Singapore Property no longer the best retirement investment?

For the purposes of this article, I will be using the definition of retirement as per wikipedia : withdrawal from one's position or occupation or from one's active working life.

I came across a Straits Times Article with headlines “Property no longer the best retirement investment in S'pore: DBS report”. You may read more here 

The release of the research coincided with my recent discussion with a friend on retirement planning, we touched on the following possibilities:

•         Purchasing investment linked insurance policy
•         Investing directly into funds
•         Buying properties.

Most insurance agents will tell you that they can offer you products that can generate higher returns than your current investment portfolio. Most personal financial planners will be able to show you financial products that can generate high returns too and the same can be said for property agents.

As with most things in life, there is no black and white answer (which is great otherwise life would be boring!). We concluded that each has its own merits:

•  Investment linked policies provides an avenue for people with little or no financial background a chance to gain higher returns without the need to actively monitor the portfolio.
• Direct investments into funds are great for those are know what to invest in and have the discipline to constantly monitor the market.
• Properties provides stability and constant stream of rental income.

An important thing is to do proper needs based analysis with a clear investment horizon and not put all your eggs in one basket (diversify).

The DBS report compared returns on buying a second property to various other investments and found that it yields lowest returns amongst eight asset classes. High taxes (e.g. ABSD) was cited as a factor that reduced the returns. One could technically buy a second property as a family unit under another family members name and enjoy a lower tax rate. Hence, do your own research / seek your own advice and interpret the research findings with a pinch of salt. Always think: whose interests does the research seek to serve? (hint: it may not be you, the customer)

How are you planning your retirement? What are your thoughts on purchasing properties in Singapore for investment? Leave your comments below!