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income to finance retirement. Investments in this phase tend to adopt more income-oriented investment strategies, with the aim of maximising portfolio durability to support the level of withdrawals needed during retirement. This requires investors to consider incorporating investment strategies with fixed income and annuity solutions, such as target date funds (TDFs), insurance and reverse-mortgage solutions, during the late stages of wealth accumulation. Moving forward, investors may benefit from a broader range of wealth decumulation solutions and greater flexibility in PRS to adopt different investment strategies and investment advice.
Diagram 7
INVESTMENT NEEDS RANGE FROM WEALTH ACCUMULATION, PRESERVATION TO DECUMULATION
Accumulation, preservation
Investments tend to be growth-focused (convert income into capital)
Decumulation
Investments tend to be income-oriented (convert investments into regular income)
Retirement
Mass affluent with know-how and capacity need more options to take risks
Diversification needs
– foreign exposure, alternatives, etc.
Shift in PRS from unit trust structure to portfolio structure
Need for decumulation solutions – TDFs, annuities, etc.
Source: SC.
Need for broader spectrum of advisory to complement different levels of investment literacy and to strengthen Malaysians ability to invest for retirement
As income levels rise, Malaysia will see a growing pool of mass affluent investors. This segment includes, among others, younger working professionals with steady incomes who are digitally savvy and have varying financial needs. In light of this, investors will need wider access to investment options, services and delivery channels that allow them to pursue higher yields, such as investments into alternative asset classes and structured products. Further, as the country progresses, Malaysian investors will increasingly look for greater diversification and higher yields, which may require easier access to cross-border investment products and solutions beyond what is currently available in the market.
CAPITAL MARKET MASTERPLAN 3
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Investment needs