Singaporeans are keeping more of their assets in cash, but these savings should be doing more work, said the chief investment officer of Singapore-based robo-advisor Endowus.
The record high of S$743.6 billion ($528 billion) at Singapore banks is evidence of the influx of liquidity and flight to cash amid uncertainties associated with the Covid-19 pandemic, Samuel Rhee said in an interview with finews.asia about the changing investment landscape.
But investors also need to grow their cash savings in an environment of continuously falling interest rates, said the platform's chief investment officer, who was formerly CEO and CIO of Morgan Stanley Investment Management in Asia.
Rhee pointed to Endowus' recently launched fully digital cash management offering that leverages investors' Supplementary Retirement Scheme (SRS) funds and cash savings, with a projected yield of up to 2.2 percent, with no lock-ups, daily accrual on interest, and withdrawals at any time. Known as «Cash Smart,» its portfolios are made of diversified cash, money market, and short duration bond funds.
«Our digital wealth platform has seen a steady influx of new investors and positive fund flows throughout this period suggesting that there is still a lot of surplus liquidity on the sidelines. We also see a dramatic increase in acceptance and usage of digital wealth and investment solutions,» Rhee said.
Investor Preferences
Endowus conducted a survey of 325 Singaporean investors on their cash management habits and found that many were seeing better options to manage their cash. Some 62 percent of respondents said they prefer to be liquid with zero lock-ups, while 55 percent want higher interest rates than what traditional bank deposit accounts offer.
The survey also showed that 85 percent of Singaporeans are keen on exploring different safe offerings of varying risk levels, despite not having prior experience in these kinds of investments. The types of products most commonly cited were fixed/time deposits (29 percent), Singapore Savings Bonds (27 percent), and money market funds (21 percent).
«Most of our clients simply don’t have the time to shop around. We don’t think cash management should be complicated, and want to allow our clients to manage all their money, be it their short term cash positions or long term investments through all sources,» Rhee said about the survey results.
Investing Amid Covid-19
The CIO advised investors to have a financial plan that is specific to their personal needs, goals and risk appetite, and to implement it in a disciplined way through regular investments.
«This is what worked in the recent volatile markets. It is the proven way to successfully build wealth for the future or securing your retirement adequacy,» Rhee said.
«Some people feel that they can predict the future for the stock markets, and most people are wrong. Similarly, putting all eggs into one basket does not work well in a climate like this, and diversification is really important to manage risk well,» he added.
