyed, the bank added.
“Many young investors in their 20s who lost money may not realise they have a blind spot either, with more than a third (35 per cent) of them actively managing investments on their own, trading daily to profit from short-term price fluctuations,” said OCBC.
The survey found that 35 per cent of those who relied only on self-help sources were on track with their investments.
In contrast, almost half (46 per cent) of investors who sought financial advice from financial institutions were found to be on track with their investment goals.
INVESTMENTS
Overall, the survey found that fewer Singaporeans had invested in 2023, compared to 2022. Those who did recorded a lower average rate of return on their investments.
In 2023, the average rate of return from investments for all survey respondents was 0.4 per cent — down from the 0.7 per cent return rate recorded in 2022.
The survey also found that the investments of younger respondents performed more poorly than those of their older counterparts.
While 35 per cent of total respondents suffered losses on their overall portfolio, more younger investors recorded such losses, including:
40 per cent of those in their 20s37 per cent of those in their 30s35 per cent of those in their 40s
The figure was lower for markedly older investors:
30 per cent of those in their 50s30 per cent of those aged 60 to 65
The survey results also indicated that 30 per cent of investors in their 20s — the highest among all age groups surveyed — had invested in international stocks.
As such, these Gen Z and young millennial investors were likely to have been hurt by these foreign equities, which “have taken a pounding this year”, said OCBC in its release.
Non-traditional investments such as cryptocurrency and non-fungible tokens — once popular among young investors — have also declined in popularity this year, the survey found.
In 2023, just 6 per cent of investors in their 20s invested in cryptocurrency, compared to 18 per cent the year before.
FINANCIAL WELLNESS
Still, while this year’s Financial Wellness Index Score of 60 is a record low since the survey began in 2019, some improvements were observed across a few indicators.
For example, despite a period of higher interest rates, more Singaporeans were able to pay off their home loans and other personal debts on time in 2023, compared to the year before.
In 2023, the survey found that 64 per cent of respondents had paid off their housing loans on target, compared to 60 per cent in 2022.
Other key improvements between 2022 and 2023 included:
Fewer respondents spent beyond their means to keep up with their peers, down from 22 per cent to 16 per centFewer respondents gambled more than they could afford to lose, down from 48 per cent to 43 per centFewer investors speculated excessively for quick gains, down from 34 per cent to 25 per cent