KUALA LUMPUR, June 3 — Malaysians’ cash portion of their financial assets is the second-largest among Asian countries at 44 per cent and this can affect their savings potential, a survey of Asian investment and saving habits has found.
Manulife Asset Management’s “One step forward, half a step back: Meeting financial goals in Asia” report in its Aging Asia series found that if Malaysian investors were to divert half of their local-currency cash holdings to local equities, the 2.8 per cent potential shortfall in investment returns could drop to just less than 1 per cent.
“Our analysis of self-reported asset allocation reveals that relatively small changes to this allocation could significantly reduce the 2.8 per cent potential returns shortfall that they face,” said the Manulife Asset Management report published this month.
The potential shortfall in returns could drop even more or practically vanish if Malaysians allocated their financial assets to foreign equity markets or diversified their assets, said the global asset manager.
“For more conservative investors, shifting 50 per cent of their cash holdings to a relatively low-risk portfolio of domestic bonds could lower their returns shortfall substantially to 1.85 per cent,” said the Manulife Asset Management report.
According to the report, the Japanese hold 48.5 per cent of their financial assets in cash.
Singaporeans, in contrast, allocate 33 per cent of their assets to cash in local currency.
Manulife Asset Management said Malaysians allocating 44 per cent of their assets to cash posed a “potentially significant” hurdle to achieving their financial goals.
According to the report, Malaysians’ top financial goal was to save for a rainy day at 30.2 per cent, which Manulife Asset Management interpreted as preparing for unexpected medical costs.
Maintaining one’s current lifestyle was the second most common financial goal at 16.8 per cent, while saving for retirement, children’s higher education and expected medical expenses were ranked as subsequent goals at 13.9 per cent, 12.4 per cent and 8.5 per cent respectively.