This article first appeared in The Edge Financial Daily, on March 4, 2016.

KUALA LUMPUR: Over two-thirds or 68% of Malaysian investors have debts, the highest proportion of all eight markets in Asia, according to the Manulife Investor Sentiment Index (Misi).

Misi is a half-yearly proprietary survey that measures and tracks investors’ views across eight markets in the region on their attitudes towards key asset classes, and issues related to personal financial planning.

“The research shows 68% of Malaysians currently have debt, the highest proportion of all eight markets surveyed in Asia — more than double the regional average of 33%. Average debt is RM56,000, which is nearly 10 times average monthly personal income,” said Manulife Asset Management Bhd in a statement yesterday.

The firm said Malaysians’ debt is mostly due to daily living expenses (60%), with rental payments (44%) and children’s education (37%) the other main causes.

The research from Misi also shows that while Malaysian investors rank saving for retirement as their top financial priority, there is a lack of financial planning which may jeopardise long-term financial security, particularly when compounded by high debt levels.

“Worryingly, much of the debt is long-term, with a quarter (25%) of those in debt not expecting to be able to pay it off for three years or more,” it added.

The survey shows high debt levels as reflecting poor financial management, with investors failing to effectively manage their cash flow.

“Whilst the majority of Malaysian investors (89%) track their expenses regularly, 44% of investors spend 70% or more of their monthly income every month, suggesting they are not acting on their tracking by curbing expenses.

“Investors are at least aware of the need to address their high debt levels, ranking paying off debt and credit cards as the second most important financial priority overall, with 16% of investors ranking this as their top priority,” said Manulife.

Manulife Holdings Bhd group chief executive officer Mark O’ Dell said the Misi survey revealed worryingly high levels of debt.

“Against the backdrop of more volatile financial markets and slowing economic growth, investors need to better manage their finances and track expenses to prevent them from incurring too much debt.

“Without effective debt management, Malaysians are less likely to achieve their long-term savings goals, which could jeopardise their future financial security,” said O’Dell.

And though saving for retirement is the number one financial priority for 21% of investors in the survey, investors are failing to efficiently save for their retirement, said O’Dell, with many investors not having a target savings goal (41%), including those aged 35-49 (43%), who should be most active in retirement planning.

“Of those who do have a target savings goal, the average amount is RM378,000, more than 62 times average monthly personal income... whilst almost half of savers (48%) have set medium-term time frames (5-10 years) to achieve their goal; these high savings targets may be unrealistic to achieve, which could explain why the majority (67%) have only been able to save less than 40% of their target,” the statement read.

Related to this lack of effective savings management, 74% of investors surveyed wished they had done better investment planning, with more than a third (38%) wishing they had done more research, while 28% wished they had been more active in reviewing their portfolio, and 27% regretted having held too much cash.

“This may be explained by the fact that most investors rely on themselves for financial advice (79%), while investment experts ranked fifth (24%), after friends and family,” said Manulife.

Manulife Asset Management Services Bhd chief investment officer Jason Chong said investors should start saving when they are young, to enjoy the benefits of compounded returns.

“Investors should set realistic monthly savings targets and seek professional advice to ensure they are wisely investing to meet their long-term financial goals.

“They also need to think about supplementary options for retirement planning, such as Private Retirement Schemes and regular savings plans that provide steady long-term returns, to help ensure they meet their financial goals upon retirement,” he said.