A chip off the old block, or a case of ‘if it ain’t broke, don’t fix it’?
Opinions can be mixed when it comes to talking about millennials. On one hand, they are regarded as the generation that work hard, play hard and think out of the box when it comes to solving problems. On the other hand, they are also referred to as the ‘strawberry generation’ because they “bruise easily” like strawberries – unable to withstand social pressure or work hard, and often viewed as spoiled, selfish and arrogant. It can be difficult to understand what are their attitudes when it comes to finance and investments; a recent survey report in February 2017 aimed to find out a bit more about this aspect of millennials in Asia.
According to Manulife Asset Management, millennial investors in Asia are more willing than their parents to borrow money for spending, but in terms of investment, their behaviour is similar to the older generation: they invest mainly in property and like to hold cash. The annual Manulife Investor Sentiment Index (MISI) survey drew 4,000 respondents from eight Asian markets – Hong Kong, China, Singapore, Indonesia, Philippines, Malaysia, Thailand, and Taiwan – and included 1,400 millennials.
It found that property and cash are the two major investments undertaken by respondents aged 18 to 34 years old when planning their retirement. Over 50% of millennial investors across Asia – in particular Indonesia with 82% – wanted to buy property in their local market in the short term, a significantly higher number than investors in other age groups. Real estate continues to be a favourite means of seeking financial security for many investors, and nearly half of millennials who intend to purchase local property across Asia do so with the intention of generating rental income from it.
However, Michael Dommermuth, head of wealth and asset management for Manulife Asia, pointed out that they should be aware that Asian property markets in the coming years may not experience the same high growth seen in the past decade. This is because many Asian markets have an ageing population and facing economic slowdown. Investing in emerging Asian countries such as Indonesia will likely be more advantageous than buying a home in already mature and saturated places such as Singapore or Hong Kong, where slowing growth and ageing population can dampen real estate markets.
It all sounds pretty good, doesn’t it? Young people are becoming increasingly aware of the need to invest in order to have a secure cash flow, and property remain a viable investment asset.
Nevertheless, despite the strong willingness to invest in property, the same survey reported that close to one-third of Asian millennial investors said they expect to run out of money later on in life, due to rising cost of living and healthcare.
“It’s sobering to see how many investors, especially young people, recognise that there are risks to their retirement,” said Dommermuth. “Longer lifespans and later retirement will place increasing demands on investment funds, for which every investor should start planning ahead early for future protection,” he adds.
An elderly Asian man walks past a window displaying stock index. (Photo from VOA News)
And if that wasn’t bad enough, 39% of them expect healthcare to become too expensive when they retire, and 43% expect their health to worsen to the point where they can no longer continue working. Nevertheless, 71% of them expect to have to continue working well beyond the retirement age.
The future may seem rather bleak when you look at it like that, but the silver lining is that there are many other investment options besides property, including stocks, REITs, insurance, gold, and even art! Investors are advised to invest more in stocks and other types of mutual funds, in order to diversify their portfolio so as to spread the risk.
So if you’re a millennial feeling a little down about your prospects for the future, don’t worry – there are plenty of investment opportunities out there waiting for you when you have the right attitude and mindset! 🙂
