Financial Knowledge and Portfolio Complexity in Singapore

35 Pages Posted: 12 Feb 2020

See all articles by Benedict S. Koh

Benedict S. Koh

Singapore Management University - Lee Kong Chian School of Business

Olivia S. Mitchell

University of Pennsylvania - The Wharton School; University of Pennsylvania - The Wharton School, Pension Research Council; National Bureau of Economic Research (NBER)

Susann Rohwedder

RAND Corporation

Date Written: November 14, 2018

Abstract

Financial literacy in Singapore has not been analyzed in much detail, despite the fact that this is one of the world’s most rapidly aging nations. Using the Singapore Life Panel®, we explore older Singaporeans’ levels of financial knowledge and compare them to those observed in the United States. We assess portfolio complexity for these older households, to examine how financial literacy is related to outcomes of interest. We show that older Singaporeans’ levels of financial literacy are comparable overall to those in the United States, even though older Singaporeans score slightly lower on some dimensions (knowledge of interest and inflation), and slightly higher on their knowledge of risk diversification. We document that women are less informed than men about stock diversification, and educated people tend to be more financially knowledgeable than their less educated counterparts. We also find that financial literacy is positively associated with respondents having both more wealth and more diversified and complex portfolios.

Keywords: financial literacy, investment, portfolio diversification, pension, Central Provident Fund, retirement, saving

JEL Classification: D14, E21, G11, J32

Suggested Citation

Koh, Benedict S. and Mitchell, Olivia S. and Rohwedder, Susann, Financial Knowledge and Portfolio Complexity in Singapore (November 14, 2018). Wharton Pension Research Council Working Paper No. 2018-02. Available at SSRN: https://ssrn.com/abstract=3089992 or http://dx.doi.org/10.2139/ssrn.3089992

Benedict S. Koh (Contact Author)

Singapore Management University - Lee Kong Chian School of Business ( email )

469 Bukit Timah Road
Singapore 912409
Singapore

Olivia S. Mitchell

University of Pennsylvania - The Wharton School ( email )

Philadelphia, PA 19104-6365
United States

University of Pennsylvania - The Wharton School, Pension Research Council ( email )

3302 Steinberg Hall-Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6302
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Susann Rohwedder

RAND Corporation ( email )

P.O. Box 2138
1776 Main Street
Santa Monica, CA 90407-2138
United States

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