A survey recently done by Hong Kong & Shanghai Banking Corp. on savings behavior of the people living in the major Asian cities show that the people in Taipei have the highest savings rate-putting away some 31% of their total incomes.
The survey conducted by the bank from April to August in 2006 polled 500 subjects aged 18 to 64 each in the six major Asian cities: Taipei, Hong Kong, Shanghai, Seoul, Tokyo, and Kuala Lumpur.
Shanghai and Seoul each witnessed the second highest savings rate of 29%; followed by Hong Kong, Kuala Lumpur, and Tokyo with 25%, 21% and 18%, respectively. Savings for the people in Asia usually includes insurance, investment, stock, and funds in addition to deposits in financial institutions.
The survey indicates that the people in Asia mainly save for children`s tuitions and other educational expenses, as well as their own retirements. However, 24% of those polled in Taipei said that traveling is another reason for saving, while 22% put away money to purchase real estate. The people in Taipei set aside an average of US$449 per month, higher than those recorded in Shanghai and Hong Kong.
The people in Kuala Lumpur save each month an average of only US$99, spending any extra income; but not those in Seoul, who tend to save surplus income. Those in Hong Kong prefer to spend half of any extra income and saving the other half.
People in the above-mentioned six cities mostly anticipate modest pensions offered by governments or employers, except those in Shanghai and Tokyo. Over 60% of the subjects believe that their expected pensions can only contribute to one third of their expenses in retirement. The people in Taipei say that they have to put away at least an average of NT$7.624 million (US$231,033 at US$1 = NT$33) for retirement, with only 44% polled being confident to achieve such goal.
As for children`s education, those in Hong Kong, Taipei, and Kuala Lumpur aspire to send their kids abroad while those in Shanghai and Tokyo are inclined to educate their children at home. The people in Taipei plan to set aside an average of NT$3.94 million (US$119,394) as tuition for their children, the highest of the six cities-with only 45% confirming being able to reach such target, the lowest of the percentages recorded in the six cities.
In terms of purchasing real estate, the people in Taipei say they have to spend about seven years to save US$175,000 (about NT$5.76 million) on average to buy a residence, with only 52% feeling confident of becoming a homeowner.
It`s interesting to note that people in Taipei generally are diffident in saving for their big-ticket items, yet they have the highest expectations for return-on-profit rates-28% on life insurance and mutual funds and even a more optimistic 41% on other investments.
Chu Yun-peng, economics professor at the National Central University (NCU), says that relatively high saving rates suggest a feeling of insecurity in peoples` lives. Also, high saving rates also show low consumer confidence-impacting in a ripple-effect the job market and sales sector, and even the entire regional economy.
A survey done by the NCU shows that Taiwan`s consumer confidence index was 67.48 points in November 2006, the lowest in five and half years. Plus the indices of the domestic sales price and household financial status both hit new lows in the same month. (JL, December 2006)
Savings Behaviors for People in Major Asian cities |
Item / City | Taipei | Hong Kong | Shanghai | Tokyo | Seoul | Kuala Lumpur |
Average monthly savings (US$) | 449 | 424 | 86 | 538 | 720 | 99 |
Savings over incomes (%) | 31 | 25 | 29 | 18 | 29 | 21 |
Average amount prepared for retirement (US$10,000), excluding expected pensions | 23.2 | 25.5 | 2.5 | 29.2 | 27.5 | 4.0 |
Those confident in achieving expected savings for retirement (%) | 44 | 39 | 53 | 34 | 43 | 71 |
Those have sent or intend to send children abroad for study (%) | 35 | 41 | 17 | 11 | 25 | 48 |
Average savings for children’s education (US$10,000) | 12 | 8.1 | 1.7 | 5.5 | 8.1 | 5.7 |
Those confident in reaching the savings goal for children’s education (%) | 45 | 53 | 57 | 60 | 58 | 68 |
Expected savings for purchasing real estate (US$10,000) | 17.5 | -- | 6.8 | 17.5 | 22.1 | 9.4 |
Average years needed to reach goal for purchasing real estate | 7 | -- | 7 | 9 | 6 | 9 |
Those confident in reaching goal for purchasing real estate (%) | 52 | -- | 57 | 57 | 55 | 63 |
(by Judy Li)
