Monday, February 7, 2011

This is the time when people are greedy... in Singapore property market.

What do I mean?

Remember Warren Buffett favourite quote, "Be fearful when people are greedy. Be greedy when people are fearful."

The "People are fearful" times are over. But people never learn their lessons. They get greedy in such a short time. Have they forgotten the financial crisis that had caused the world to go into recession?

Singapore property market is still very hot, despite the cooling measures. More cooling measures are coming.

Well, people who buy properties in Singapore now are either GREEDY or just don't know what kind of shit they will get into. Why would people be willing to pay close to $900 per square feet for a 99 year property?

The buyers may question, "Property prices are going up in the long term, why not buy one now when the interest rate is so low?"

My answer to this question:

Interest rates will not be this low (1%) forever. Please do not forget that the banks revise the rates every 3 months. What will happen if interest rate increases to 4%? You can figure that out yourselves.

I would say now is the time to build our warchest with lots of money and the CPF monies. Invest in some company stocks that can give very good dividend instead. For example, Cerebos Pacific has declared a dividend of $0.32 per share. At today's closing price of $5.26, it's a yield of 6%. Isn't this better than property investment (rental yield) now?

Wait till the property price to be right before we sell our shares and turn to property investment.

Investment is just a transfer of your savings from a place to another to earn the highest interest possible.
You can leave it in a bank, buy the bank stocks, buy other company stocks, buy another property, the choice is yours.

I am currently holding on to only one property to stay in and currently growing my cash by buying some really good companies that I have found. Until I have found a good property at the right price (of course I am unable to find one now), I will continue to put my cash with these companies and earn a higher yield than rental yield.

Happy Investing and don't forget to do your homework.

I own Cerebos Pacific at the time when this post was written.

Investment involves risks and readers are expected to exercise their own discretion when making an investment decision.

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