Some 41 percent of retail investors in Singapore do not have a financial plan. St. James’s Place Wealth Management Asia (SJP Asia) warned this would cause them to make financial decisions on emotion rather than fact.
A new study has revealed that Singaporean investors are missing out on long-term gains because of their attitudes toward market instability – in a downturn, 60 percent of them would divest equities within one week, and 32 percent would divest within 24 hours.
Adverse performance would also cause more than one quarter to also divest from cryptocurrency and exchange-traded funds (ETFs) within 24 hours, SJP Asia's inaugural «Money Relationship Monitor» revealed.
The study, which looks at the relationships of local retail investors with their money, including their approaches to investing, spending, and saving, showed that while most Singaporeans are focused on building balanced financial portfolios, high levels of cash holdings and a failure to plan for inflation may signal a lack of understanding around managing short versus long-term risk.
Critical to Plan
SJP noted that investors who divested equities within 24 hours of markets starting to fall on 19 February this year, and did not re-enter, would have lost around 18 percent of their investment value. «By comparison, those who stayed invested would have most likely gained,» Gary Harvey, chief executive officer, SJP Singapore, said.
«Sound financial planning goes beyond just saving to provide a clear pathway for wealth creation over time. Amid economic uncertainty, a plan is critical as investors are more likely to act on emotion rather than fact. This behavior does not always translate to better long-term investment outcomes,» Harvey said.
The study was based on surveys conducted between February and March 2020 among 1,045 respondents in Singapore aged 25–54. They all were from households with an annual income of S$70,000 to over S$250,000, and held personal investments in stocks, property, shares, funds, etc.
