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Business Times
29-07-2025
- Business
- Business Times
How to maximise investment returns
[SINGAPORE] The Straits Times Index has been on a winning streak over the past month. As at Jul 24, the benchmark blue-chip index has enjoyed a 14-day streak of unbroken increases, sending the index past its all-time high. For those who invested early, this rally has likely translated into solid capital gains. But the extent of your profits will depend on how your investments are allocated. If a significant portion of your portfolio is parked in stocks and other growth-oriented assets, you're likely to have seen strong returns. On the other hand, having too much cash on the sidelines could have meant missed opportunities. Here's why your asset allocation matters – and how you can make the most of future rallies. Asset allocation determines returns Your portfolio's returns are closely tied to how much of it is invested, versus how much you keep as cash. Let's break this down with a simple comparison. Imagine three investors, each starting with S$100,000. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Investor A invests S$90,000 into an exchange-traded fund (ETF) tracking the STI, and keeps S$10,000 in cash. Investor B invests half (S$50,000) in the ETF, and the other half in cash. Investor C is more conservative, allocating just S$20,000 to the ETF and S$80,000 in cash. Between Apr 9 and Jul 24, the STI surged 25.9 per cent, rebounding strongly from earlier declines due to Trump's tariff announcements. Now, let's assume all three investors stayed invested during this entire period. Despite holding the same ETF, their results would differ significantly due to their asset allocation. Since cash typically earns a negligible 0.05 per cent in annual interest, we'll assume it contributes almost nothing to returns. Here's how the numbers play out: Investor A (90 per cent invested) earns a 23.3 per cent return. Investor B (50 per cent invested) sees a 13 per cent return. Investor C (20 per cent invested) ends up with just 5.2 per cent. This simple example clearly shows how being more fully invested during a market rally can significantly boost your capital gains. Even modestly allocating idle cash can improve outcomes. For instance, if Investor B had placed S$40,000 of his cash into corporate bonds yielding 3 per cent, his overall return would rise to 14.2 per cent, instead of 13 per cent. The bottom line is that being 90 per cent invested can deliver dramatically better returns than staying mostly in cash. Your asset allocation matters – and staying invested is key to capturing upside when markets rally. Pick the right stocks to improve returns Of course, the previous example assumes the investors only held the STI ETF in their portfolios. But how about individual stocks? Take Singapore Technologies Engineering (STE), for example. From Apr 9 to Jul 24 this year, STE's share price surged 40.6 per cent, far outpacing the STI's 25.9 per cent gain over the same period. Good returns are not restricted to blue-chip stocks. Smaller companies can sometimes deliver even more impressive results. One standout is Food Empire, a maker of three-in-one coffee. Its shares nearly doubled during the same timeframe, jumping from S$1.12 to S$2.41. So, if your portfolio included high-performing stocks like STE or Food Empire, your overall returns could have been significantly higher than if you had only invested in the STI ETF. Waiting for the crash Meanwhile, some investors may feel the urge to cash out during a rally, hoping to lock in profits before a potential crash. They plan to sell high now and buy back later when the market drops. It sounds like a smart move on paper – but in practice, it's much harder to pull off. The truth is, you could be waiting a long time for that crash. Bull markets tend to last much longer than bear markets. In fact, according to data from Bespoke Investment Group, the average S&P 500 bull market lasts 1,011 days, while the average bear market lasts only 286 days. That means bull markets typically run about three times longer than bear markets. So, if you're sitting on the sidelines in cash, waiting for the next downturn, you could end up missing out on years of strong gains. That's why it often makes more sense to stay invested, especially if the companies you own continue to deliver healthy growth. While there will be periods when there will be downturns, in the long run, time in the market beats trying to time the market. Don't forget dividends Staying out of the market doesn't just mean missing potential capital gains as share prices climb. It also means forgoing valuable dividend income while you wait on the sidelines. STE is a great example of why that matters. Over the past decade, STE's share price rose 166.1 per cent, climbing from S$3.32 to S$8.86. But that's only part of the story. During the same period, STE also paid out S$1.48 in dividends per share. When you include those dividends, your total return jumps to 210.5 per cent, a significant boost. In terms of annualised performance, STE delivered a 10.3 per cent compound annual growth rate (CAGR) based on share price alone. Add in dividends, and the CAGR rises to 12 per cent. This clearly illustrates how dividends play a powerful role in enhancing your long-term investment returns – not just as a bonus, but also as a meaningful contributor to wealth growth. The importance of keeping some cash Some investors believe it's best to be 100 per cent invested at all times to maximise returns, rather than letting any cash sit idle. But that approach has its drawbacks. First, a fully invested portfolio can experience sharp swings during periods of market volatility. Watching your entire portfolio fluctuate wildly isn't easy; it can lead to emotional, knee-jerk decisions. Second, having some cash on hand gives you the flexibility to act quickly when unexpected opportunities arise, especially during a sudden market downturn. If you're already fully invested when markets crash, you'll be forced to sell other stocks, likely at a loss, just to free up cash. That means selling at exactly the wrong time, when prices are falling. For these reasons, it's wise to keep a portion of your portfolio in cash. This gives you the stability to ride out market volatility and the firepower to seize opportunities when they appear. Get smart: Smart portfolio management is key The secret to building attractive long-term returns may sound simple, but it's incredibly effective. Invest the bulk of your portfolio in strong, growing companies, and hold them for the long haul. Not only will you benefit from capital appreciation over time, you'll also enjoy rising dividends that enhance your total returns. At the same time, it's wise to keep some cash on hand. This gives you the flexibility to scoop up great bargains if the market suddenly takes a dip. In short, smart portfolio management – balancing long-term investments with cash for opportunity – is the foundation for lasting success. Stick to these timeless principles, and you'll be well on your way to achieving investment results you can truly be proud of. The writer does not own shares in any of the companies mentioned. He is portfolio manager of The Smart Investor, a website that aims to help people invest smartly by providing investor education, stock commentary and market coverage
Business Times
29-07-2025
- Business
- Business Times
How to maximise your investment returns
[SINGAPORE] The Straits Times Index has been on a winning streak over the past month. As at Jul 24, the benchmark blue-chip index has enjoyed a 14-day streak of unbroken increases, sending the index past its all-time high. For those who invested early, this rally has likely translated into solid capital gains. But the extent of your profits will depend on how your investments are allocated. If a significant portion of your portfolio is parked in stocks and other growth-oriented assets, you're likely to have seen strong returns. On the other hand, having too much cash on the sidelines could have meant missed opportunities. Here's why your asset allocation matters – and how you can make the most of future rallies. Asset allocation determines returns Your portfolio's returns are closely tied to how much of it is invested, versus how much you keep as cash. Let's break this down with a simple comparison. Imagine three investors, each starting with S$100,000. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Investor A invests S$90,000 into an exchange-traded fund (ETF) tracking the STI, and keeps S$10,000 in cash. Investor B invests half (S$50,000) in the ETF, and the other half in cash. Investor C is more conservative, allocating just S$20,000 to the ETF and S$80,000 in cash. Between Apr 9 and Jul 24, the STI surged 25.9 per cent, rebounding strongly from earlier declines due to Trump's tariff announcements. Now, let's assume all three investors stayed invested during this entire period. Despite holding the same ETF, their results would differ significantly due to their asset allocation. Since cash typically earns a negligible 0.05 per cent in annual interest, we'll assume it contributes almost nothing to returns. Here's how the numbers play out: Investor A (90 per cent invested) earns a 23.3 per cent return. Investor B (50 per cent invested) sees a 13 per cent return. Investor C (20 per cent invested) ends up with just 5.2 per cent. This simple example clearly shows how being more fully invested during a market rally can significantly boost your capital gains. Even modestly allocating idle cash can improve outcomes. For instance, if Investor B had placed S$40,000 of his cash into corporate bonds yielding 3 per cent, his overall return would rise to 14.2 per cent, instead of 13 per cent. The bottom line is that being 90 per cent invested can deliver dramatically better returns than staying mostly in cash. Your asset allocation matters – and staying invested is key to capturing upside when markets rally. Pick the right stocks to improve returns Of course, the previous example assumes the investors only held the STI ETF in their portfolios. But how about individual stocks? Take Singapore Technologies Engineering (STE), for example. From Apr 9 to Jul 24 this year, STE's share price surged 40.6 per cent, far outpacing the STI's 25.9 per cent gain over the same period. Good returns are not restricted to blue-chip stocks. Smaller companies can sometimes deliver even more impressive results. One standout is Food Empire, a maker of three-in-one coffee. Its shares nearly doubled during the same timeframe, jumping from S$1.12 to S$2.41. So, if your portfolio included high-performing stocks like STE or Food Empire, your overall returns could have been significantly higher than if you had only invested in the STI ETF. Waiting for the crash Meanwhile, some investors may feel the urge to cash out during a rally, hoping to lock in profits before a potential crash. They plan to sell high now and buy back later when the market drops. It sounds like a smart move on paper – but in practice, it's much harder to pull off. The truth is, you could be waiting a long time for that crash. Bull markets tend to last much longer than bear markets. In fact, according to data from Bespoke Investment Group, the average S&P 500 bull market lasts 1,011 days, while the average bear market lasts only 286 days. That means bull markets typically run about three times longer than bear markets. So, if you're sitting on the sidelines in cash, waiting for the next downturn, you could end up missing out on years of strong gains. That's why it often makes more sense to stay invested, especially if the companies you own continue to deliver healthy growth. While there will be periods when there will be downturns, in the long run, time in the market beats trying to time the market. Don't forget dividends Staying out of the market doesn't just mean missing potential capital gains as share prices climb. It also means forgoing valuable dividend income while you wait on the sidelines. STE is a great example of why that matters. Over the past decade, STE's share price rose 166.1 per cent, climbing from S$3.32 to S$8.86. But that's only part of the story. During the same period, STE also paid out S$1.48 in dividends per share. When you include those dividends, your total return jumps to 210.5 per cent, a significant boost. In terms of annualised performance, STE delivered a 10.3 per cent compound annual growth rate (CAGR) based on share price alone. Add in dividends, and the CAGR rises to 12 per cent. This clearly illustrates how dividends play a powerful role in enhancing your long-term investment returns – not just as a bonus, but also as a meaningful contributor to wealth growth. The importance of keeping some cash Some investors believe it's best to be 100 per cent invested at all times to maximise returns, rather than letting any cash sit idle. But that approach has its drawbacks. First, a fully invested portfolio can experience sharp swings during periods of market volatility. Watching your entire portfolio fluctuate wildly isn't easy; it can lead to emotional, knee-jerk decisions. Second, having some cash on hand gives you the flexibility to act quickly when unexpected opportunities arise, especially during a sudden market downturn. If you're already fully invested when markets crash, you'll be forced to sell other stocks, likely at a loss, just to free up cash. That means selling at exactly the wrong time, when prices are falling. For these reasons, it's wise to keep a portion of your portfolio in cash. This gives you the stability to ride out market volatility and the firepower to seize opportunities when they appear. Get smart: Smart portfolio management is key The secret to building attractive long-term returns may sound simple, but it's incredibly effective. Invest the bulk of your portfolio in strong, growing companies, and hold them for the long haul. Not only will you benefit from capital appreciation over time, you'll also enjoy rising dividends that enhance your total returns. At the same time, it's wise to keep some cash on hand. This gives you the flexibility to scoop up great bargains if the market suddenly takes a dip. In short, smart portfolio management – balancing long-term investments with cash for opportunity – is the foundation for lasting success. Stick to these timeless principles, and you'll be well on your way to achieving investment results you can truly be proud of. The writer does not own shares in any of the companies mentioned. He is portfolio manager of The Smart Investor, a website that aims to help people invest smartly by providing investor education, stock commentary and market coverage
Yahoo
18-07-2025
- Business
- Yahoo
Get Smart: When the market looks good… maybe too good?
The Straits Times Index (SGX: ^STI) has just crossed 4,100 as of 11 July 2025, setting another record in a year filled with optimism and momentum. Dividends are rising. Corporate earnings have held steady. And the long-quiet IPO market is beginning to stir again, with NTT DC REIT (SGX: TBD) officially listing on SGX just yesterday. It certainly feels like the good times are back. But if you're feeling conflicted, you're not alone. The emotional tug-of-war is real Some investors feel like they've missed the boat. Others are gripped by FOMO, afraid that the rally will leave them behind. Some hesitate, worried the market will dip right after they buy. And a few are wondering: should I take profit while I can? These emotions are natural. But they can also cloud your judgement. When the market feels too good, it's even more important to step back and focus on the fundamentals. Focus on companies with stronger earnings ahead Even as the STI climbs, several businesses are still set up for sustainable earnings growth, not just short-term price gains. Take Singapore Technologies Engineering (SGX: S63). As of March 2025, it held a record-high order book of S$29.8 billion, providing nearly three years of revenue visibility. With solid demand across aviation, defence, and smart city solutions, the group is positioned for steady growth, backed by a progressive dividend policy that rewards long-term shareholders. Then there's Singtel (SGX: Z74). Its net profit (excluding exceptional items) rose 9% year-on-year to S$2.47 billion. This growth was attributed to strong performances from Optus, NCS, and regional associates. The telco has guided for continued growth in FY2025, supported by cost savings, expanding digital infrastructure, and its regional associates. A rising full-year dividend of 17 cents per share suggests confidence in its long-term earnings outlook. Meanwhile, Singapore Exchange (SGX: S68) is quietly building a more resilient foundation. Management has targeted 6 to 8% annual revenue growth over the medium term, and recurring income from derivatives, currency products, and market data continues to grow. With IPO activity picking up, including NTT DC REIT's listing, SGX is well placed to benefit from a more active and diversified capital market. What do these blue-chip companies have in common? They're not just riding the rally — they're building sustainable earnings for the years ahead. So, what should investors do now? Don't chase, but assess. Rising prices can trigger a fear of missing out. But share prices are just one piece of the puzzle. Ask yourself: is the business likely to earn more in the future? That's what drives long-term returns. Stay selective, not reactive Not every rising stock is worth owning. Stay focused on companies with clear earnings visibility, strong balance sheets, and the ability to grow their dividends over time. Buy with discipline Even in a rising market, you don't have to rush. Consider buying in stages. This reduces regret and keeps you engaged without overcommitting. Hold for the right reason If your current holdings are still delivering results, don't sell just because prices are heading higher. The power of compounding often kicks in only after years of staying invested. Get Smart: When the excitement fades, what remains.. At 4,100, the STI is sending a clear message. Markets have rewarded long-term investors. But in every rally, there are temptations to chase and traps to avoid. So, let others watch the index. Let us stay focused on what matters — owning strong, growing businesses and having the discipline to hold them for the long term. Because it's not about predicting the next peak. It's about making sure you're still holding quality stocks when you get there. Boost your portfolio's returns with 5 SGX stocks that promise both stability and steady growth. We bring you the names of these rock-solid stocks, including why they could drive massive dividends over the next few years. If you're looking to invest for retirement, this guide is a must-read. Click HERE to download now. Follow us on Facebook, Instagram and Telegram for the latest investing news and analyses! Disclosure: Joanna Sng owns shares of NTT, STE and SGX. The post Get Smart: When the market looks good… maybe too good? appeared first on The Smart Investor. Sign in to access your portfolio
Business Times
25-06-2025
- Business
- Business Times
ST Engineering divests entire equity interest in US-based construction player LeeBoy for US$290 million
[SINGAPORE] Singapore Technologies Engineering (ST Engineering) on Tuesday (Jun 24) announced that it will be selling its entire equity interest in ST Engineering LeeBoy, a US-based construction equipment manufacturer, for an estimated US$290 million. The net proceeds from the sale will amount to around US$246 million, and will be used for debt repayment, resulting in interest expense savings of about US$9 million. In this deal, the buyer is privately held Fayat Group, which has a presence in the road equipment segment in the US through various businesses such as Dynapac and Asphalt Drum Mixers. The transaction is expected to close in the fourth quarter of 2025, though it is still subject to regulatory approvals and customary closing conditions. Based on ST Engineering's audited accounts for the 2024 financial year, LeeBoy contributed S$33.8 million in net profit and S$326.3 million in revenue. The disposal is projected to result in a net gain of about S$100 million, after taxes and transaction expenses. LeeBoy is the last of the company's construction equipment businesses and is part of the group's defence and public security segment. Shares of ST Engineering closed 1.1 per cent or S$0.09 lower at S$7.83 on Tuesday.
Business Times
25-06-2025
- Business
- Business Times
ST Engineering divests entire equity interest in US-based construction manufacturer LeeBoy for US$290 million
[SINGAPORE] Singapore Technologies Engineering (ST Engineering) on Tuesday (Jun 24) announced that it will be selling its entire equity interest in ST Engineering LeeBoy, a US-based construction equipment manufacturer, for an estimated US$290 million. The net proceeds from the sale will amount to around US$246 million, and will be used for debt repayment, resulting in interest expense savings of about US$9 million. In this deal, the buyer is privately held asphalt-paving equipment manufacturer Fayat Group, which has a presence in the road equipment segment in the US through various businesses such as Dynapac and Asphalt Drum Mixers. The transaction is expected to close in the fourth quarter of 2025, though it is still subject to regulatory approvals and customary closing conditions. Based on ST Engineering's FY2024 audited accounts, LeeBoy contributed S$33.8 million in net profit and S$326.3 million in revenue. The disposal is projected to result in a net gain of about S$100 million, after taxes and transaction expenses. LeeBoy is the last of the company's construction equipment businesses and is part of the group's defence and public security segment. Shares of ST Engineering closed 1.1 per cent or S$0.09 lower at S$7.83 on Tuesday.
