How to Afford Living in the World’s Most Expensive City


We have all loved huddling next to our grandparents and listening to fascinating tales about what a cent could buy back then. Years later, we grew up and facepalmed our naïve selves for being oblivious to the impact of inflation. A dollar can buy what a cent could buy back then and ten dollars will buy what a dollar can buy now. This is the cold hard truth of inflation, and Singaporeans of all people know what it’s like to live in an exorbitant economic climate. In fact, it recently earned the distinction of becoming the most expensive city in the world.

The Consumer Price Index has grown by a steady 4%-5% annually over the past few years, which means that the price of goods has risen by the same percentage too. If we assume that the CPI follows the similar pattern of growth over the next decade, then your money will essentially be worth 30% less by 2024.

The growth rate of savings accounts in Singapore pales in comparison to the CPI, and even FDs can’t fetch you growth rates exceeding 2-3%. Real estate investment is the ideal bulletproof investment to make; however, it is often beyond the realm of affordability of most working class Singaporeans.

Although elevated prices are a bitter pill to swallow, Singaporeans can beat the inflation monster and keep their portfolios shining if they opt to invest in the booming corporations of Singapore rather than sulk and solely focus on savings. You might often end up detesting these “evil corporate overlords” for their business practices; however, an organization’s only purpose is to make profits for its shareholders. Therefore, if your money is tied to their company, then their interests are surely aligned with yours.

Opportunity never runs dry when economic growth is on the horizon, and equity investments are the testing ground for your financial wits that offers everyone the same opportunity to shine.

Why Equity Investment Is a Golden Opportunity

Firstly, investing in equities does not require a massive sum of money to kick off. Even an amount ranging in between $1000-$5000 can lead to promising returns in the future if invested wisely. For starters, you don’t need huge capital. $1,000 is enough to get started (although most people set aside around $5,000 when they first start investing).

The market is packed with a plethora of financial instruments to choose from, but there is no product as effective at beating inflation as stocks. The stock market may appear to be a monstrous unsolvable puzzle; however, the truth is it is more transparent and accessible than ever now. Secondly, the liquidity offered by stocks is unmatched by any other form of investment.

The only trick investors need to know to succeed in the stock market is to simply follow the money. If you notice a rise in real estate prices, then it means that Capitaland is raking in the moolah. If MRT fares are getting steeper, then surely SMRT will look good on your portfolio. Amazingly, these are just 2 out of the 30 companies you will be investing in when you opt for the STI ETF. With the help of an automated savings plan that gives you monthly savings of $250-$300, you can easily accrue enough money to purchase at least 1,000 STI shares in a year.

Financial instruments such as REITs, ETFs, and bonds are free from the meticulous active buying and selling routine followed by financial traders. You can make an easy one-time investment after conducting a thorough research of the stocks you are interested in and analyzing their risks and rewards so that they meet your financial requirements

Singapore REITs are another great option to bank on for guaranteed high yields averaging up to 9%. For those Singaporeans that have a healthy cash flow, perpetual income bonds may be worth looking into because of the consistency of risk-free payouts offered to investors.

Invest to Give Your CPF Savings a Leg Up

Whether they like it or not, CPF is a lifetime financial partner for every Singaporean. While it’s easy to understand how most citizens would be miffed at the meager 2.5% growth rate for ordinary accounts and 4% for special accounts, it doesn’t mean that there is a lack of flexibility in investment options related to CPF.

If you are looking at your CPF money for your retirement security, then it is a damn good time to start investing it right away. By investing a sizeable portion of it in equity will allow you to maximize your CPF savings and beat inflation rather than become victim to it. Therefore, your pension lump sum will definitely be adequate enough to safeguard your future when the time comes for you to retire.

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