Imagine this:
A plate of chicken rice at your favorite hawker stall cost $3.50 in 2020. Today, it’s $5.00.
Your salary? If you’re lucky, it’s risen 10-15% in those five years. For many Singaporeans, this gap between rising prices and slower wage growth means your savings are shrinking in real terms. Let’s break down why this happens—and how you can protect your hard-earned money.
Why Inflation Hurts Singaporeans
The Silent Squeeze: Prices Rise Faster Than Wages
Singapore’s core inflation—which excludes housing and transport costs—is projected to stay between 1.5% and 2.5% in 2025610. While this seems low, essentials like food and healthcare are rising faster:
-
Hawker meals increased 6-8% annually since 2020
- Healthcare costs jumped 2.7% in 2024 due to higher insurance premiums
Meanwhile, salaries are struggling to keep up:- Nominal wages grew just 4.1% in 2024, slowing from 2023's 6.4%
- After adjusting for inflation, real wage growth is even smaller - around 2% annually
The Savings Trap: Why Cash Loses Value
Storing money in a bank account? Here's the problem:
- Average savings account interest: 0.05%
- Core inflation (2025 forecast): 1.5-2.5%
Result: Every $1,000 in your bank account loses $15-$25 in purchasing power yearly. Over a decade, that's a 20-30% loss.
Assets like stocks and ETFs historically grow 5-7% annually—well above Singapore’s inflation rate. For example:
- STI ETF (ES3), which tracks Singapore's top 30 companies, returned 6.2% annually since 2002.
- Global ETFs like the Vanguard S&P500 ETF (VOO) grew 10% annually over the past decade.
Unlike cash, these investments compound over time. A $10,000 investment growing at 6% becomes $17,908 in 10 years - even with 2% inflation eating away.
ETFs let you own hundreds of stocks or bonds in one purchase. They’re ideal for beginners because:
- Diversification: Avoid putting all eggs in one basket.
- Low Fees: Singapore ETFs like Nikko AM STI ETF charge just 0.3% annually.
- Inflation Protection: With a annualized growth rate of about 8-10% yearly, which is well above the core inflation rate of 2.5%.
If you’d invested $500/month in the STI ETF from 2015–2025, you’d have $98,000 today—outpacing inflation by 4% annually.
Apps like StashAway or Syfe let you buy ETFs with no minimums. Automate $100 / month to build discipline.
If you have an Interactive Brokers (IBKR) account which we use in our training programmes, you can set up a recurring investment into low-cost ETFs like VOO.
- For Stability: STI ETF (ES3) - 30 top SGX stocks.
- Exposure to the US Market: Vanguard S&P500 ETF (VOO) - tracks the top 500 companies of the S&P500
- Global Exposure: Vanguard Global Stock ETF (VWRA) - 9,000+ worldwidde companies.
- Inflation Hedge: SPDR Gold Shares ETF (GLD) - tracks gold prices
Singapore's market dipped 15% during COVID but rebounded 40% by 2023. Patience pays.
We have created a free 30-page ETF eGuide tailored for Singaporeans. Inside you'll learn:
- 2 Safe ETFs (local & US ETFs)
- The Power of Compounding - 8th Wonder of the World
- How to Keep Risk Low with Diversification & DCA
- A $100 / Month plan Invest on AutoPilot using platforms like IKBR, POSB, or MooMoo
👉 Download Your Free Guide HereSingapore's economy is strong, but prices will always keep rising. By starting with ETFs, you are not just preserving your savings - you are building a safety net that grows faster than the cost of living.
P.S. Every investing legend started somewhere. Claim your free ETF guide today.
