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doctorpot1 shared · May 1, 2023 19:52

Singapore Market is great as there are NO TAXES! Great for dividend and retirement investing

Most investors are drawn to the US market as it has the most volume, most stocks, and most speculations. Not many investors consider Singapore's market at all. Financial influencers all promotes investors to just DCA into $SPDR S&P 500 ETF(SPY.US)$ but I don't hear any one asking us to DCA into $FTSE Singapore Straits Time Index(.STI.SG)$. Most argument is that the share price of S&P500 goes up, but STI is flat, therefore you don't earn money with STI.
However, most of them left out an important detail out, DIVIDENDS. While STI price is kindda flat, but they put money back into our pocket quarterly. According to SGX, when we account for dividends, STI Clocks 9% Annualised Return Amidst 10 Years of Global Challenges, not 0%. 9%. Why? This is because the dividend that is paid out are reinvested back to STI so that we can have the compounding effect that S&P500 have.
S&P500 is a good investment based on historical returns. However, if we only buy S&P500, there are certain risks that we will take on. Risks such as concentration risk, currency risk, and political & regulatory risk. These risk is especially prominent in this current era where US banks are falling one by one as the fed jacks up interest rate, more talks about de-dollarization as countries starts to hedge out of fear, and the non-zero chance of US defaulting as politicians are playing with fire.
Concentration risk is about the lack of diversification. If we only invest in one country, our returns will follows the rise and fall of the country. So if US accidentally defaults, then we can see our investments gets hurt real bad. But the good thing is if US survives and thrives, then our investments will rally.
Currency risk is about the exposure to the fluctuation of the USD by us and the company we invests in. In a short span of a few years, we have experienced USD rising and falling by up to 9%. If we are living in Singapore, we need SGD to buy stuff and pay for our expenses. If our investment is entirely in USD, that means that when we need cash, we have to pray that USD is still very strong.
Political and regulatory risks is about the changes in political or regulatory conditions on our investment. The most prominent example is China, Chinese stocks crashed big time when the government started cracking down on big tech. Although for US the political or regulatory risk is lower, but with the recent US debt crisis saga, I'm not so sure anymore. These politician could accidentally caused US to default and that will be bad! Really bad!
So what are the benefit of investing in the Singapore market?
Adding Singapore into our US only portfolio helps reduce concentration risk a little as we diversify in terms on geographic. Many companies listed in Singapore have significant exposure to Asia's emerging markets too, so investing in such companies will give us exposure to these emerging markets, which helps to reduce concentration risk too.
Singapore's Exchange is well known for being highly regulated and transparent, so it does helps provides some level of stability and confidence in the market. If we are living in Singapore, this reduce currency risk as well, because the dividends and sales proceed are giving in SGD. So in the very unlikely event that US defaults, and the value of USD crashed, there is a chance that SGD may survive.
Singapore's market, in my opinion, is cheaper and more sensible as compared to US market too. As the global economy isn't doing well and when interest rate goes up, stock prices drop. However, that isn't what happen in the US market. US market rallied instead, probably due to the unprecedented amount of money printing. So, to me, Singapore's stock prices makes more sense.
Retirement by investing in Singapore
The biggest benefit for investing in Singapore's market is that we do not have any dividend tax or any capital gains tax. Unlike in the US, where all dividend are taxed at a rate of 30%. If you invest in a US company and they give you $100,000 in dividend, $30,000 is gone immediately, you only get $70,000 in your account. $30,000 gone. But if you invest in a SG company and they give you $100,000 in dividend, you get $100,000 in your account.
On top of that, according to some market data, Singapore dividend stocks tends to give out a higher dividend yield as compared to US dividend stocks. Higher yield with no tax, makes Singapore very attractive for dividend investing.
Another amazing thing about Singaporean investing in the Singapore's market is that we can get food dividend Some companies' AGM do serve amazing buffet! So when we are retired, we can just attend the AGM for free food
doctorpot1: [Frasers Property AGM rating] My first physical AGM serving tea break
That's why half of my portfolio is in Singapore's market
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only. Read more
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doctorpot1
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crawled out of poverty, working towards FIRE!! (financial independence, retired early)
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