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It is said that there are always opportunities in every crisis. 2016 did not only start with a stock market crash. No matter you are a business person or an employee, you may have already felt the pinch of a weak Singapore economy.

Walking direction on asphalt

Not so if you have been prudent. If you have robust emergency fund and a lot of cash savings, Singapore’s economic downturn isn’t all doom and gloom. It’s a golden land of opportunity, filled with bargains. Here are some of the less visible upsides to a weak Singapore economy.

#1. Invest in private properties in Singapore

You probably have known a whole list of reasons why property prices are down. These range from additional stamp duties to weak demand. Many people are waiting at the sidelines for discounts because developers are facing issues such as the Qualifying Certificate, which imposes a hefty tax on those who can’t finish and sell the entire development on time.

The important thing to know, however, is that property prices across the board have fallen by over 9% since the last peak in 2013. If 9% doesn’t sound like much to you, we’d better remind you that you are paying $90,000 less for a $1 million house now.

For many first time buyers or upgraders, a resale flat or condominium may now be within reach.

Low interest rates may continue

One of the key worries of property buyers is the rising interest rate. In 2014, the United States Federal Reserve rose the interest rate to 0.25%, which in turn saw home loan rates rise in Singapore. But in light of the current global situation, the United States may be reconsidering further hikes in the interest rates. That will keep home loans cheap in Singapore.

sibor-2016-06-14

You can monitor Singapore’s home loan interest rate benchmark Sibor here

Stick to the 5x guideline

Now, I am not saying you should throw caution to the wind. If you can stick to the 5x guideline, you will be pretty safe. It means that if you have a total household income of $200,000 per year, you should not buy a house that costs more than $1,000,000.

Fortunately and unfortunately, Singapore’s properties have long been overpriced and many people have violate the 5x rule. The increasing numbers of mortgagee sales may create opportunities for property buyers who have cash on hand.

If you have been waiting for a long time to upgrade to a condo, or you aspire to have one as your first home, the weak economy is a good thing for you. Only if you have saved, you can take advantage of situations like these.

#2. Buy more stocks when they are cheap

With the market in bad shape, the stock prices of many large companies have fallen significantly.

If you go through regular investment plans like the POSB Invest Saver or OCBC blue chip investment programme, the current low share prices mean that you can look forward to receiving more shares for setting aside the same amount. For example:

Say you set aside $300 a month to invest in some blue chip stocks

  • When the shares cost $1 each, you would have gotten 300 shares per month.
  • If the price falls to $0.80 per share, you would now get 375 shares per month.

Besides blue chip stocks, Singapore Real Estate Investment Trusts (REITs) have also declined in price. S-REITs have long been a favourite of passive investors for high dividend payouts, as they are required by law to pay out 90% of their profits as dividends.

However, sometimes a stock price drops for good reasons, just because it is cheaper now doesn’t mean it’s right for you. Speaking to someone with investment management experience may help you avoid many investment pitfalls.

#3. Dig the share economy goldmine

When a recession hits, one of the first industries to benefit is the share economy.

Singapore experienced a high rate of layoffs in 2015, the highest since 2009. It was reported that around 15,000 people were retrenched. As everybody knows by now, when jobs are cut, the number of Uber drivers increases. As a result, the cost of transportation actually decreases.


People also rush to sites like eBay and Carousell, and offload luxuries that they need to turn to cash.

If you have been diligently saving while they’ve been spending, then this is your chance to get someone’s Xbox 360 for a bargain price, or to snatch up a smartwatch that someone bought on impulse. Watch these marketplaces like a hawk, and set up notifications for the things you want.

On the flipside, note that it’s generally a bad time to sell on these sites. Everyone is rushing to offload their stuff, which pushes overall prices down.

If you don’t want to look online you might consider visiting more flea markets, or even going to pawn shop auctions. These old school versions of ebay also thrive in hard times, with people trying to convert luxuries to much needed cash. Just be sure you don’t buy to the point that you join them.

#4. Travel while it is cheap

It is interesting that even with weak Singapore economy, Singapore dollar remains stronger comparing to our neighbour’s currency such as ringgit.

sgd-myr-2016-06-13
Singapore dollars vs Malaysia Ringgit 2 years chart

Many Singaporeans have already flocked to Malaysia for the shopping spree. Coupled with a weaker Chinese economy and falling oil price, some other currencies such Thai Baht are super weak in comparison to the Singapore dollar.

This is a good time to be on holiday in the region; just compare the exchange rates and flight costs to fetch the best deal. You should also watch travel agencies and the relevant tourism boards.

In bad times, some countries will have their tourism board go into overdrive, to try and bring in tourism dollars. This can lead to more discounts, whereas it is you intend to visit.

#5. Take support from Government

There was a time when Singapore swore it would never be a “welfare state”. That hard stance appears to be changing, much to your benefit. There is a lot of government help pouring in nowadays to cope with tough times.

But beyond that, Budget 2016 announced a slew of “rescue” measures. For example, the Wage Credit Scheme now has increased support, and this will help some employers to raise monthly pay even in tough times. There’s an Adapt and Grow initiative by the Ministry of Manpower, which is in place to help older workers find new forms of employment.

And of course, there are two to three months of rebates on conservancy charges for HDB dwellers, and some of you will get a one off GST voucher of $200.

While this support is meant to cope with tough times, they are simply extra bonuses if you have already been saving. If you have built an emergency fund of six months of your income, for example, then you probably already have ample time to find a job. The government initiatives can just help you find a better one, and you’re in no rush.

And if you’re not strapped for cash, the rebates and GST voucher are just a windfall, not a survival tool.

Your financial well-being is not tied to the wider economy

You can’t control currency rates, oil prices, or stock markets. But you can control your spending. If you stick to a clear way of saving and a systematic way of investing, you could be one of the few who are smiling during a downturn.

This article was contributed by Singsaver.com.sg and adapted by me

About the Author

Ivan Guan is the author of the popular book "FIRE Your Retirement". He is an independent financial adviser with more than a decade of knowledge and experience in providing financial advisory services to both individuals and businesses. He specializes in investment planning and portfolio management for early retirement. His blog provides practical financial tips, strategies and resources to help people achieve financial freedom. Follow his Telegram Channel to join the FIRE community.
The views and opinions expressed in this article are those of the author. This does not reflect the official position of any agency, organization, employer or company. Refer to full disclaimers here.

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