KUALA LUMPUR:
Malaysian investors rank the highest in Asia in terms of indebtedness, with
more than two-third of investors with debt, according to the latest Manulife
Investor Sentiment Index (MISI).

Although Malaysian investors rank saving for retirement a top financial
priority, the research showed a lack of financial planning. This may jeopardise
long-term financial security, particularly when compounded by high debt levels.
  

The research showed that 68% of Malaysians currently have debt, the highest
proportion of all eight markets surveyed in Asia – more than double the
regional average of 33%. Average debt is RM56,000, nearly 10 times average
Monthly Personal Income. 

This debt is mostly due to daily living expenses (60%), with rental payments
(44%) and children’s education (37%) the other main causes. 

Point to note is that a majority of the debt
is long-term, with a quarter of those in debt not expecting to be able to pay
it off for three years or more.

The survey reflects poor financial management, with investors failing to manage
their cash flows effectively. 

A majority of Malaysian investors (89%) track their expenses regularly, but 44%
of investors spend 70% or more of their monthly income every month, suggesting
they are not acting on their tracking by curbing expenses. 

However, the survey indicated that at least investors are aware of their high
debt levels, ranking paying off debt and credit cards as the second most
important financial priority overall, with 16% of investors ranking this as
their top priority. 

Manulife Holdings Bhd group CEO Mark O' Dell said: “The survey has revealed
worryingly high levels of debt. Against the backdrop of more volatile financial
markets and slowing economic growth, investors need to better manage their
finances and track expenses to prevent them from incurring too much debt. 

“Without effective debt management, Malaysians are less likely to achieve their
long term savings goals, which could jeopardize their future financial
security.” 

The survey also showed that saving for retirement is now the number one
financial priority for investors, with 21% of investors ranking this as their
top priority. In spite of this, investors fail to efficiently save for their
retirement. 

Many investors do not have a target savings goal (41%), including those aged
35-49 (43%) who should be most active in retirement planning. Of those who do
have a target savings goal, the average amount is RM378,000, more than 62 times
average Monthly Personal Income. 

While almost half of savers (48%) have set medium term time frames (5-10 years)
to achieve their goal, these high savings targets may be unrealistic to achieve,
which could explain why the majority (67%) have only been able to save less
than 40% of their target. 

Related to this lack of effective savings management, 74% of investors surveyed
wished they had done better investment planning. More than a third (38%) wished
they had done more research; while 28% wished they had been more active in
reviewing their portfolio and 27% regretted holding too much cash. 

This may be explained by the fact that most investors rely on themselves for
financial advice (79%) while investment experts ranked fifth (24%), after
friends and family.

Jason Chong, Chief Investment Officer of Manulife Asset Management Services
Bhd, added: “It’s encouraging that investors are prioritising their retirement
planning, but many seem to lack a clear financial plan. Investors should set
realistic monthly savings targets and seek professional advice to ensure they
are wisely investing to meet their long-term financial goals. 

“Investors also need to think about supplementary options for retirement
planning such as Private Retirement Schemes (PRS) and regular savings plans
that provide steady long-term returns, to help ensure they meet their financial
goals upon retirement. Investors should start saving when they are young to
enjoy the benefits of compounded returns”.