​​The following headline in Singapore’s Business Times caught my attention, and frankly, had me surprised:

In well-managed Singapore, one has seen a relatively stable yet significant rise in private property prices over the years – at about 5% per annum. 

The resort island of Sentosa (name derived from the Sanskrit word “Santosha” meaning satisfaction) is a marque destination. And it is the only place in SG where foreigners can “own” landed properties (99-year leasehold starting in the early 2000s).

Related topics: value investing, property, real estate, long-term growth

Even with the heavy burden of the diminishing leasehold period, given the overall property price trends, and the massively increased global interest in relocating to Singapore, one could have EASILY expected the Sentosa villa to go up in value by 50% or more in the last decade. 

Instead, it is down over 20%, not counting other expenses! And there are several units in that famous area facing a similar situation, as the Business Times article enlightens us. 

Another recent example is cryptocurrency exchange FTX. It was created by now 30-year-old Sam Bankman-Fried, hailed as the next Warren Buffett by top business periodicals like Fortune. He had the “smartest of smart money” including sovereign wealth funds and the largest venture capitalists as investors. They had to write their entire position down to ZERO!

Moral of the story: 

Any single investment, however seemingly good, can go belly-up any time. Diversify adequately.

To elaborate a little more on “diversify”, my personal recommendation is that no single investment (or highly-correlated asset class) take up more than 20% of one’s overall portfolio. For many retail investors, a real estate property is often the biggest allocation – rising over the ideal threshold. But the remainder of the portfolio must then be split up into smaller components of  well-selected high-quality assets – stocks, bonds, funds, etc. that are “liquid” i.e. quick and inexpensive to buy or sell.