Asian households maintain a significant portion of their wealth in cash, with some holding as much as 50% of their net worth in liquid assets, prompting fintech platforms like Syfe to offer alternative investment solutions. This practice, rooted in the region's history of economic instability, often results in the erosion of savings due to inflation and low interest rates, according to Dhruv Arora, founder of Singapore-based Syfe.
Arora explained that traditional advice to keep money in the bank often leads to a decrease in real value over time. "We have quite a heavy culture of saving," Arora said, "But inflation and low interest rates end up eroding the value of household savings. Over time, the 100 you put in the bank doesn’t become 101, but effectively 98 due to the effects of inflation."
In contrast to Asia, developed markets such as the U.S. and Europe typically see around 15% of household wealth held in cash. However, this conservative approach in Asia is gradually shifting, driven by increasing wealth and strong stock market performance across the Asia-Pacific region.
Syfe, the fintech platform founded by Arora, aims to address this issue by providing accessible investment options. The platform offers a range of investment products, including diversified portfolios of exchange-traded funds (ETFs) and actively managed funds, designed to help users grow their wealth beyond traditional savings accounts. Syfe utilizes a robo-advisory approach, employing algorithms to create personalized investment strategies based on individual risk profiles and financial goals.
HSBC economists noted in a Jan. 9 report that Asian households are slowly increasing their investments in stock markets, although overall equity investment remains relatively low. This gradual shift indicates a growing awareness of the potential benefits of diversifying wealth beyond cash savings.
The trend toward increased investment in Asia is expected to continue as wealth grows and financial literacy improves. Fintech platforms like Syfe are positioned to play a key role in facilitating this transition by providing user-friendly and cost-effective investment solutions. The company continues to expand its product offerings and geographic reach to meet the evolving needs of Asian investors.
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