Hey Zoomers and Millennials!
If you were born between 1997 and 2012 (Gen Z / Zoomers) or 1981 and 1996 (Gen Y / Millennials), you might be feeling that the property market in Singapore is becoming more and more out of reach.
It’s tough, isn’t it? But it’s not your fault.
The Singapore property market has been on an incredible bull run, and those who were fortunate enough to start investing in property early enough have certainly reaped the rewards.
It’s true that the these investors were fortunate to have been born during a time when properties were one of the best investments around. But they took their chances well and now are being rewarded. It is fair and there’s no point complaining about it
While I believe in the value of buying our own homes, I’m not convinced that investing in properties is the best way to build wealth in the current market. The high prices and Singapore’s slower growth means that future returns are unlikely to match the gains enjoyed by the Boomers.
If you a Zoomer or a Millennial reading this, don’t lose hope because you have options that were previously unavailable to boomers, and it’s important to explore them and find the right path for your own financial future.
With ETFs, you have the ability to invest globally for potentially higher returns, all while keeping costs low. This can be an effective way to diversify your portfolio and take advantage of growth opportunities in a range of markets. So, don’t limit yourself to local property investments – consider the benefits of ETFs and make your money work for you on a global scale.
You can still be a landlord
What if you’re still keen on being a landlord?
There’s still a way to participate in the real estate market through Real Estate Investment Trusts (REITs).
By investing in REITs, you can become a “landlord” and earn income from real estate without the hassles of managing property. The REIT manager takes care of the properties, collects the rents, and pays out dividends to you as the investor. This way, you can enjoy passive rental income without lifting a finger. It’s a great option for Zoomers who may find physical property investment unattainable due to high prices.
With over 40 REITs available in Singapore alone, it can be overwhelming to figure out which one to invest in. That’s where REIT ETFs come in handy. Instead of trying to pick individual REITs, you can invest in a REIT ETF which owns a basket of REITs. This allows you to enjoy the benefits of diversification without having to become an expert in picking individual REITs.
If you’re interested in investing in Singapore REITs, there are a couple of ETFs worth considering. The Lion-Phillip S-REIT ETF (SGX:CLR) and the CSOP iEdge S-REIT Leaders ETF (SGX:SRT) are great options that give you exposure to a diverse range of properties, from malls to offices, and industrial to logistics properties. CLR offers exposure to high quality S-REITs, while SRT provides geographical diversification with 64% SG exposure, 9% exposure to the Australian market, and the remaining 27% allocated to other regions. By investing in these ETFs, you can gain access to a broad range of real estate assets without the need for in-depth knowledge of individual REITs.
Invest globally
In the past, investors had a stronger bias towards investing in their home country due to limited and expensive access to global investments. However, times have changed and now it’s possible to invest in almost anything and anywhere with just one brokerage account, and at a low cost.
An example of how easy it is to invest globally is by purchasing a single ETF that tracks the entire world’s stock market. Two such ETFs are the Vanguard Total World Stock Index Fund ETF (VT) and the iShares MSCI ACWI ETF (ACWI). By investing in these ETFs, you can own a piece of thousands of companies around the globe, providing diversification and exposure to a wide range of industries and economies.
In addition, the S&P 500 ETF (SPY) is the world’s largest ETF and invests in some of the largest and most well-known companies in the US. Its management fee is as low as 0.0945% per year, which means that investing just $1,000 would result in an annual fee of only $0.945.
Invest in the future you believe in
ETFs also provide an excellent opportunity for you to invest in themes and sectors you believe will shape the future.
For instance, if you believe that artificial intelligence (AI) will revolutionize our lives because you were inspired by what ChatGPT can do, you can consider investing in the Global X Robotics & Artificial Intelligence ETF (BOTZ). This ETF invests in companies that develop and manufacture robots and other AI-related products and services.
If you believe that cybersecurity will play an increasingly critical role in our more digital and networked world, you may want to consider investing in the Global X Cybersecurity ETF (BUG). This ETF invests in companies that provide cybersecurity solutions and services.
If you believe that electric vehicles (EVs) will eventually replace traditional gasoline-powered cars, you can consider investing in the NikkoAM-StraitsTrading MSCI China Electric Vehicles and Future Mobile ETF (SGX:EVS). This ETF invests in companies that are involved in the production, development, and distribution of electric vehicles in China. And why China? Because it is the world’s largest car market and a leader in EV in the world.
There are many other thematic and sector ETFs that you can choose from. There’s definitely an ETF for you. Overall, by investing in ETFs that align with your beliefs and values, you can potentially benefit from the growth of the industries and sectors that you think will shape the future.
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Invest in what you care about
ETFs can be a useful tool if you prioritize investing in socially responsible companies that align with your values.
If you are concerned about climate change and want to invest in renewable energy, you can consider the iShares Global Clean Energy ETF (ICLN). This ETF invests in companies that produce clean energy, such as wind and solar power.
Moreover, if you value socially responsible investing and want to invest in companies with good reputations, you can consider the iShares MSCI World ESG Screened UCITS ETF (SAWD). This ETF invests in companies that have high environmental, social, and governance (ESG) ratings, which means they are committed to sustainable and responsible business practices.
Invest at your own pace
Investing can seem overwhelming, especially if you’re new to it or have a busy schedule. However, one way to keep it simple and systematic is by setting up a monthly investment plan. By contributing to your portfolio on a regular basis automatically, you can let your investments compound in the background and potentially grow over time.
To start, decide how much you are comfortable investing per month. While the amount is ultimately up to you, it’s generally recommended to invest no less than $100 per month to make the commissions worthwhile.
The good news is that FSMOne, a brokerage platform, is currently waiving the processing fees for all 115 of the it makes ETFs available under it’s Regular Saving Plan (RSP). FSMOne customers can choose from over 115 ETFs from six different categories such as Core Equity, Fixed Income, Regional Equity, Single Market Equity, Commodity and Tactical Plays, including popular ETFs such as Vanguard S&P 500 ETF and Straits Times Index ETF. Investors can start investing in ETFs from as low as $50/month. This makes it more affordable and accessible for investors to start building their portfolios through regular contributions. You can check out the list to see if there are any ETFs that align with your investment goals and values here: https://secure.fundsupermart.com/fsm/etf/etf-focus-list
Long-term investing is cliché but it still works
One piece of advice that is still relevant today, no matter what generation you belong to, is the importance of long-term investing. It can be difficult to predict how the market will move in the short term, but when you zoom out and take a longer-term perspective, the general direction of the market is upwards. This means that the longer you hold a well-diversified ETF, the higher the chance that you will see a profit.
It’s tempting to chase quick profits and invest in exciting assets like cryptocurrencies, but the fable of the tortoise and the hare that you may have heard as a child is a valuable investment lesson. While investments like crypto may have the potential for quick gains, they are also highly volatile and speculative. Entering at the wrong time can result in significant losses, and some cryptocurrencies may even collapse.
While Zoomers can certainly invest in crypto, it shouldn’t make up a significant portion of their portfolio. Instead, they can build a stable core by investing in “boring” but reliable ETFs.
By taking a long-term approach and investing in well-diversified ETFs, Zoomers can build a solid foundation for their investment portfolio and potentially reap the benefits of long-term growth.
ETF: a wealth building tool for Zoomers
While property investing can be a popular choice for wealth building, it may not be the best option for Zoomers. ETFs, on the other hand, offer a credible alternative for building wealth, providing exposure to a diverse range of assets at a low cost. By investing in ETFs, Zoomers can benefit from the long-term growth of the market, while also having the flexibility to invest in themes that align with their values and beliefs. By focusing on long-term investing and building a diversified portfolio, Zoomers can use ETFs as a tool for building wealth and achieving their financial goals.
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Apart from informative content, you can also participate in exciting Lucky Draws that include a luxurious staycation at a 5-star hotel, a Nintendo Switch, and the latest Apple Airpods Pro. Food and refreshments will be provided, and there are attractive account opening perks for those starting a new FSMOne.com account. Don’t miss this opportunity to broaden your investment horizons and potentially win amazing prizes! Register here:
This article is sponsored by FSMOne, and the views expressed herein are solely those of the author. The content of this advertisement has not been reviewed by the Monetary Authority of Singapore.