The affluent population in Singapore enjoyed a 4.5% growth in 2021, showing the resilience of wealth generation, despite the impact of covid-19, according to a study from data and analytics company Globaldata.
“As the country being one of the most effective markets globally when it comes to managing the pandemic, it made the city-state even more attractive for investors in addition to its enduring tax advantages,” said Ravi Sharma, lead banking and payments analyst.
The trend is expected to continue in the future years, with the number of mass affluent investors expected to grow at an average annual growth rate of 3.7% from 2022 to 2026, said the firm in its wealth market analytics and retail investments analytics, which categorises “affluent investors” as those holding liquid assets of $50,000 to more than $1m (£758,000, €909,000).
According to the research, the financial hub’s affluent population accounts for 30.6% of its population at the end of 2021, which is relatively high compared with the rest of the region.
Equity-driven rise
The growth in the rich population is believed to be driven by the performances of equities and mutual funds, added Globaldata.
After a disappointing year in 2020, the equity asset class in Singapore grew by 7.1% last year, driven by a rebound in performance and improved investor sentiment.
Coupled with low interest rates on bank deposits, the attractiveness of mutual funds as a savings and investment instrument has also improved, as this asset class rose by 5.8% in 2021.
“With economic recovery and a rise in investors’ confidence, the growth in Singaporean financial markets is expected to continue, supporting the growth of the affluent population going forward,” said Sharma.
But he also cautioned against rising inflation, the uncertain future trajectory of the pandemic, and the ongoing Russia-Ukraine conflict, which could pose challenges for faster growth — with 2022 expected to see the lowest growth in affluent Singaporeans since 2013.
Millennials’ financial habits
Separately, a survey by Natixis found that more millennials want financial advice (59%), compared with Generation X (56%) or baby boomers (48%)
Among the advice they receive, millennials are most interested in information on financial planning, including retiring at age 60, the Five Financial Truths about Millennials at 40 report found.
The report also found that surveyed investors on average put aside 17% of their income for retirement, and have accumulated considerable wealth so far.
Most investors attribute investing as their source of income (37%), followed by business ownership or self-employment income (31%). Just 17% cite receipt of an inheritance or family money as a source of their wealth.
“We also see a big focus amongst millennials on matching their investments with their deeper values, a trend that has accelerated even more during the pandemic and led to growing interest in our ESG solutions in Asia,” said Fabrice Chemouny, head of Asia Pacific. The research was done on over 2,400 people aged between 25 to 40 last year by Natixis Investment Managers, with additional analysis conducted in March by the Natixis Investment Institute.
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