Have you saved enough for your retirement?

Do you want to know where your fellow Singaporeans stand across the globe when it comes to making investment choices for retirement planning?

The world is sitting on the ageing “time bomb” while many governments have to set aside as much as 50 percent of their GDP for the costs of ageing. And you know that you cannot retire with $1,100 a month.

In the face of challenging global economic conditions, making the right investment choices matters more than ever. What do you have to consider when it comes to saving and investing for retirement? Here are my findings…

Blackrock has recently surveyed more than 27,000 investors, including 1,000 Singaporean investors across 20 markets globally. They published a report called “Investor Pulse Survey”.

Whether you have just graduated, are in your mid-career or near retirement, how you make financial decisions will impact your retirement life.

Singaporeans are good savers but unprepared for retirement

Believe it or not, Singapore has one of the highest savings rates in the world! We save 29 percent of our income. That is about as much as the savings rate of the people in China and Taiwan.


But the study also finds out that as many as 80 percent of Singaporeans are “more concerned about not living comfortably in retirement”. It also found that only 24 percent of Singaporeans believe their pensions will fully or mostly meet their future retirement.


If we have already saved so much, why do we still feel insecure and inadequate?

Low saving rate for retirement purpose

On the other hand, the proportion of Singaporeans saving specifically for retirement is only 59 percent. This is much lower than other Asian markets.


In fact, we are only better than Japan, a nation famous for Karoshi (death from overwork). I surely hope that is not our destination.

High cost of living makes it difficult to save

It is also shown from the report that high cost of living and having a breadth of financial priorities are the prevalent concerns.sg-investor-sentiment-high-cost

Despite the relatively high levels of financial confidence, Singaporeans are very concerned about the domestic economy. 70 percent of people surveyed are having difficulty staying on top of their bills and saving for retirement.

How to save for a better retirement

More and more people have realised the importance of retirement planning.

If you pay attention to the escalating debates over CPF scheme, you can see that Singaporeans have expressed their preference to have greater flexibility in where their CPF funds should be invested. This is especially important among millennials (also known as the Generation Y, people who fall between the age 25–36).


By taking control of your own retirement funds, you are also assuming a greater responsibility. The right investment choices are certainly more crucial than ever.

Compared to global investors, Singaporeans place a higher priority on generating income from their savings and investments. In fact, it is among the top financial priorities for the affluent Singaporean investors.


Time to adjust income investing strategies

Given the decade-long hot property market in Singapore, you may think Singaporeans only invest in properties for rental income. But statistics shows that more Singaporeans choose dividend-bearing stocks to invest for retirement, followed by investment funds investing in dividend-bearing stocks.

However, instead of reinvesting the income received, more than half of the Singaporean investors spend the income on everyday expenses.


The problem is that income investing is no longer a new idea, but finding good income investment becomes more and more challenging. We all know that selling iPhone used to be very lucrative for Apple, but with Samsung and all the other companies competing in the same space, it becomes harder for Apple to make money.

The same goes for income investing. Finding investment with consistent good income has become more and more challenging. Gone are the days when you could just pick up some blue-chip stocks such as SPH or Singpost. The prices of these stocks have gone through the roof and risks of investing them have increased tremendously.

Therefore, you need to cast your net wider in search for yield. Dividend stocks alone is no longer enough. You need to rethink your income strategies by looking beyond stocks and traditional bonds, you need to look into “opportunistic” income sources using a multi-asset investing approach.

What income investing options are there for Singapore Investors

With today’s dynamic and ever-changing economy, you can no longer repeat the old-fashioned buy-and-hold investment strategy. You have to be nimble and adjust your investment allocations from time to time.

However, dynamic asset allocation is difficult for most retail investors. You may not have the time nor the interest to do the research and adjust your investment holdings like below.


But that is what a diversified multi-asset fund can do for you. A good fund can constantly seek income opportunities by

  1. Avoiding markets that already had a run-up and
  2. Redeploy the assets into other income markets

Here are some examples of multi-asset income funds (click the link to check them out at fundsupermart.com)

What you do need to understand is that each of these funds has its own characteristics and will perform in different market conditions. That is why choosing the right fund is not an easy task.

Don’t buy an income fund just because it has a high yield

The danger of income investing is usually not what you buy, but the price you pay. Nearly a decade of yield chasing by investors has pushed up the prices of most income generating assets. Eventually, these high-income strategies may end up riskier than what you might have thought.

Only when the tide goes out do you discover who’s been swimming naked. – Warren Buffet

To help you further, I have established some criteria to help you find suitable funds:

  1. Does the fund manager have an experienced team and made names in the multi-asset sector? (Not all fund managers are good at this)
  2. Does the fund allow flexible investment style?
  3. Does it allow the fund manager to exploit opportunities in both Traditional and Non-Traditional Asset Class?
  4. Did the fund managers actively look for ways to deliver the yield by not increasing the portfolio risks (a.k.a. deliver superior risk adjusted returns)
  5. Historically, did the fund deliver consistent income dividends to the investors?
  6. Did the fund manager do what they promised or claimed? (you can request an asset allocation history chart like above)

If this is too technical or you have no resources to do so, it is time for you to consider professional investment management, or you can read this article about how to choose the right unit trusts as a start.

Ivan Guan is a financial consultant, blogger and author. He helps individuals achieve financial freedom through a non-linear wealth accumulation process.

If you like this post, check out his blog at www.sgmoneymatters.com.

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