Strengthening financial resilience

NEARLY two-thirds of respondents of a recent survey are either financially unstable or living paycheque-to-paycheque.

Some suffer from mental stress in meeting their financial obligations every month as there are gaps in awareness and application when it comes to good savings behaviour.

Nearly 50% know that they should save 20% of their monthly income, yet only 23% actually allocate that percentage from their monthly income to savings.

These were the findings of a survey by Institute for Capital Market Research Malaysia titled, “New Age Vulnerabilities: Understanding Investor Vulnerability within the Malaysian Context,’’ with over 2,000 respondents involved.

Lack of financial literacy impairs the ability of some of them to make sound financial decisions, with some likely to fall victim to scams. Others are inadequately prepared for retirement or face everyday difficulties while investing.

A total of 61% rely on Internet/online sources for information, opening up new potential for financial harm, it adds.

The Covid-19 pandemic has taught many the need for emergency funding yet only 22% claim to have that amount.

As for retirement savings, 75% of respondents say their total retirement savings would not last them beyond 20 years. There is also a lack of retirement savings, especially among retirees and gig workers.

Behavioural insights from this survey can be used to build financial resilience by strengthening the savings and investment habit among Malaysians so as to help them be better placed to weather financial vulnerabilities, it adds.

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