If you are investing for 10+ years
Buying at an all time high is not necessarily a problem.
Historically, markets spend a lot of time making new highs. Investors who wait for a correction often miss years of compounding.
If you are investing a large lump sum today
Be cautious.
The STI has risen more than 25% over the past year and dividend yields have compressed somewhat as prices increased. �
The Kopi Notes +1
You could consider:
Invest 30% to 50% now
Dollar cost average the remainder over 6 to 12 months
If your goal is dividend income
The STI still offers attractive yields of roughly 3.5% to 4% depending on the measure used, which remains higher than many developed market indices. �
The Kopi Notes +2
Main risk now
The STI is heavily concentrated in banks. If:
Interest rates fall faster than expected
Bank earnings weaken
Global recession appears
then the STI could correct despite being fundamentally strong.
For someone in Singapore who already has CPF and SGD exposure, I would not put 100% of my equity portfolio into STI. A mix of STI plus global equities often provides better diversification.
How much are you planning to invest, and is this for:
Dividend income
Retirement growth
Short term trading
The answer would be different for each objective.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
