Quote:
Originally Posted by ptader
TBH realistically for sinkies besides betting on property what else can they invest to make it big? Even if property got cycle, not ideal, depend on timing etc... What other alternatives are there? Property is still the surest way to make money compare to all others.
Fix Deposit, Bank Savings, Strucutred Deposit etc - All pathetic interest guaranteed to lose to inflation
Stocks - Full of consters, scandal, crappy IPOs. Stocks is the kind you always hear about someone somewhere make big money, but its never you. Besdies the money you can borrow for stock punting is much lower and higher interest rate than whacking property. You look at the Sunday Times invest section where they interview rich people, most tycoons are either start own business or play property, stock people are like super rare
Bonds - Retail bonds are now a joke with maturty yields averaging 1.5-2.5%. Those with higher yields are either open only to accreditied investors or trade at blocks of $250,000.
Unit Trust - All those professional manage funds charge high fees, pay this pay that and in the end most underperform and even if you lucky to get some better ones, they are only slightly better, not enough to make it big.
ETF - Supposedly safer because of diversification, but returns are so so, cannot really borrow money. Most expose to USD which keep depreciating against SGD. Probably a good way if people are discipline and invest regulary, but very hard to get rich or retire early.
Endowment / ILP - Always hear of people selling these junk, but never heard of anyone getting rich through a ILP except for the insurance agent
Commodities like gold, silver, diamond - Really just high volatile price. Pure 100% gambling, again compared to property cannot borrow as much, sometimes high sometimes low. Property is more like 80% of the time high and 20% low.
Forex / Option / Future trading - Just like stock, always hear rumor about someone somewhere make it big, but those who make it big super rare. This is the favorite of newbie fresh grads with little money but want to dream of retire at 40. Usually loose money through leverage until blur blur then give up and go back to a 9-5 job.
Alternative Investment - Wine, art, farm, gold rebate scheme, land banking, MLM whatever. Most require special expertise or just con jobs waiting to explode.
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3 counter points.
1. Not necessary to stay invested at all times - now is a particularly tricky time to be invested in any asset class. Understand that inflation is a concern, but buying property has at a high is no hedge (i.e. if you bought a property in 1997, you may not have broken even in NOMINAL terms even today).
2. Leverage is the primary advantage AND disadvantage for property
- obviously many generations of Singaporeans have made it rich by buying property due to the effect of leverage. But this is a double edged sword.
- if you buy a $2mn property today, using your hard earned $400k as downpayment, and we see a 'normal' downturn with a 30% drop in prices, you would lose $600k and be in negative equity territory
- I know its only a paper loss if you can hold on to the property, but isn't it better to wait until it drops to $1.4mn before you buy ?
3. Policy risk
- We are seeing more policy risk now than ever, as the govt is coming up with round after round of policy measures - there's no end to this
- If you look at what the govt has done, they have effectively taken away foreign buyers (10% stamp duty), speculators (16% sellers tax within 1st yr) and reduced mortgage tenors (35yr / 65 yr old rule)
- historically such policy measures have a lag effect, but they WILL eventually gain traction (this has been proven throughout history and across geographies), so why buy now?
- its damn hard to make money now i.e. my 3 to 5-yr outlook is more negative than positive (against the backdrop of continued policy risk, weak global environment, property prices at an all time high, interest rates at an all time low, record TOPs coming onstream in the next 3 yrs) and if i want to flip, i buy a $2mn property now and pay 3% stamp duty, 1% agent commission, 16% seller's tax, 2% agent commission to sell my current house --> means I have to sell at above a 22% profit in order just to break even !
so in summary, why property and why now ?