Why You Should Not Time The Market
Updated: May 5, 2020
"When is the best time to invest in real estate?" This is a common question that I heard from many of my clients and friends. We all want to time the market so that we can invest at a lowest price possible and sell at the highest price at the fastest time. But can we really time the market? Let me share my thoughts. Below is my vlog. If you prefer to read, please scroll down further.
Imagine today you have a miracle crystal ball that can tell you when Singapore property price will drop to rock bottom and when it will hit the highest point. Imagine it tells you exactly the date to buy or sell! Wow! You can time the market if you have such a ball!
Imagine you don’t have the crystal ball. Oh! A matter of fact, nobody has such crystal ball. Sorry to burst the bubble. I guess without such a ball, I can safely say that it is impossible to accurately time the real estate market.
I have heard many of my friends and clients ask this golden question: “When is the best time to invest in property?” I guess it is human nature to always want to know the future before everyone else do and always want to be the one that outsmart the rest. Sometimes many will base on past personal experiences they have to time and predict the future market. More often than not, personal experiences can be very limited and myopic.
Probably there could be no best time to invest and maybe the best thing to do is not to time the market.
So why should you not time the market then? Let me share with you my thoughts.
Long Term Investment
First and foremost, we need to understand this important point when come to investing in Singapore property. It is a long term investment. If you are thinking you can buy and sell within weeks or months or maybe 2 to 3 years and make lots of money, then maybe real estate investment may not be the investment choice.
Property investment in Singapore require patience. Past decades of property market movements had shown us that significant profits await those who wait. Patience is a virtue. Many became millionaires in Singapore because they have such virtue.
Future drop in price may be higher than the current price
Oh why is that so? Supposing I want to time and wait for a property price to drop. It is valued at $1 million.
But the opposite happens. The $1 million property rises in value to $1.2 million. What could be my thoughts when this happen? Most likely I will tell myself to wait longer. The correction is going to happen. So I wait and wait and it really happens. The news says property prices drop! But Guess what? When that happen, yes the valuation drops, but it drops from $1.2million to $1.1 million and I buy it. This is higher than the beginning price of $1 million when I started waiting. I could have bought that property at $1 million instead of $1.1 million.
Ok. You may be thinking what if the property price really drop? Remember my first point, property investment in Singapore is a long term investment. As you hold it and ride it out over a long period, you probably may be laughing to the bank in the future, and likely can’t recall at an instant how much exactly you bought the property. And this lead me to my 3rd point.
Studying and understanding the fundamentals of Singapore property market can give you a very good indication of where the property market will head in the next 7 to 10 years.
When I mentioned fundamentals, I am not referring to listening to someone hear say, but rather looking at the actual statistic, figures, plans released and others facts.
If the fundamentals are bad and you don’t see a good ratio of demand vs supply, you probably should exit or look for other investment opportunities.
But what if the fundamentals are good? You see what the Government is doing and will be doing. You see how much the Government and private sectors are investing in developing certain locations. You see the future potential growth of demand, and the supply may not be catching. And many other indications. These fundamentals are almost as good as the traffic signage pointing to the airport while you are on the taxi going for your holiday. Knowing that the fundamentals are good, probably the next step could be narrowing down to the location with best growth potential and working out your investment and financial plans with professionals like a realtor.
Above are my thoughts why you and I should not time the market. I believe there could be many other reasons. So what should you do if you want to invest in a Singapore property? I would suggest to start by planning to minimize risk because in any form of investment, there is no such thing as 100% guarantee returns. If you like to understand more on minimizing risk, you can check out my blog or vlog:
Let me leave you with this last phrase:
Don’t wait to buy property. Buy property and wait.
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**all data and information extracted from URA and OrangeTee & Tie Research & Consultancy. The content and information provided is for general information only. It should not be treated as an invitation or recommendation to buy or sell any specific property or product. Each illustration in the presentation or article is based on current information as at the date of publication. Readers are to consider the content as one of the many factors in making investment decision and should seek specific investment advice. Readers should carry out their own due deligience or verification of such information. The author and publisher of the article are not liable for any losses. All right reserved.