There's news that there is early-stage coronavirus vaccine trials.
Will the pandemic end? Will stock and bonds markets continue it's surge upwards?
Before we get there...
Avoid buying residential investment property in Singapore
As a property investor, I'm not a fan of the current Singapore residential property dynamics.
Yet so many advertisements are running these days that property is the best investment and property markets will recover post coronavirus days.
Firstly, as of today, ABSD (additional buyer stamp duty) is still at a crazy 12%!
It is such a painful cost to pay and eliminates any profitability for the starting few years in my opinion.
Secondly, even if you can avoid paying ABSD, property markets are looking oversupplied.
Look at this above! A pipeline supply of close to 50,000 units?
Imagine the competition for tenants and the buyers in a few years time if you're keen to invest now.
Thirdly, property is a huge purchase and sucks out all your possible investment cash!
Unless you've millions in your bank account.
This leads to next point...
Before investing, KEEP AT LEAST 25% IN CASH!
I personally think the best advice now is to maintain at least 25% of your money in CASH!
Yes cash that gives next to 0% interest these days. Try keeping it in high interest accounts but nontheless don't worry too much about inflation on them for awhile...
Warren Buffett is widely known as the best investor of all time. If he is holding substantial cash, it suggests that opportunities in the financial markets are NOT YET IN ABUNDANCE!
Keeping cash gives you the option to buy when markets become distressed again like in March 2020.
With that, here are my top 5!
#1 High quality bonds
This pandemic will cause many companies to go into bankruptcy.
Hence, it may be wiser to invest into high quality bonds. Bonds that companies with strong credit standing issue. These are much less likely to default.
High quality bonds can be invested in a few ways.
You can buy a retail bond on SGX or even simpler invest into a bond fund focused on that sector.
To learn more on bonds, click on the video below.
#2 Annuity plans
There are many insurer's participating plans that are structured as annuities.
Typically, at least 60% is invested into bonds which is stated above.
These annuities now typically have a guaranteed yield and a non-guaranteed yield. It suits as a lower risk investment idea.
Personally, I think guaranteed yield for annuity plans issued next year is going to be lower, hence, if it fits your retirement strategy, look for an annuity plan now.
Check out the idea below on Infinite Harvest which has a 1.77% guaranteed yield.
#3 Asian funds that pay high dividends
In my opinion, equities are looking vastly different in valuations.
US Equities which can be invested via S&P 500 are dominated by technology firms like Google, Amazon and Facebook and have seen their valuations soar this pandemic.
Nasdaq itself is at new highs! As if the pandemic never occurred...
Asian equities on the other hand have recovered only slightly since Mar2020.
A further tip to get invested into Asian equities is via funds that focus on large cap dividend paying companies. These companies will likely survive the pandemic.
An example is First state dividend advantage fund which is focused on Asia Ex-Japan equities and has a strong long term track record. Check more below
Gold has seen a spectacular run up since Marc2020.
It could be due to massive economic stimulus all over the world.
A quick glance below shows that it is at an all time high.
Is it the end of the rally or just the beginning? It's anyone guess but I'm with the former.
However, gold has no dividends and yield.
Perhaps, it will be prudent to allocate only a small % of your wealth there will do as an inflation hedge.
#5 Singapore Bank shares
Singapore banks are one of the safest in the world. DBS, OCBC and UOB are listed within the top 50.
Hence, it is likely that these 3 survive this pandemic well.
They've survived Global Financial Crisis, Dotcom bubble crash and Asian Financial Crisis...
The share prices are still relatively low as of this time of writing. Trailing PE ratio are all less than 10 only.
Keen to know more on DBS which is Asean's biggest bank by market cap, watch the breakdown below!