3 Investment Myths Singaporean Investors Should Not Fall Prey To This Year



What would you do if you had an extra $35,000, $50,000 or even $100,000 sitting in your bank?

You could leave it there to collect meagre interest, or splurge on exorbitant luxurious items. Our suggestion however, is to use your money well by growing it right. We understand that making a right decision on investing is a tough and heavy commitment.

The world of investing changes with the wind and that implies that yesterday’s wisdom can soon turn into today’s myths. In often cases, many investors make bad investment decisions when they haven’t quite kept up.

Today, we debunk 3 common myths that have been circulating and misleading many investors in 2017, regardless the size of their investment.

3 Common Investment Myths To Debunk In Current Day

Myth No. 1: Stock Bonds Are Safe

Are we to believe the banks when they sell us bonds claiming that they are “safe”? The global financial crisis and collapse of numerous oil and gas companies have devastated many equity owners and affected tons of bondholders, when these companies struggle with the difficulty of repaying loans.

Technically, bonds are “safer” since bondholders get paid off first before equity holders in the case of liquidation. However, whether or not they are “safe” depends on the company you are throwing money into. In our opinion, that’s not exactly how “safe” should sound like.

Click to readmore on why stock bonds are just not safe anymore.

Myth No. 2: “Properties” Are A Sure Investment Win

It is not a surprise why property investment are popularly deemed as great investments.

Investing in good old fashioned bricks and mortar is seen as a more tangible and concrete investment compared to the turbulent stock market.

“Overall property prices have been decreasing since the introduction of cooling measures in 2013.”

This myth that have been around for some time, in Singapore especially, rooted from the previous generation of property investors who have seen amazing returns due to the economic growth that Singapore has enjoyed since independence.

This has fuel optimism bias when people start looking into investments and see real estate as great venture. They end up paying high prices beyond affordability, being over confident that they are going to reap large increased returns.

“Fundamentals are showing that long-term property prices are not expected to be a sure shot at making you rich. Property prices will at best, in the long run, match inflation.Unlike those who were able to purchase a property in the 70s and 80s, those who purchase a property today will see limited upside in the future.”
 -Dollars and sense Sg, 2016

In Q2 2016, property prices had bottomed out. The drastic shock came in big Q3 2016, when they made a plunge, leaving investors’ holding power tested.

This recent situation is a great lesson for potential investors to learn from.

While we believe that real estate is one of the key avenues for investments of all time, you can and will lose money if you buy the wrong asset at the wrong time, making unsound decisions with naive expectations.

Click here for 5 tell tale signs that property investments will be declining in 2017

Click here to read news report on “why the investment outlook for Singapore property markets may be grim.

Myth No. 3: Overseas Investments Are Extremely Risky

Some investors won’t invest abroad because they are under the impression that it would be at a higher risk. We however, are exposing that as a myth today.

Global investing offers diversification, allowing one to be spreading investment money around different markets. This strategy lowers risk of the entire investment.

Prudent Singapoeans generally have this viewpoint that oversea investments are risky mostly because the average investor does not know enough about them.

It is indeed true that it is “risky” if we do not know exactly what we are investing in. Hence, learn up well about them and make smart decisions.

If you are an informed investor, seeking diversification by investing outside of Singapore could actually be safer.

Experts all agree that the most efficient way to accrue wealth is through sound investments. However, unprecedented global events and market volatility changes things up quickly. Stay up with current investments new well and accurately. Know which are the truths of yesterday or complete myths stemmed from rumors so to make the right choices and not getting cold feet at potential revenue-earning ones. 

In closing words, investing anywhere comes with inherent risks. We strongly urge you not to invest in something you don’t understand.

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Recommended Readings:

http://dollarsandsense.sg/3-singapore-stocks-that-have-been-badly-affected-by-the-economy-this-year/

http://dollarsandsense.sg/5-common-investment-myths-to-debunk-in-2017/

http://dollarsandsense.sg/why-you-should-not-always-listen-to-what-your-property-agent-is-saying-about-the-housing-market/

http://www.schroder.com.sg/en/uk/tp/markets2/markets/four-investment-myths-on-the-rise/