In the wake of political turmoil, rising inflation rates and new cooling measures, what are some key impacts investors should know? Below, we ask four finance insiders and experts to identify major trends to note in 2022, and how you can best prepare for them. Read on to find out!
1. “Putting your money to work is more important than ever”
The world is slowly easing into the post-pandemic new normal in 2022, with countries reopening and the emergence of new travel lanes. However, the pandemic’s lingering effects on the economy are still being felt.
“US inflation hit the highest levels in 40 years in January as a result of the global pandemic’s impact on global trade,” shares Ritesh Ganeriwal, Head of Investment Advisory at Syfe. “With the advent of war and uncertainties surrounding the Ukraine-Russia conflict, price pressures will continue to accelerate.”
What does this mean for investors and everyday folks?
“With the current context and world we are living in, putting your money to work has become such an important necessity,” shares Ritesh. “Right now, the issue is that people in Asia are holding too much cash and those who continue to keep their money in the bank will see it being eroded if nothing is being done about it.”
How can we prepare for it?
“Time in the markets is always more important than timing the markets. The key thing about investing is to start as early as you can, and let the magic of compounding work for you.
It isn’t always going to be rosy and that is part and parcel of investing. However, studies have shown that the consistent investor will ultimately make his money grow much more than those who simply leave it in the bank.
ETFs (Exchange Traded Funds) have been one of the most important innovations in the past few decades, achieving record high inflows due to its low cost and wide availability of ETFs across asset classes.”
2. Rising HDB resale prices
Closer to home, property markets are also experiencing the winds of change. The prices of Housing Board resale flats has been continuously climbing every month, with the number of flats sold dipping, in the wake of new property cooling measures introduced in December.
So, what does this mean for homeowners and potential buyers?
According to Clive Chng, Associate Director at Redbrick Mortgage Advisory, the resale HDB market will continue to climb owing to longer construction times for BTOs. However, the latest cooling measures to reduce HDB loans to 85% and TDSR to 55% will likely have minimal impact on homeowners as the important ratio is the MSR.
“We’re likely to see more decoupling, or single owner purchases for married individuals, to free up another person’s name to purchase a property without paying for ABSD. (The) resale condo market might pick up due to the lack of and relatively smaller sizes of new launches in 2022.”
How can we prepare for it?
“Try not to exhaust all your CPF on the property so that you have a buffer during rainy days. If you intend to make partial prepayments on the mortgage, consider repaying the CPF that you have used on your property to let it earn accrued interest,” Clive recommends.
3. Impact of new cooling measures
A lot has been said about the new property cooling measures introduced in December last year. These included higher Additional Buyer’s Stamp Duty (ABSD) rates, lowering of the Loan-to-Value (LTV) limits and as well as the tightening of the total debt servicing ratio (TDSR) threshold.
These measures were implemented by the Singaporean government in a strong effort to cool the property market that was booming amidst the COVID-19 pandemic. But what does this mean for homeowners and potential buyers?
What do new cooling measures mean for homebuyers?
“These broad, sweeping changes affect a wide demographic of property owners and investors, either looking for investment purposes or even for first-time homeowners,” shares Samuel Taylor of SoReal Prop.
“Though real estate statistics for Quarter 1 2022 still show increasing price trends in the residential market for sales and rentals, these increases should likely abate in the coming quarters of 2022.”
So, how can readers prepare for it?
“We believe that potential investors should also consider other forms of real estate for investment purposes. Segments like retail, office and industrial properties have strong fundamentals that can provide good investment returns in the current climate.”
4. New solutions for a new generation
Singapore has one of the highest life expectancies in the world, with average life expectancies increasing year on year. This means that a solution to ensure our well-being and needs are met during our silver years is crucial.
In Etiqa Singapore’s 2021 Protection Study, millennials, who are Singapore’s new ‘sandwich generation’, reveal their financial concerns include providing for their ageing parents financially (48%) and funding their own retirement (60%) for the future.
How can we prepare for this?
“It is crucial for the insurance industry to rally for Singaporeans to be protected against life’s unexpected events and enhance their awareness that they cannot afford not to have protection,” shares Raymond Ong, CEO of Etiqa. “Etiqa Insurance needs to continue to deliver innovative and customer-first product propositions and services that effectively bridge the protection gap. Only then, can we build up a nation of individuals that are well protected for the road that lies ahead.”
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