Recently, I decided to sell a portion of my Singapore stock holdings and reinvest the proceeds into U.S. stocks or ETFs in USD. This marks a significant shift in my investment strategy, and I’d like to share the reasoning behind this decision.
My Journey with Singapore Stocks
Since 2019, I have been investing in Singapore stocks. The Singapore market, with its low trading volume and gentle daily price movements, provided a great environment for a beginner investor like me. While it could be somewhat dull, it also meant less volatility, which was comforting as I got used to seeing fluctuations in my investment values.
One challenge I faced was the relatively high trading fees in Singapore. For those using DBS Vickers, like myself, buying stocks costs around 10 SGD, and selling them incurs a fee of about 30 SGD. These fees can quickly add up and eat into your profits, especially if you’re making small, frequent trades. I’ll delve deeper into the specifics of trading fees in another post.
My portfolio was primarily composed of public sector stocks and Singapore REITs. Recently, I decided to sell most of these holdings. Here’s why:
Reasons for Selling Singapore Stocks
1. Limited Growth Potential:
Singapore stocks generally don’t show significant growth except for a few select short-term surges. Picking these winners is tough, and government policy changes can be abrupt, making timing even more challenging. Fortunately, the stocks I sold had doubled in value, allowing me to lock in some profits.
2. Upcoming U.S. Interest Rate Cuts:
The U.S. is likely to start lowering interest rates soon, possibly as early as the second half of 2024 or sometime next year. By increasing my holdings in U.S. stocks or ETFs now, I hope to benefit from this anticipated monetary easing.
3. Weakening Japanese Yen:
The Japanese yen has been weak against major foreign currencies. When I lived in Singapore, 1 SGD was about 79 JPY, and 1 USD was roughly 112 JPY. Now, 1 SGD is 117 JPY, and 1 USD is 158 JPY. I believe this trend of yen depreciation will persist, even if the U.S. starts lowering rates. By shifting my investments to USD-denominated assets, I can increase my overall wealth and hedge against the weak yen. The relative stability of the SGD to USD exchange rate also supported this decision.
Managing Currency Risk
Living in Japan means my pension and salary are in yen, making it unavoidable that a significant portion of my portfolio is yen-denominated. I’m constantly looking for strategies to balance this out and protect my wealth from currency fluctuations.
Looking Ahead
As I continue to refine my investment strategy, I’ll share any updates and insights. For now, transitioning from Singapore stocks to U.S. stocks and ETFs feels like a prudent move to optimize my portfolio for future growth and stability.
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