Global investors aim to boost retirement saving in 2014

04 April 2014   Category: News, Asia, Global   By Asia Asset Management

Boosting retirement saving is the key goal for investors in 2014, yet despite this long-term objective, almost three-fifths (61%) of those surveyed say they are looking for satisfactory investment returns within just five years, with just 5% taking a longer-term view of ten years or more.

This mis-match between investors’ goals and the investment decisions that they are making could jeopardise many people’s ability to build the retirement pots they are seeking to achieve.

The findings come from the Schroders Global Investment Trends Report 2014, a survey of 15,749 investors across 23 countries, which reveals that almost half (46%) of those polled are prioritising pensions and retirement planning as a key investment goal for 2014. In the UK, where radical savings and pension reforms have been announced in the recent Budget, those planning for retirement will have the freedom to invest their pension as they please and a much larger tax-free savings allowance, supporting the 59% who identify saving for retirement as a priority for them this year. However the survey also demonstrates that investors are holding a significant proportion of their investments in cash and much less in high-growth assets such as equities, despite improving economic conditions and stock market performance.

Investors polled say they are allocating only around 20% of their portfolios to higher risk assets (such as equities) while holding around a third (35%) of their portfolio in medium risk assets with 44% of their portfolios still held in low risk asset classes such as cash.

These investment allocations have remained broadly unchanged from 2013, despite significantly different economic headwinds this year. The report also highlights that many investors are not seeking advice from a professional adviser, with 40% of investors saying they will look for professional financial advice in 2014. When making financial decisions, almost the same proportion (38%) say their previous investment experience will influence them, almost quarter (24%) decide based on gut instinct and 14% turn to friends and family for advice.

Asian investors are the most open to placing funds into higher-risk assets, but even here investors say they intend to allocate only a quarter of their money to assets that provide higher growth potential this year.

Proportion of investments allocated to low / medium and high risk assets

Region

Low risk

Medium risk

High risk

Global

44%

35%

21%

Europe / UAE

49%

33%

18%

Americas

40%

41%

20%

Asia

40%

35%

25%


Massimo Tosato, executive vice chairman, Schroders plc said: “Ageing populations, greater life expectancy and the scaling back of government pension arrangements and related tax concessions in a number of countries are focusing the minds of many on the need to save more for retirement.

“However, achieving your investment goals requires a dynamic and diversified approach to managing portfolios and the fact that investors’ asset allocations are largely unchanged from last year, despite significant changes in global economic conditions, should be a concern, as should the proportion of investors who are not seeking professional financial advice.

“We urge investors to take the time to review their objectives to ensure they are structuring investments to achieve their required outcomes and to tap into the economic growth opportunities emerging around the world. It is also important to take a long-term view where possible, particularly where retirement goals are concerned and to mitigate against short-term economic fluctuations such as those caused by the instability in Ukraine and recent concerns about the level of Chinese economic growth and the strength of the eurozone recovery.”