Singaporean investors have silly income expectations: survey

The average investor anticipates at least 9.2% return per year.

Investors in the city-state are overly upbeat about income returns with an average investor expecting a minimum return of 9.2% every year.

According to Schroders Global Investor Survey 2016, this is unrealistic considering the current average stock market yield of only 3.8%.

“This over-optimism is particularly pronounced among millennials, who expect a 9.6% return on their investment per year compared to 8.9% for investors aged 36 and over,” the poll said.

Singaporean investors also have a short-term investment view. Asset managers usually recommend a minimum of five years investment stay, but investors in the Lion City remain invested for just 3.06 years on average.

Again, millennials emerged the most short term oriented, holding their investments for an average of 2.61 years as against the 3.47 years for older Singaporean investors.

These impressions among Singaporean investors should not at all be surprising as they also ooze with much self-belief, with about 55% of them saying they have a higher-than-average understanding of investments.

“This confidence is highlighted among millennials, with 61% of them agreeing to the statement, compared to 50% by their older counterparts. Furthermore, 11% feel they have less-than-average understanding,” Schroders revealed.

Overconfidence among Singaporean investors could be risky, but every cloud has a silver lining. In this case, almost 95% of the city-state’s investors believe they need to learn more about investing.

“In today’s low interest rate environment, Singapore investors’ return projections are extremely high. In order to minimise income shortfall, investors need to actively consider their investment needs and align their risk-adjusted return profile in light of current market conditions,” said Susan Soh, Schroders Singapore country head.