This article first appeared in Personal Wealth, The Edge Malaysia Weekly on July 13, 2020 - July 19, 2020
While Malaysians spent less during the Movement Control Order (MCO) period, they still participated in the stock market and put their money to work in various financial instruments, according to a recent survey conducted by Personal Wealth.
The survey of 619 Malaysians found that 82.4% of the respondents had put money aside to invest during the MCO period. The money was channelled to financial instruments of varying levels of risk — more than half (56.9%) invested in the stock market while 47.5% placed their money in fixed deposits.
A smaller number of respondents put their money in newer asset classes. The survey found that 13.6% invested in exchange-traded funds (ETFs) via robo-advisors, 6.2% invested directly in ETFs, 5.3% put their money in peer-to-peer financing platforms and 3.1% bought cryptocurrencies.
When asked about their personal expenditure, the majority of the respondents (69.8%) said they spent less during the MCO. Only 18.3% spent more while 12% did not experience any change in their financial habits. The respondents saved the most on social and outdoor activities, followed by transport, clothing and footwear.
One respondent said the MCO allowed him to save 12% of his salary as he did not have to travel to work or eat out. By working from home, he had more money left in his bank account at the end of the month, giving him the opportunity to save and invest.
Most of the respondents (60.9%) said they spent more on food and beverage during the MCO period, which included food delivery services and groceries. “While I was able to cut down on expenses related to dining out, I found myself spending more on food delivery services. These services are not cheap,” said a respondent.
Malaysians also spent more on healthcare products and services (26.2%) as well as digital service subscriptions, such as Netflix and Spotify.
When it came to financial planning, 80% of the respondents said they already had emergency savings prior to the start of the MCO. This amount varied — a large number of the respondents (30.5%) mentioned that they had saved one to three months’ worth of expenses while 27.9% had saved more than 12 months’ worth of expenses. Almost a quarter of the respondents (23.2%) had saved three to six months’ worth of expenses while the rest (18.4%) had saved six to 12 months’ worth of expenses.
The accumulated savings bode well for most of the respondents. About 78.6% of the respondents said they would be increasing their allocation to their emergency savings fund in the future.
Going forward, most respondents have plans to cultivate healthy financial habits. The majority of the respondents (69.8%) said they would save more while 54.7% said they would invest more. The respondents also plan to reduce their expenses related to social and outdoor gatherings, food and beverage, digital service subscriptions and transport.
One respondent, who managed to reduce his expenses for social gatherings, used the money to settle his outstanding credit card balance. “In the future, I plan to save more, invest more and limit my credit card use to emergencies,” he said.
Personal Wealth’s “Spending habits during the MCO” survey ran from June 11 to 19. The respondents were Malaysians of various income levels. Most of them belonged to the following age groups: 25 to 34 (42.8%), 35 to 44 (29.4%) and 45 to 54 (12.4%).
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