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Bruce Stanton
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Bruce is a freelance writer who currently lives in Singapore. Before deciding to move to a new country and start a new life, he used to be a banker in New York. In his free time, he likes taking photos of cute pets in the park

Guest Writer

October 10, 2017

Viable Investments for Expats in Singapore

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Singapore remains an attractive country for expats due to its diverse business opportunities and the level of financial security it gives to investors. In a statement written by HSBC's Expat Explorer, Singapore was voted by expats as the best place in the world to live and work. Seven out of ten respondents to Expat Explorer said that they are confident about its economy compared to a global average of 48%. The survey used a controlled group of 21,950 respondents hailing from 39 countries.

This is Money claims that Singapore now offers the best quality of life especially for British Expats. Currently, about 70% of British expats living in Singapore earn over £125,000 (S$225,400) every year. In this post we look at viable investments for expats in Singapore.

Gold
investments_2.jpg For those who are looking for long-time returns, gold might be a good investment option. Gold prices are highly volatile, which is why investors don’t put a lot of their money in the precious yellow metal. Most experts advise investors to only put 5% - 10% of their assets in gold. 

FXCM's gold price chart shows that gold prices peaked at $1,890 (S$2,570) in 2011. However, its value has depreciated since then, and investors are still waiting for a rally, which may not happen anytime soon. Yet, despite a drop in value, gold is still considered a viable long-term investment. FXCM note that during times of turmoil investors always return to gold.

Singapore Business Review states that gold has a negative correlation with indexes. This means that when the markets go down, the price of gold goes up and vice versa. Most markets in Asia are positively correlated. So, if you have gold investments in Singapore, and the market is good, you will have to wait until it drops for the value to increase. Yet as the Singapore Business Review states: “Gold is a form of insurance. Buy it to protect your portfolio… hoping you never have to use it.” Gold is for investors looking for security not a fast return. 

Singapore Savings Bonds

Singapore Saving Bonds (SSB) are ideal for expats and investors who want to invest in Singapore without risk. Dollars and Sense inform that as the Singapore government backs the bonds they are virtually risk free. There are also no penalties for early withdrawals and investors can take their money out any time after giving one-months notice. For those looking to invest this way it needs to be noted that the returns on investment are small and you can only hold the bonds for a maximum of ten years. On the first year both the interest % and average return per year % is 1.05. After ten years the interest % is 3.57 and the average return per year % is 2.44. 

STI ETF

In comparison, trading on the STI ETF is for investors who are willing to take risks. The Straits Times Index's Exchange Traded Fund (STI ETF) is an index of the top 30 companies listed on Singapore’s stock exchange (SGX). The STI ETF was made to mirror the performance of the biggest stocks on the Singapore Exchange. The STI ETF is self-selecting, which means that investors cannot choose the stocks they want to invest in. The advantage of this is that the stocks will be divided amongst the most successful companies in Singapore. The risk comes from evaluating how well the Singapore economy will do. For example, Singapore' stock market is closely linked to China's. Experts have noted that the Chinese economy has weakened in recent years as shown by the unexpected 40% drop in the stock market in 2015. Another economic downturn in China could have serious repercussions in Singapore.

Real Estate Investment Trusts

Unless you are extremely rich, the best the way to invest in Singapore's real estate is through Real Estate Investment Trusts (REITs). REITs allow investors to trade on Singapore’s lucrative real estate market and invest in different capacities including industrial and commercial real estate. The SGX has 26 listed REITs with market capitalisations above $1 billion (S$1.3 billion). The property market carries a high risk with CNBC reporting that the current slump in the market doesn’t look like it will ending soon.

Think these typical investment options are boring? Here are some sexier alternatives you can channel your funds to.

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ABOUT THE AUTHOR
Bruce Stanton is a freelance writer who currently lives in Singapore. Before deciding to move to a new country and start a new life, he used to be a banker in New York. In his free time, he likes taking photos of cute pets in the park.

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