“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 most times (My own included).
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.
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. PM me! 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.
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 can safely 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.
If you have read my previous posts before, 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 avg 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.)
So, with that in mind, i know my odds are pretty good, at least historically based, for where i’m putting my money in – Singapore Property and my businesses. What about you?
For friends in the financial sector with products that beat what i have just illustrated, please feel free to add on. I would love to learn something new. Pls provide the last 10 years returns annually before and after inflation and fees for comparison.
Updated to add and correct Rental ROE figures, and indicate leverage used.
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.
Stuart is known for his keen acumen and insights in real estate and has helped many of his clients turned friends build their property portfolios and grow their wealth using optimised asset holding and structuring strategies.
Today, apart from handling the portfolios of private high net worth investors comprising the who’s who in Singapore and Indonesia, he leads a team of 200 agents comprising of 5 divisions and runs property related businesses on the side.
Stuart is a well known leader and personality in the real estate industry, industry speaker for events and developers, guest contributor for various property newsletters and blogs and is often featured in media interviews on 938FM, Channel 8, PropertyReport, PropertyGuru and other publications. Throughout his career, he has also coached many top million dollar producing agents from different agencies in Singapore.
In his free time, he enjoys bodybuilding, snowboarding, travelling and spending time with his baby boy and wife.