21 July 2009
The global economic meltdown has greatly impacted consumers around the world, bringing about major changes in behavior as people adjust to cope with the fall-out from the US sub-prime crisis that has shaken financial markets worldwide. The Nielsen Company recently conducted a study to unveil how this situation has affected the way Singaporeans manage their finances.
The Nielsen survey on finance management polled 921 Singaporean adults aged 18 years and above in March 2009 to find out how they apportion their disposable cash prior to, and after the onset of the global economic crisis.
When asked which of these three areas—Savings, Investment, and Insurance—they placed most of their money before and after the bad news hit, a slight increase (3%) was registered in Savings, with close to six in 10 (57%) Singaporeans indicating that they are now saving most of their spare cash, at the expense of their Investments (-2%) and Insurances (-2%).
“Overall, the crisis does not appear to have had a huge impact on the way Singaporeans allocate their funds. But when we zoom in to focus on the various income segments, the Nielsen survey revealed noticeable changes particularly within the high income earners,” noted Ms Joan Koh, Executive Director, The Nielsen Company Singapore. “Our findings reflect a decreased placement of funds into investment vehicles after the global financial crisis broke, and a corresponding increase in savings among the group of respondents earning above $7000.”
While previously, close to four in 10 (39%) from the high income group saved most of their money, over half (52%) are now putting most of their funds into savings. On the other hand, a lesser proportion of people from this group are putting their money into investments (-7%) and insurance (-6%).
Despite the reduced proportion allocated to investment, high income earners are still placing most emphasis on investment, with over a third (36%) continuing to invest during this current volatile climate, as compared to other income brackets. Stocks and equities continue to be the key investment instruments, popular with almost half (48%) of all those who put their money predominantly in investments. Mutual funds and properties/real estate rank second and third respectively at 27 percent and 14 percent.
“Another interesting finding from our survey highlighted that insurance appears to be less of a focus for high income earners,” added Ms Koh. “The proportion of high income earners who place most of their money in insurance is notably less, especially after the downturn—at only four percent, compared to the other income brackets which stand at least, at 15 percent.” (
Overall, a large proportion of the Singapore population does not appear to be keen investors. According to a separate Nielsen global online survey that was conducted across 52 countries in April this year, three-quarters of respondents indicated the intention to put their spare cash into savings, while only a quarter (25%) stating that they will be investing in shares of stock and mutual funds.
“It is worth noting that in the past several years in which the Nielsen consumer confidence survey have been carried out, Singapore has always been amongst the three top countries with the greatest number of people expressing their intention to save their spare cash. We are definitely a cautious lot who are more comfortable putting our hard-earned money in fixed deposits and saving for a secure tomorrow,” said Ms Koh.
Higher food prices have also led to declining sales of various food products as shoppers tend to be more cautious when it comes to impulse buys. The top three food types shoppers are buying less of are chocolates, carbonated soft drinks, and salty snack food.
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