China's rising affluent urged to be patient

Shen Mengdan
Charles Schwab General Manager Thomas Pixley suggests the country's newly rich embrace long-term financial planning as index indicates a rise in short-term investment behavior.
Shen Mengdan

China's rising number of affluent citizens should be more patient about investment and make diversified long-term financial plans, as indicated by an index released by the Shanghai Advanced Institute of Finance (SAIF) and Charles Schwab on Wednesday.

The China Rising Affluent Financial Well-Being Index, which reflects their current financial behavior, settled at 70.51 points, 0.27 lower than last year.

The rising affluent group is defined as those whose personal annual income varies between 125,000 yuan (US$17,567) to 1 billion yuan, and whose investable assets are less than 7 million yuan.

The research found that the enthusiasm of the newly rich for property investment has faded for three consecutive years, with the proportion of those owning two or more investment properties falling back to 12.5 percent from 32.5 percent in 2021.

In contrast, interest in financial investment among the newly rich has risen for the third consecutive year, with the proportion of users favoring financial product investment over real estate hitting a five-year high.

A rise in short-term investment behavior has become common, with the proportion of rich people focusing on short-term returns increasing significantly this year, up 5.7 percent year on year.

"The enthusiasm for short-term behavior to some extent makes the newly rich prone to make emotional decisions during market volatility," said Thomas Pixley, general manager at Charles Schwab (Shanghai).

He suggested long-term financial planning, with possible professional help, and a diversified investment, such as investing overseas.

China's rising affluent urged to be patient
Shen Mengdan / SHINE

Tu Guangshao, first chairman of the SAIF board, gave a speech at the release ceremony.

Tu Guangshao, the first chairman of the SAIF board, said: "The index, which is in its eighth edition, can help us track the movements and changes through long-time observation of this important group."

The index is based on a survey carried out this June, with 4,592 respondents, 2,055 from first-tier cities, 1,552 in second-tier cities, and 985 in third-tier cities.

Tu added: "China's economic development has currently entered an important stage of transition, and there is now an urgent need to expand domestic demand, the most important of which is consumption, which relies on the wealth of the population."

He said income growth relies on both policy and residents themselves.

"Only through the joint improvement of financial literacy and wealth health can benign wealth growth of the public be realized," said Tu.

China's rising affluent urged to be patient
Shen Mengdan / SHINE

Experts discussed various financial topics at the ceremony.


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