*Latest chart updates added at the bottom of article.
“History does not predict the future."
However, to ignore history is to ignore the lessons and experiences that come with them and so often foretells much of what is to come.
I preface this sharing with the quote above as recently i did a study on what the returns are for common investments and savings choices of Singaporeans over the last ten years.
The reason being, as a realtor, business owner, a property investor and a soon to be dad, i knew my time was getting more precious and scarce and i wanted to know how to make my money work the hardest for me so that i can put more eggs in THAT basket and step out of guesstimates, predictions, industry hype etc.
After all, forecasts from economists and so-called experts are wrong half the time.
So, instead of working forward and predicting what’s going to happen in the next decade, i thought let’s work backwards, give history a chance to educate us, and find out which common investment and savings choice gave the BEST returns.
Over the past 10 years 2007-2016. (Scroll to the bottom to see the latest moving 10 years comparison)
If you look at the table i have attached, you would find 10 forms of common vehicles in which locals hold our money in.
I did not cover the different stocks, derivatives, mutual funds, commodities, overseas properties etc as the possibilities would be endless but am open to adding them in, if they are considered common holdings by Singaporeans.
I have also not attached all my workings and calculations as that would greatly confuse most people.
But, i can share that in another post if requested.
Summary
To briefly summarise, the facts show that the Returns on Equity (The money you actually put in) of Property (Landed, Condos, ECs, HDBs) outperform most of the other manners of holding wealth, with the only exception of Gold outdoing Condos by a hair’s breadth.
It is not difficult to understand why as globally we are plagued with much uncertainty over the last decade.
I have also illustrated the real growth in value AFTER accounting for inflation eating away at our money as sadly, inflation is real and impossible to deflate (if you get it).
S$1 ten years ago is worth only $0.70 today and we feel it in every aspect of our lives – From buying a morning teh-o, paying our bills to property and car prices growth.
And we can even bet that S$1 today will see approximately the same fate in 10 years time.
Looking at property investments on average, and seeing the returns performing far better than others, i conclude that my observations of economics, government and our central bank polices show that in the long run (10 years and more), our govt will still need and want to help our population to experience asset value growth for the simple reason of it being the ONLY way out for our country’s growth and survival.
Why Demand for Singapore Assets (Sing Dollar/Property etc) Will Remain Strong For The Foreseeable Future
If you have read my previous post on why Singapore properties are still a great investment choice, i have elaborated about the strength of our Sing Dollar and why it is essential and compulsory for our nation’s survival.
With a strong currency policy, the compulsory population injection due to our rapidly aging society and low fertility rates, and necessary destination as a wealth management hub, properties in Singapore cannot afford to decline in the long run.
There are just too many consequences of a negative downward spiral if that happens which we may not be able to recover from.
Yes, the property market will have its fluctuations and it is necessary to have cycles in any market to weed out the froth BUT again, do not shine your torch only right in front of your feet as in the long run, property investments will still safely and ultimately bring you to your destination – Financial Freedom.
And it is not like most of us have many other choices of investments to start with.
Unless you’re the rare super fund manager who can consistently beat SG’s average inflation of 2.56% annually and still produce decent returns.
Just for comparison, the top Japanese Venture Capital firm, Jafco, produced an avg of 2.6% annual returns over the past 40+ years. And these boys manage BILLIONS and have some of the world's best minds in there.
So, with that in mind, i know my odds are pretty good, at least historically, for where i’m putting my money in – Singapore Property.
What about you? Where do you invest your money and does it outperform the property market?
If you found this article useful, share it with your friends and comment below!
Caveat: Pls note that I’m not saying you can throw money into any property. There’s an art and science to choosing good quality ones vs buying without strict criteria.
Recommended reading: Important investment criteria for Singapore Properties
Updated: Feb 2019 returns charts over 2010-2019.
Updated in 2011-2020
Updated in 2012-2021
Need an opinion on your property investment plans, the best buys available or help marketing your properties?
Get a 1-time free 30 min Property Wealth Planning consultation with Stuart and his team of Property Wealth Planners. Schedule one right now.
A PWP consultation includes:
- An in-depth financial affordability assessment and timeline planning
- Highly relevant investment insights
- A clear and customised investment road map
- A curated list of best buys in today's market with good growth potential & minimal risks
- Selecting units with the highest potential in a new launch project
- Has your property stagnated in price? What options do you have?
- Advice on marketing and getting a buyer for your property fast
Stuart Chng, Executive Group District Director at Huttons, is a renowned leader and personality in the real estate industry.
He adores music and can play a few instruments decently without upsetting his neighbours. When not doing so, he enjoys pillow fighting with his son and coming up with silly puns which barely amuses his wife.
Professionally, he is a licensed real estate agent, an avid stocks, options and real estate investor, business owner, team leader, speaker and columnist for several property newsletters and blogs and is often quoted in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications.
Throughout his career, he has helped many clients grow their wealth through selecting great property investments and managing their portfolios actively. Read his clients' reviews here.
Stuart has also coached many top million dollar producing agents from top real estate agencies in Singapore. Read his agents' reviews here.
Related readings: