The Sunday Times — Invest section (B/1-5)
Extracted full text for article titles found in the Invest section.
1. Goodbye hero stock… …hello diversified chips, cloud and software AI investments?
Page: B/2 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KID.1+G4OOS9CS.1.html
Goodbye hero stock… …hello diversified chips, cloud and software AI investme…
Goodbye hero stock… …hello diversified chips, cloud and software AI investments?
Opportunities broaden, as well as ways to build more balanced AI exposure, as the industry matures.
Angela Tan
Senior Business Correspondent
Artificial intelligence has become the defining investment theme in recent years, reshaping industries from healthcare to finance and opening new growth avenues.
Experts say one approach investors can consider is to build a basket of AI stocks across the value chain. For example, combining chip leaders (Nvidia, Broadcom, AMD, TSMC), cloud platforms (Microsoft, Amazon, Alphabet) and selected software names (Palantir, ServiceNow) to reduce single-stock risk.
Yet the market’s enthusiasm has not been without turbulence, as investors sift through companies that can harness the technology and those that cannot.
This was witnessed five weeks into 2026, when fears of AI-driven disruption triggered heavy selling in the software sector, wiping out US2.5 trillion) in valuations.
Concerns intensified following reports that Claude Cowork, an AI-powered productivity platform, could put traditional software vendors out of business. The S&P 500 software and services index tumbled 30 per cent in February from its October 2025 peak.
Selling pressure spread to other service-based industries seen as vulnerable to new AI tools. These include financial brokerages, data analytics, insurance, commercial real estate and wealth managers.
Despite reporting strong earnings, shares of software companies, including Microsoft, Adobe and Salesforce, tumbled.
As the lines between hype and reality become blurred, how can investors stay exposed to the long-term AI story without getting hurt by short-term volatility?
Is it a bubble, and is it popping?
The blanket sell-off fails to distinguish between vulnerable and resilient business models, experts say. It assumes a bear case that AI will let firms replace incumbent software easily and cheaply.
Analysts argue that incumbent software systems are complex and hard to replace. There are “integration complexities” and switching costs involved.
HSBC’s head of US technology research, Mr Stephen Bersey, says once a large platform application is installed and a customer’s business runs its critical operations on it, switching carries many risks.
If there is a disruption during a platform replacement, normal operations can stall, loyal customers can leave forever, brands are tarnished and revenue can hard-stop until the issues are resolved, he says.
Mr Ryan Hammond, portfolio strategist at Goldman Sachs Research, says the industry’s fundamentals are still strong.
The market is starting to see more industry-specific applications rolled out from large language models that are prompting investors to question the long-term sustainability of certain business models, he says. This scrutiny is contributing to greater divergence among technology stocks.
Investors like these companies’ earnings and growth over the next few years. However, they are unsure how strong the business will be further down the road. Given that a big chunk of a stock’s price comes from profits far in the future, even small doubts about long-term prospects can matter more than today’s solid numbers, he says.
AI-related spending to build data centres, buy chips and secure talent is also unnerving investors.
The Big Four hyperscalers – Microsoft, Alphabet, Amazon and Meta Platforms – have committed about US$650 billion to data centre capital spending in 2026, up nearly 60 per cent from 2025 levels. They are expected to require billions of dollars more to meet expected demand before the end of the decade.
Time and money will determine who will succeed, and when. US President Donald Trump’s administration has added a new layer of uncertainty for these companies, with his tariff announcements disrupting international trade.
For those looking to buy the Magnificent Seven tech stocks for exposure to AI, bear in mind that they now come with concentration risks on top of their high valuations.
Investors already hold very large positions in the Mag Seven tech stocks. This means most people who wanted to buy have already done so, leaving less new money or dry powder to push prices higher. Thus, some experts expect the Mag Seven to keep underperforming in the broader market.
As the industry matures, investors are gravitating towards companies that show fiscal discipline and progress in monetisation, says Mr Ritesh Ganeriwal, managing director and head of investment advisory at Syfe, a digital investment platform.
“2026 is likely to be less about who spends the most on AI and more about whether these companies can sustain their elevated earnings growth and meet Wall Street’s high expectations,” he says.
Coping with the mood swings of adolescence
The market behaviour is typical of a later-stage bull market, says Mr Jay Woods, chief market strategist at Freedom Capital Markets.
The market may find it harder to push significantly higher, but that does not necessarily mean the bull market is over.
Investors should not cling to yesterday’s winners. Instead, they should reposition into the areas now taking the lead, he says.
Big tech firms remain central to the AI boom. Chipmakers like Nvidia and Taiwan Semiconductor Manufacturing Co (TSMC) supply the hardware powering AI, while cloud companies such as Microsoft and Amazon integrate it into their services.
Rising demand for AI infrastructure – from chips to memory and wafers – is supporting profits across the supply chain, with equipment makers benefiting as chip foundries ramp up spending to expand capacity.
Second-tier beneficiaries are emerging – from workflow software providers like ServiceNow and data platforms such as Palantir, to social and ad platforms like Meta – that use AI to improve targeting and engagement.
For Singapore investors, this broadening stack means AI exposure can be diversified across chips, cloud and software, rather than concentrated in one hero stock.
Investors should diversify across industries, geographies and asset classes to counter concentration risk, US dollar headwinds from geopolitics and rate cuts, Mr Ganeriwal says.
Mr Afdhal Rahman, executive director of wealth advisory at OCBC, said investors should consider seeking opportunities in sectors that are relatively insulated from AI disruption risks.
This includes cyclical US sub-sectors such as capital goods, materials and energy, which have delivered robust returns year-to-date.
Sectors like materials remain beneficiaries of persistent geopolitical tensions and the race for resources, as the sector is generally home to producers or miners of critical minerals and precious metals.
Beyond the US, emerging markets stand to gain from dollar depreciation, Mr Ganeriwal says.
Emerging market stocks jumped about 34 per cent in 2025, nearly double the 18 per cent gain in US equities, helped in particular by China’s policy stimulus and progress in AI-related sectors.
Developed markets beyond the US also performed strongly, led by European banks, Japan and Britain’s most highly capitalised blue chips listed on the London Stock Exchange represented by the FTSE 100 index.
European banks benefited from healthy net interest margins, solid capital buffers and a still-resilient economic backdrop.
Japan gained from finally shaking off deflation and pushing reforms to boost shareholder returns, such as higher dividends and buybacks.
The FTSE 100, where around four-fifths of large-cap revenues come from overseas, effectively acted as a proxy for global growth rather than just the British economy.
By asset class, gold was the standout asset in 2025, with sharp gains driven by geopolitical tensions, heavy central bank buying, strong exchange-traded fund inflows and a weaker dollar, underscoring its role in diversified portfolios. These supports are still largely in place in 2026 despite the latest pullback, Syfe’s Mr Ganeriwal says.
Bonds also had their best year in 2025 since 2020 as inflation eased and yields remained historically high. With policy rates still above estimates of neutral, markets expect further cuts from the US Federal Reserve in 2026, giving bonds room for additional capital gains as yields move lower, he adds.
All this means Singapore investors no longer need to punt the next Nvidia to gain exposure to AI.
As the industry shifts from hype to infrastructure and everyday adoption, the investable universe is widening, and so are the ways to build more balanced AI exposure.
Policy tailwinds closer to home
Investors may want to start paying more attention to Asia’s often-overlooked role in the AI ecosystem, especially its leadership in chip manufacturing, says Mr Afdhal.
The expansion of data centres across ASEAN could open up opportunities in related sectors like property, energy, cooling systems and IT services.
Singapore’s push to become a regional AI hub is also gathering momentum, with leading companies building out infrastructure and expanding AI adoption across sectors.
Singtel has been identified as a top AI enabler, thanks to its aggressive data centre expansion in Singapore and partnerships supporting Nvidia’s accelerated AI factories in South-east Asia.
Asset manager and operator Keppel also stands out as a likely beneficiary given its expertise in integrated solutions that combine power, connectivity, data centres and decarbonisation.
Similarly, Sembcorp Industries is well-positioned to capture gains through its power and natural gas operations.
In terms of AI adopters, Grab is recognised as a major driver of AI innovation in Asean while leading in areas such as autonomous mobility.
Sea, Singapore Airlines and ST Engineering have also emerged as key players in the AI space. ST Engineering is rolling out AI-driven solutions across defence, aerospace and smart-city projects, aiming to more than double its digital revenue to $1.3 billion by 2029.
Experts say one approach investors can consider is to build a basket of AI stocks across the value chain. For example, combining chip leaders (Nvidia, Broadcom, AMD, TSMC), cloud platforms (Microsoft, Amazon, Alphabet) and selected software names (Palantir, ServiceNow) to reduce single-stock risk.
Those who prefer instant diversification can look at broad tech or AI-themed exchange-traded funds.
Doing so, you may enjoy the AI ride without having to worry about the occasional bump.
2. 3 myths about ABSD that have landed property buyers in trouble
Page: B/3 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KIE.1+GV2ORK1M.1.html
3 myths about ABSD that have landed property buyers in trouble
3 myths about ABSD that have landed property buyers in trouble
Before you buy an investment property here, it is crucial that you understand Singapore’s unique tax regime for real estate so you don’t end up on the wrong side of the law, or worse, losing the whole unit.
Here are the three key misconceptions that have landed property investors in trouble because of their eagerness in avoiding paying the additional buyer’s stamp duty (ABSD).
Using the kids to hold your properties
In the past, many parents thought it was a good idea to use their children to hold their investment properties under a trust deed because no ABSD was payable then.
But from May 2022, the taxman started imposing ABSD (Trust) for such purchases and the prevailing rate is 65 per cent.
Parents may apply for a remission of this levy if the trust meets all the required conditions, such as if there is a genuine beneficiary who will eventually take over the asset when the person turns 21 years old.
Even if you are cash-rich, you should make use of such schemes only if you are genuinely giving the properties to your children.
There have been at least two cases involving parents who bought properties under a trust for their children when they were actually using the arrangement to avoid paying ABSD.
When they later sued for the properties because they needed to cash out their investments, they lost their claims because the courts ruled that the properties belonged to the children.
Once a trust arrangement has been created for a minor, such properties cannot be sold without the court’s approval.
Recently, a woman applied to court to sell a property that was held in her young son’s name for a $500,000 profit, but her application was dismissed because she could not show that the sale was for the child’s benefit.
In another case, a father succeeded in getting the court’s approval to sell two properties that were under his children’s names because he was facing financial woes and was at risk of losing his job.
But the court ordered that the sales proceeds must be deposited in a special account and the funds there can be used only for the benefit of the children.
Parents who misuse such funds for themselves can be taken to task because it shows the original trust transaction was just a sham to avoid the ABSD liability.
Those caught using fake schemes will have to pay the correct ABSD, and are liable to a further 50 per cent surcharge, or a penalty of up to four times the payable duty, depending on the facts of the case.
‘It is fine to use loopholes’
Those who make such remarks are ignorant of tax laws, which allow the Inland Revenue Authority of Singapore to disregard any schemes that are designed to avoid paying tax and impose penalties on those who pull such stunts.
So all loopholes, including blatant ones like the infamous 99-to-1 arrangement, are doomed to fail from the word go. Some tax planners had challenged the taxman’s decision by appealing to the courts in the past – in vain.
Before you consider similar moves, you should know that the legal fees for pursuing such cases will be hefty, and you risk losing even more if you fail to show that your arrangement is legitimate.
It is not illegal to avoid paying tax
Yes, it is not illegal to avoid paying more tax, provided you do so by the book. For instance, if you own a residential property, you can avoid paying ABSD legally by selling your existing home first before buying a new one.
If you choose to decouple – where one spouse transfers all shares in a property to the other spouse – you must ensure that the transaction is genuine and allows both spouses to hold two properties separately.
This is because the High Court ruled recently that such “decoupling” can also be viewed as a sham transaction to avoid taxes if the owners had ulterior motives in retaining beneficial interests in both the existing and new properties.
As property investment is an expensive affair, it is vital that you get your sums right first so that you don’t end up in trouble just because you want to save on taxes.
Tan Ooi Boon
3. TAX BATTLE: Man wants ex-wife to pay back ABSD for buying a second property
Page: B/3 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KIE.1+G4OOS66P.1.html
TAX BATTLE: Man wants ex-wife to pay back ABSD for buying a second property
TAX BATTLE : Man wants ex-wife to pay back ABSD for buying a second property
Couple had kept their money separate, and paid each other back for even small expenses
Tan Ooi Boon
Invest Editor
A man wanted his former wife to account for over $300,000 in stamp duty that was paid to buy a second property in secret as a preparation for their divorce.
He was upset because he said at least $206,000 of that sum was used to pay the additional buyer’s stamp duty (ABSD) and he noted this could have been saved if he had been consulted.
As the couple were living in a house that was in the wife’s name at the time, he claimed that had he known about his former wife’s intention, he would have asked her to transfer the ownership of the house to him.
After giving up her ownership of the home, the wife would be able to buy the second property without the need to pay ABSD as a first-time Singapore buyer.
But the High Court rejected his argument, which was “not only speculative, but also conjured from hindsight”. As the couple were at the brink of divorce then, the husband might actually object to the purchase of the second property.
Even if he had agreed, the court noted that he might face a problem in getting approval to own a landed property because the 52-year-old Singapore permanent resident, who used to work as an investment analyst, had “retired” when he was around 40, after accumulating millions of dollars in savings.
The wife, 50, who earns about 3.5 million second property on her own without her husband’s knowledge.
It was not disputed that both the house and the second property were matrimonial assets and this meant that the husband would have a share of the real estate.
He was upset because he felt that it was unnecessary to spend over $300,000 to pay for both buyer’s stamp duty (BSD) and ABSD. As he had not agreed to spending such a substantial sum when the parties were planning to split, he wanted the wife to put the amount back to the matrimonial pool with her own money.
He made this request because the couple had been keeping their money entirely separate and would even go to the extent of reimbursing each other for household expenses, including for small payments such as $8.55 for groceries.
But for the $300,000 in stamp duty, the court ruled that the wife did not have to return the sum because doing so would be “an artificial inflation of the pool of assets”.
The court noted that the wife was deemed to have accounted for the stamp duty because the whole property was added to the pool in which the husband had a share.
As the payment of the stamp duty was compulsory in order to buy the second property, the court noted that it would not be fair to add both the value of the property and its acquisition costs to the matrimonial pool.
The couple’s fully paid house was worth about 3.5 million second property had a residual value of 1.8 million.
Overall, the couple’s total matrimonial assets, which included mostly cash and investments, were valued at $8.6 million.
As the husband was more cash-rich than the wife, his financial contribution was given a high ratio of 72 per cent. As the couple were deemed to have contributed equally in taking care of the children and the household, the court gave them a similar 50 per cent ratio for indirect contributions.
What this means is the average ratio of the couple’s overall contributions was 61 per cent for the husband and 39 per cent for the wife.
Here are three lessons on financial planning that couples should know.
1 Property ownership
So long as a spouse uses his or her property as the matrimonial home, the other spouse is likely to have a share of it, regardless of whether this spouse’s name is registered as an owner.
In the past, there have been several cases involving men who had deliberately not put their wives’ names as joint owners, thinking that doing so would deprive them of a share in the homes.
Recently, a man who did that even prevented his former wife from paying the mortgage for the flat and this resulted in the Housing Board repossessing the home.
Indeed, his unreasonable action, which prevented the flat from being sold at a higher price in the open market, led the court to increase the wife’s share in the flat by 5 per cent, from 20 to 25 per cent of the payment from the HDB.
In the current case, the husband’s name was not even listed as an owner of the house, presumably because the couple did not want the hassle of seeking approval for a foreign citizen to hold a landed property.
But this did not stop him from paying about 96 per cent of the purchase price for his then wife.
Similarly, his name was also not included in the second property which was bought by the wife.
Despite not being listed as an owner of these matrimonial properties, the husband was given credit for his overall financial contributions to the household and this would enable him to stake a bigger claim over all their assets.
2 Better to have fewer accounts
Even after he had retired for close to a decade, the husband still managed to keep cash savings of over 24,000 annually.
But all his cash was spread out over close to 50 bank accounts here and abroad. For instance, he had fixed deposits ranging from 200,000 with over 20 different banks.
It was not disclosed why he chose to keep so many bank accounts because many of them were probably not used frequently as the balances were below $1,000.
By spreading his fixed deposits across so many banks, he also missed the chance of possibly getting better rates as a private banking customer if he had put up more money in a chosen bank.
Moreover, it was a chore to keep track of so many accounts and not surprisingly, he had a tough time arguing that the bulk of his savings was accumulated prior to the marriage and should not be considered in the split.
Although he took pains to gather stacks of bank documents, the court found that tracing his assets after more than a decade was “nigh impossible”. So the court ruled that the appropriate solution was to include all his assets for division, but an adjustment to the average ratio would be made to account for the husband’s pre-marital assets.
In the end, the court increased his share by 8 per cent, to 69 per cent, and this meant that he would be entitled to keep about 2.7 million, or 31 per cent of the share.
3 Don’t sweat the small stuff
Judges have always advised divorcing couples to be civil and not nitpick over personal items such as jewellery, watches or other branded items unless the total value is substantial.
In this case, the husband actually asked the court to penalise the wife whom he accused of not being upfront in disclosing her jewellery. Even when she did, the total value of her items, which included a diamond engagement ring, jade ring, Patek Philippe watch and Mikimoto pearl jewellery, was about $80,000, or barely 1 per cent of their assets.
The lesson here is that before couples start to be calculative during their divorce, they should check the legal costs for prolonging the case so that they don’t end up spending more to fight for less.
4. From door-to-door sales to boss of interior design firm
Page: B/4 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KIF.1+GO9OSN5B.1.html
From door-to-door sales to boss of interior design firm
From door-to-door sales to boss of interior design firm
Me &My Money
Expanding his business is the most effective way to grow his money, he says
Rosalind Ang
Mr Russell Chin’s interest in interior design is a longstanding one, but the journey to starting his own firm in the sector has been a difficult one.
It began with selling home fittings, sometimes going door to door trying to convince property owners to buy from him.
“I started as a salesman selling aluminium gates and window frames in my 20s,” said Mr Chin, 48.
It was his own business, but he was getting the fittings from others and his earnings were wholly based on his commissions from selling them.
“There were times when I had zero salary.”
His next venture was as a wood flooring supplier, before it hit him that his calling was to go into the interior design business.
“I realised I can be better at providing the home owners a one-stop solution in building their homes, rather than just supplying a specific renovation material,” said Mr Chin, who graduated with a diploma in business from Temasek Polytechnic.
Today, he is the founder and managing director of interior design firm Inspire ID Group, which he set up in 2012.
Mr Chin currently lives in a condominium in Bishan with his wife and seven-year-old son.
Q What do you invest in?
A I invest in my businesses, in property as well as Singapore and US stocks and bonds.
Q What was your first exposure to investing?
A I invested in my start-up company in my early 20s, selling aluminium gates and window frames. The personal sales experience was good, but the investment didn’t go well as I had no mentor at that time and I was still very young.
Q What’s your approach when it comes to growing your money?
A I primarily grow my wealth through my businesses. I believe in investing in areas I understand deeply, which is why expanding my business is, for me, the most effective way to grow my money. At the core, I am an interior designer and I’ve scaled strategically by building complementary services around that foundation. Today, I helm three interior design firms, supported by an in-house carpentry workshop, an electrician team, a tiling works team, and a cleaning company. By branching out within my core discipline, I’m able to control quality, improve efficiency, and capture value across the entire renovation ecosystem.
Q What has been your biggest financial mistake?
A One of my biggest financial mistakes was placing too much trust in my internal processes and not having enough oversight. Over a span of three years, I discovered that more than $600,000 had been misappropriated by a staff member. At the time, I was focused aggressively on driving sales and growing revenue, but I neglected to put in place proper financial controls and checks. It was a painful lesson, but an important one. Since then, I’ve strengthened internal controls, implemented stricter financial monitoring processes, and learnt that trust must always be balanced with structure.
Q What has been your best financial decision?
A It was buying over the minority shareholdings of a sleeping partner in my business. This happened shortly after the Covid-19 pandemic, at a time when the company was not in a strong position. I made the difficult decision to invest a few hundred thousand dollars to secure full ownership of the business, while also assuming the company’s existing debts.
The experience reinforced a critical lesson: sometimes the biggest gains come from backing yourself fully. Although ownership brings pressure, it also brings clarity and speed in decision-making. Regaining full control allowed me to realign the company’s direction, rebuild momentum, and position the business for stronger growth.
Q Money-wise, what were your growing-up years like?
A I grew up in a one-bedroom rental flat and I learnt early that money doesn’t come easily. It comes from effort. Whether it was watching my parents work long hours or taking on small jobs myself, I understood that money represents time and labour. I put it to work methodically so that over time, my money works as hard as I did growing up. I realised that financial security isn’t about how much you earn; it’s about how well you manage what you have. That’s why I prioritise stability and long-term growth over quick get-rich or high-risk portfolios.
Q What was your first job ever?
A I was a part-timer at a KFC outlet during my secondary school days.
Q What was your childhood dream?
A To be a businessman. I remembered I said it loud and clear in my classroom. My teacher asked me what kind of business? I replied: “A businessman that makes money”.
As a child, I didn’t save up for a particular toy or gift. I saved up for a rainy day. I enjoyed watching my piggy bank fill up and repeatedly counting the savings over time. Today, I save and invest so I don’t have to depend on a pay cheque.
Q Do you drive?
A A Ferrari 488 GTB.
Q What would your perfect day look like?
A It would start simply by enjoying a cup of pu’er tea while meeting my directors, managers and team, knowing that our processes are aligned and everything is running in good order. That sense of clarity and structure gives me real satisfaction.
Later, I’d catch up with close friends over coffee, exchanging big ideas and challenging each other’s thinking. And I’d end the day at home, having dinner with my wife and son because no matter how ambitious the day is, coming back to family is what makes it complete.
5. Finance 101 still explains almost everything about the stock market
Page: B/4 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KIF.1+G4OOS8VP.1.html
Finance 101 still explains almost everything about the stock market
Finance 101 still explains almost everything about the stock market
Allison Schrager
Investing these days feels harder than ever. So much has changed, and there are so many uncertainties, from the financial (what’s going on with tech stocks?) to the cosmic (what will the new economic world order look like?).
To make matters worse, there is no haven – not gold, not crypto, not even US Treasuries.
There is a way to manage this environment: Embrace Finance 101. Recall the basics you learnt in financial literacy class, or in that one finance course you took in college, or while getting your MBA, or just from reading the classics on investing.
Everything you need to know to manage this market environment is contained in a few nuggets of wisdom.
When investors learn that software firms’ products may be displaced by artificial intelligence, their prices fall, as they did recently. They will probably go back up, then fall again, as the market learns exactly what AI will mean for the economy and who the winners and losers will be.
It will be a messy process – but there will also be a lot of upside. That is because the implication of the efficient markets theory is there is no excess return without more risk, and timing the market is nearly impossible. If you are in markets for the long haul, settle in for a bumpy ride. Odds are, it will pay off eventually.
There is a larger benefit as well: Efficient markets are transparent and the best way to allocate capital. Private markets are not efficient because prices are not updated as new information comes in. This can result in some nasty surprises for investors as public markets deliver their verdict.
Diversify your portfolio as much as possible. For the last quarter of a century, you almost could not go wrong with big US tech stocks. If in 2005 you had invested US31,800 (S$40,200) today.
If you had invested it all in the S&P 500 instead, you would have just US$5,800. The so-called Magnificent Seven’s growth has been so spectacular they dominate the S&P, and their performance seemed to demonstrate that diversification was for suckers.
But hindsight is always 20/20. AOL also looked like a winner once. OpenAI could be 2026’s Mozilla. Concentration in indexes is not so unusual, it comes and goes. What matters is broad exposure.
One of the lessons of financial economics is that more diversification is better – and that includes investing abroad. For the last few decades, you would have paid for that choice; the US market trounced all others. But no trend is permanent, not even a 20-year one.
In fact, in 2025, global markets outperformed the US stock market. This could happen again in 2026, or not – but it’s a safe bet it will happen again at some point. There is no easy way of knowing what the future holds for any given country, which is why a well-diversified international portfolio will not pay off every year. But it is the right balance of risk and reward.
Nothing is truly risk-free, but some things are lower-risk than others. And the main “risk-free” asset – it is a relative term – is probably a US government bond.
The defining feature of a risk-free asset is that its price does not move much when the stock market does. Adding this kind of security to your portfolio offers the best possible hedge. Most of the time that means a short-term US Treasury. But if you have a longer duration liability, risk-free means a long-term bond, hedged for inflation.
These assets are not perfect, but from a risk perspective, they are as good as it gets. Gold is not a safe asset, it offers no duration and its price is extremely volatile and hard to predict. It does not offer consistent correlation with markets.
And crypto is definitely not a safe asset. It may be perceived as a dollar hedge, but it never fulfilled the basic criteria as a currency; its latest price drop coincided with a dollar depreciation. Crypto is also very volatile and correlated with markets. None of this is a surprise; crypto’s meteoric rise violated every rule of Finance 101.
Bond yields revert to the mean. It is true that yields on sovereign bonds have trended down a bit over time, as the world became safer and defaults less common. But bonds are not like stocks: Yields can go only so low, and they tend to fluctuate around a long-term average that reflects the return to capital, inflation risk, and how much we value the future.
The near-zero rates of the 2010s were never going to last. Bond prices may be more volatile in the future, especially if the world gets riskier. But the age of free money is probably over.
When you took Finance 101, if you ever did, you probably expected to learn how to be the next Warren Buffet. But the true lesson of Finance 101 is humility.
Nothing is predictable, conditions change every day, the best you can do is decide how much risk you can tolerate and then diversify, hedge or insure. And if the global economy continues to grow, as it has for a few centuries now, it should all work out. Even with AI. BLOOMBERG
6. Money Matters
Page: B/4 Source: https://e-paper.sph.com.sg/ccidist-ws/sph/st/issues/12216/OPS/GI8O7KIF.1+GO9OSNJU.1.html
Q What would you do if you suddenly had a windfall of $1 million?
A I would invest 50 per cent to leave as a legacy for my son, maybe in property. The balance would be for charity and business investment.
Q If you suddenly had only $100 to your name, what would you do with it?
A I would spend it carefully on bare essentials (such as simple meals and public transport) while immediately focusing on rebuilding.
Money comes and goes, but skills, experience and resilience stay with you. With decades in the industry, I’m confident I could re-enter the workforce or be headhunted if I made myself available. For me, $100 would not be the end, it would be the starting point of a comeback.