OCBC’s Financial Wellness Index 2019: A Deep Dive
- Original Post from Investment Moats

Yesterday, OCBC put out what they called the “first time such a comprehensive study of Singaporeans’ state of financial health has been conducted”.


They call it the Financial Wellness Index.


I thought a few companies have done studies like this, but I could be wrong. I do have poor memory at this age.


Nevertheless I do appreciate data like this, especially now that I am in a job that needs to look at things like this.


I wanna see whether there are more interesting data points and the more detailed report (my boss was surprised 37 slides is a detailed report)


Here are some interesting things picked out:



  1. Majority of us are still behind in terms of the financial wellness index

  2. Our savings rate looks high at 26%

  3. 70% have a budget set and stuck to it

  4. 18% do not invest yet have passive income (how is this possible?)

  5. 52% have passive income

  6. 37% of the people do not know how to build wealth

  7. 51% on track in funding their emergency fund

  8. 20% of those in their 30s spend a large extend above their means to keep up with their peers

  9. The debt problem

    1. 18% of Singaporeans are worried not able to pay off unsecured debt

    2. 30% of those with credit holders pay the minimum

    3. 30% of 40 to 54 year old singles have problems paying for the mortgage loans

    4. 20% of 40 to 54 year old married have problem paying mortgage loans




Let us go through it in more detail.


If you take care of your health, what about your wealth?



Based on OCBC’s observation, Singaporeans seem to be taking care of their health. However, they are not sure if they are trying to excel in their wealth or not.


I have also observe this trend. We organize talks in the past. I have been savaging food from buffets as part of my Freegan lifestyle.


And we do know that organizers tend to give less of the good stuff and more of the carbs. However, I think that if Singaporean’s like carbs, they could have taken more of it.


But most of the time, there are just so much left over. I think it is also an increased awareness among Singaporeans they should control their carbs, and thus they are placing more emphasis on their health.



So they decide to create their first OCBC Wellness Index.



OCBC’s financial experts list 10 pillars that help them define how financially well someone is. A lot of pillars are rather new to me.


To a certain extent, it feels like me judging people.



Thought the questions asked was interesting.



The sample of people surveyed was sizable, and spread among a wide spectrum of Singaporeans.



OCBC tries to zoom in on 3 different segments of the population. The most customized was the Sandwiched generation.


This was the generation that on top of taking care of their primary family, they also had to take care of their parents.


Data shows that Most are Behind



Overall on a spectrum of 100 points, Singaporeans scored an average of 63. This is not so good because to be considered on track, they would have to score 75 and above.


In this chart, we can see how these 2000 participants are distributed. There are a good number of people that are doing well, but the majority are deemed behind on most indicators.


And it is good that I do find the distribution skewed to the on track side. (This means that more are getting better instead of getting worse.


We have Good Savings Rate and 70% of Us have a budget



It seems as a cohort the people saved on average 26%.


This looks very good until we wonder does this include the mandatory 20% CPF contribution. If it does than the savings rate from take-home pay is only 6%. Then it is not so good.


82% of the population have gotten medical insurance, but we are not sure whether the coverage is adequate.


I was wowed that 69% set a budget and managed to stick to it!


This is because almost all the people around me:



  1. don’t track their expenses (which is different from budgeting)

  2. are seldom tough on how much they can scan in a single category. You do not see them reference them breaking their limits. They either have very lax budget limits or that they are failing at this game


Overall, this report shows that Singaporeans are not in a good position.


So if you budget well, then how come there is this dislocation?


A budget (check out my comprehensive budgeting article) when done right, should map your spending close to what you value in life.


So either what they value is really not what they are concerned about, or that they are not doing things right.


One Third of Them do Not Invest



When it comes to investing, 34% do not invest. I expected as much.


OCBC said 48% do not have passive income but I chose to read the opposite.


Does that mean that 52% of the Singapore population DO HAVE passive income? That is pretty good!


Out of the 66% who invest, 36% of them say their investment is not performing to their targets. 27% of the 66% who invest also said their speculators.


So almost 1/3 of investors are under-performing (they think) and are speculators. These 2 groups are not the same.


I think under-performance data might not mean much because most people have a hard time judging what is under-performance. It is likely they mean psychologically, the amount they accumulated is unsatisfactory.


Investing to Us, is still Gambling



33% of Singaporeans think investing is gambling. 37% of Singaporeans don’t know the best way to grow their money.


You can see that the percentage of people who do not know the best way to grow their money is almost similar to the percentage of people who do not invest.


If you do not know what to do, you tend to procrastinate and not do anything about it.


The opinion on investing as a form of gambling is not all surprising as this is what I thought about stock investing before I started in university.


Back then, I have secret thoughts that my friends are going to lose their pants by gambling their money this way.


Now I am gambling my money on a very frequent basis!


Emergency Fund: Half of us are on track to have well funded emergency fund



42% are on track to accumulate enough funds for an emergency. That means 58% is not on track! 51% can stretch their savings to last 6 months.


How much is enough emergency funds? (you can read my comprehensive emergency fund guide here)


The standard is 3 to 6 months.


This is befuddling. If 51% can stretch their savings to last 6 months, then how come only 42% are on track to have enough for one emergency?


Does that mean an emergency to those survey, is of an amount greater than 6 months of their expenses?


The surprising for me was that there are 42% of Singaporeans who know what is an emergency fund!


They probably did not know it, but the question introduce this concept to them. If that is the case, it is not so surprising because Singaporeans tend to be cash heavy.


Retirement Plans: Conflicting Conclusion



Only 27% of Singaporeans are on track for their retirement plans. Most are not.


65% are behind with accumulating enough funds for maintain their lifestyle after retirement.


That means there are 8% who are not on track but are on track to accumulate enough funds to maintain their lifestyle after retirement.


How is this possible?


In general it looks like the participants think they are not ready and do not have enough.


The question is: How do Singaporeans know how much is enough for their retirement?


I have a hard time determining this. So for a long time, my rough retirement goal was really rough. I think for most people, they are likely to have over or under estimate how much they need.


Of Course We are Worried about Money!



Due to these gaps, 40% of us are worried about money the week we surveyed them.


I think the idea of worrying is whether you have enough time to think about money, or that your income to expense ratio is so low that you need to constantly think about budgeting your money on a daily basis.


These participants were given enough free time to think about this subject and I was surprised 60% do not worried about money the week we surveyed them.


This means that



  1. Their experiencing self do not worry so much about money

  2. Their remembering self do not recall incidents where they worry about money


Women tend to be Less Sophisticated in Building Wealth



In general, women, versus the men, have less investment, less aware of how to build wealth well and no passive income.


I read that probably 60% of Singaporeans have investments, 60% know the best way to grow wealth and 45% have passive income.


This more or less is consistent with the figures presented before this slide.


The Sandwiched Generation



Surprised that only 51% of this sandwiched generation find it tough to support both.


I infer that 50% of Singaporean’s annual household income is pretty well to fund allowances for both children and parents BUT they think they have a problem hitting their retirement targets.



31% of them have unsecured debt (which are usually personal loans, credit card debt.)


29% are investors who speculate excessively for quick gains. This is largely consistent with the gambling mentality data in the investing section.


41% of them worried about money over the previous 7 days.


This is consistent with the previous slide, but it is the way this is worded that got me worried.


If you think about your situation in the past 7 days, it means your financial situation is not so good that it bubbled up to a high point in your priority list.



So they are doing more to get them to a financial stable state.


They are



  1. Reviewing their financial plans yearly more

  2. Arranged for finances to be taken care of after their death

  3. Making sure themselves are able to sustain 6 months if they are jobless


This is befuddling.


How do you come to this conclusion and I wonder how was the questions asked.


If I want to put myself in a better position, I try to put away more money! Period!


The furthest thing on my mind is think about who I leave my money to and reviewing my plans. Yes they are important, but….


This seemed weird in that OCBC recently offered a free will service. Is that why there is this weird conclusion?


Some Worries of the Sandwiched Generation



I think largely they want to show the sandwich generation worry more than normal.


I urge readers to reset your brain to the baseline.


The data for the sandwich is not too far off from the Singapore average. They might worry more but what is important is that



  • 26% worry about teaching their children the value of money

  • 70% worry about economy not improving next 12 months

  • 18% worry about not being on target to pay off unsecured debt


18% of Singaporeans are worried not able to pay off unsecured debt is something to take note.


For the sandwiched generation, 2 problems stands out versus the average:



  1. They don’t know the best way to grow their money

  2. They are worried about not able to spend comfortably on their basic needs


Married versus Single



OCBC seem to think those married have made more plans for the future.


The data seem to think so.


I guess it is because as a couple, there are more responsibilities. You need to think more. Singles tend to be less conscientious there.


The Financial Wellness Index gets better with Age



OCBC showed some data point on the average financial wellness index score. They tend to get better with age.


It does seem to show that we do not think about money so much when we are younger, so we are behind.


We get better with age. But we are only slightly better.


The interesting data point is on when each cohort wants to retire at and how much



  1. 20s: 56 years old and $1 million

  2. 30s: 59 years old and $900k

  3. 40-55: 62 years old and $800k

  4. > 55: 67 years old and $500k


Those that are young wanted to retire early!


But notice those that have their CPF transferred to retirement account (age > 55 years old), they wanted to retire later.


The sum they need also go down.


Those that progress to 30 year old actually think they need less than in their 20s!


Why is that the case?


Shouldn’t they have higher expenses that they should want more retirement savings? Shouldn’t they want to retire early as well?


My inference is that expenses do go up, but they cannot save as much.


So they actually lowered their expectations.


We will see more of this later.



20s: Higher Savings Rate



Younger ladies do show more lack of awareness how to best grow their money. They tend not to invest compared to men as well.


Majority of their investing do not meet their target or below their target. Only a slight handful meet the target.


Again, I find it questionable how Singaporeans judge it.


30s: A Group is Struggling with their Mortgage Loans



In the 30s, we start seeing people with more unsecured debt versus the average. 38% of them is made up of personal loan and credit card debt, but curious what about the rest.


The huge data point is that out of the 51% servicing their mortgage loan, 30% have trouble paying their monthly loans. This means they missed paying on time, able to pay but with some problems, and may be forced to downgrade!


Another Worrying Slide



This slide shows a lot of problems.


What is new to me here is



  1. 30% of those with credit holders pay the minimum (!)

  2. 20% spend a large extend above their means to keep up with their peers

  3. 12% of them borrow money from friends/relatives

  4. 17% can only spend on the basic and cannot spend above that


40 to 54:



Here we see that those that is edging every closer to retirement:



  • 30% of singles have problems paying for the mortgage loans

  • 20% of married have problem paying mortgage loans


This loan situation is a big problem.


Some Average Personal and Household Income for the 40 to 54 year olds



This slide is suppose to show that 1 in 2 have problems supporting both parents and children. This is largely consistent.


What is interest is the income data points:



  1. 15 out of 30 person earns average $8,600/mth and as a household earns $12,600/mth

  2. 2 out of 30 people struggle to pay for both children and family. Their monthly income is $5,200/mth and as a household $7,700/mth

  3. Almost all of them are middle management. Those who did better are in senior management, those who are struggling tend to be office workers


Note the sample is only 30 people. When sample size is small you get some extreme results often.



Just read. I pick up nothing special.



If you do not have enough to meet daily needs, of course you do not think about retirement plans!



Notice that ladies tend to be more into insurance savings plan.



OK that is a wrap!


The interesting thing is OCBC will conduct this research every year, so we can see how the figures change.


Here are some things I find it challenging to resolve:



  1. If so many of us budget, how come we are still behind in the financial index?

  2. 20% of those with mortgage loans in their 40s and 50s have a problem paying their mortgage loans

  3. A household income of $12,000/mth would struggle to meet the modern living needs


I might think deeper about some of the ramifications from this data, but I suspect I cannot trust all the data. It really depends on how the survey was done.


You can check out the slide deck here.


I want to hear which of the data stands out to you.


DoLike MeonFacebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content viaemail below.


Here are My Topical Resources on:




  1. Building Your Wealth Foundation– You know this baseline, your long term wealth should be pretty well managed


  2. Active Investing– For the active stock investors. My deeper thoughts from my stock investing experience


  3. Learning about REITs– My Free “Course” on REIT Investing for Beginners and Seasoned Investors

  4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG

  5. Free Stock Portfolio Tracking Google Sheets that many love


  6. Retirement Planning, Financial Independence and Spending down money– My deep dive into how much you need to achieve these, and the different ways you can be financially free


$OCBC Bank(O39.SI)

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