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This content was contributed by Manulife Investment Management (Singapore) Pte. Ltd

Actively plan and smooth your way to retirement

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Challenge for Asian investors: Possible saving shortfall

Placing deposits and property investment are popular investment tools among Asian investors. Given low deposit rates, declining rental yields, and rising living costs, the chance of running out of money during retirement is increasing.

Low-or-negative real interest rates

Real interest rates (the interest rate afer inflation) in China, Hong Kong, Japan, and Vietnam are all below zero percent, which makes it impossible to generate income.

Real interest rates (deposit) in Asia are presented on per annum basis by subtracting average headline CPI in ation from average 3-month time deposit rate (October 2019-September 2020). Bloomberg, websites of Asian central banks and major banks; data as of September 2020. Over a one-year period, these markets are experiencing de ation: Malaysia (-0.508%), Taiwan (-0.053%) and Thailand (-0.645%).

Lower rental yields

Rental yields in Singapore have fallen over the past five years, as property prices surged and rents declined.

Rents in Singapore have declined while property prices have risen

Singapore Urban Redevelopment Authority Fourth Quarter 2020 real estate statistics, 22 January 2021. Rental yield is annual rental income divided by the property value.
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