When we buy stocks though, we have to remember that we are investing in real everyday businesses, from the likes of local lender DBS Group Holdings Ltd (SGX: D05) to coffee giant Starbucks Inc (NASDAQ: SBUX).
However, the best advice for anyone starting out is to invest in exchange-traded funds (ETFs). These offer you broad exposure to a basket of stocks at a very affordable price.
So, if you want property exposure in the stock market, buying REITs is probably the best way to get it. However, like stock-picking, it can be difficult to do successfully if you’re just starting out.
In that sense, a REIT ETF solves the problem. Here in Singapore, if you’re looking for REITs that are listed locally, then the Lion-Phillips S-REIT ETF (SGX: CLR) is the best way to gain exposure to the sector.
However, with a relatively higher expense ratio of 0.5% you will have to be shell out more in fees to hold this specific ETF.
You’ll find all the best-known Singapore-listed REITs in the ETF, with Mapletree Logistics Trust (SGX: M44U), CapitaLand Integrated Commercial Trust (SGX: C38U) and Keppel DC REIT (SGX: AJBU) taking up some of the top spots in terms of weighting.
With shares costing S$1.12 apiece, new investors could buy four lots (one “lot” equals 100 shares) which would cost around S$450 and give them 400 shares.
Diversify and be patient
With one share of an S&P 500 ETF and 400 shares of a Singapore REIT ETF, that’s around $1,000. It’s certainly a good foundation to build on.
That’s because you have broad exposure to some of the largest companies in the world (in the US) as well as property and income-generating assets in Singapore.
One other great thing about Singapore REITs is that many of the biggest ones are now going overseas to acquire real estate assets so that gives you further diversification in your REIT holdings.
Finally, for investors starting out, remember that investing is a long-term journey to grow your wealth. Diversification, and more importantly, patience will be your biggest assets in helping you reach your goals over time.
Disclaimer: ProsperUs Head of Content Tim Phillips owns shares of Mapletree Logistics Trust and DBS Group Holdings Ltd.
Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth.
He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. He is also a certified SGX Academy Trainer.
In his spare time, Tim enjoys running after his two young sons, playing football and practicing yoga.