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4 Things You Should Do To Cope With Inflation in Singapore

Inflation is a growing concern for many Singaporeans, especially as the cost of living in the city-state continues to rise year after year. Inflation is the rate at which the general price level of goods and services is increasing, and it affects everyone, from the young to the old, and those with low or high incomes.

The Monetary Authority of Singapore (MAS) has projected that inflation is expected to rise in the coming years due to several factors, including rising global oil prices, supply chain disruptions, and labour shortages. This means that Singaporeans will need to take proactive measures to protect their finances from the effects of inflation.

In Singapore, there are a few types of individuals when it comes to inflation. We have those who complain and fret over how terrible the cost of living is, and also the other spectrum of individuals who take action to adapt to the new normal. If you’re looking for ways to beat inflation in Singapore, there are 4 strategies you can employ to help you stay ahead of the game.

Invest in stocks and shares

Investing in stocks and shares is a popular strategy for beating inflation in Singapore. This is because stocks have historically outperformed inflation over the long term, offering investors the potential for significant returns. Buying a stock allows you to participate in the growth of the underlying companies. As the company grows and becomes more profitable, the value of the shares will also increase. However, investing in stocks and shares also comes with certain risks. The value of the shares can be affected by various factors such as economic conditions, company performance and geopolitical events. Always do your research and analysis before you invest in any stock. 

For those that are new to investing in stocks and shares, it is recommended to get started by investing in a unit trust or exchange-traded fund (ETF). These are investment vehicles that pool money from multiple investors and invest in a diversified portfolio of stocks. Unit trusts and ETFs offer investors the potential for diversification and professional management, as the fund managers make investment decisions on behalf of the investors.

Consider alternative investments

In addition to stocks and shares, there are a number of alternative investments you can consider to beat inflation in Singapore. These may include real estate, commodities, or even cryptocurrency. Real estate investment trusts (REITs) are a popular choice for many Singaporeans, as they offer a relatively stable source of income and the potential for long-term capital appreciation. Singapore’s property market has historically been a strong performer, with prices rising steadily over the years. Investing in real estate can provide investors with rental income, as well as capital appreciation if the property value increases over time.

Cryptocurrencies such as Bitcoin and Ethereum are another alternative investment option that has gained popularity in recent years. While cryptocurrencies are notoriously volatile and risky, they have the potential for significant returns if invested wisely. Investing in cryptocurrencies should be done with caution and only with money that you can afford to lose. 

Personally, I have not invested in cryptocurrencies as it goes against my investment methodology. I find that they are too volatile for my risk appetite. Alternative investments often come with higher risks, therefore it is important to conduct thorough research and analysis before investing in any alternative investment option. It’s also recommended that investors only allocate a small portion of their portfolio to alternative investments, in order to mitigate risk and ensure a diversified portfolio.

Save and invest regularly

One of the most effective ways to beat inflation in Singapore is to save and invest regularly. By setting aside a portion of your income each month and investing it in a well-diversified portfolio, you can help ensure that your wealth grows over time, even as the cost of living increases. One of the key benefits of saving and investing regularly is the power of compound interest. Compound interest is the interest earned on your initial investment, as well as any interest that accrues on that investment over time. By reinvesting your investment earnings, you can exponentially increase the value of your portfolio over the long term.

When it comes to investing, it’s important to build a well-diversified portfolio that includes a mix of stocks, bonds, and other asset classes. By diversifying your portfolio, you can spread your risk and reduce the impact of any one investment performing poorly.

In Singapore, there are several options for saving and investing regularly. One option is to invest in a robo-advisor, which is an online investment platform that uses algorithms to create and manage a diversified portfolio based on your investment goals and risk tolerance. Robo-advisors are becoming increasingly popular in Singapore, and can be a cost-effective and convenient way to invest regularly.

It is extremely important to utilise a budgeting technique so that you can squeeze more out of your savings. Some of the popular budgeting strategies are envelope budgeting and the 50/30/20 budgeting rule. Lastly, always set aside an emergency fund to tide you through unexpected situations.

Shop smartly

Finally, shopping smartly can help you beat inflation in Singapore. By being a savvy shopper, you can save money on everyday purchases and free up more money for savings and investments. One key strategy for shopping smartly is to compare prices and shop around for the best deals. With the rise of e-commerce platforms in Singapore, it’s easier than ever to compare prices and find the best deals online. Many e-commerce platforms offer competitive prices and promotions, so it’s worth checking several platforms before making a purchase.

When shopping for groceries, it’s important to be mindful of promotions and discounts. Many supermarkets in Singapore offer regular promotions and discounts on popular items, so it’s worth checking the weekly flyers and planning your purchases accordingly. It’s also worth considering buying in bulk for items that you use frequently, as this can often be more cost-effective than buying individual items. Find out more on how you can save more money during your grocery trips with these 10 easy tips.

Singaporeans can also take advantage of government schemes and initiatives, such as the GST Voucher and the Seniors’ Mobility and Enabling Fund, to help offset the cost of living.

Start coping with inflation

Overall, beating inflation in Singapore requires a combination of smart financial planning, investing, and shopping habits. By employing these strategies, you can help ensure that your wealth grows over time, even as the cost of living continues to rise in Singapore. It’s important to regularly review your financial goals and investment strategies to ensure that they are aligned with your personal circumstances and risk tolerance.

Eugene Chai

Eugene Chai is a seasoned financial expert with over 4 years of experience. His work has graced the pages of prominent Singapore Investment sites. He has also been featured on Channel News Asia - Money Talks. With a passion for simplifying complex financial concepts, he empowers individuals to make informed decisions about their money. Whether it's investment strategies, personal finance, or market trends, Eugene's insights are a beacon of clarity in the world of finance.

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