One of the investment vehicle that you can tap on to protect yourself against inflation is REITs. REITs is the short form for Real Estate Investment Trust and they are listed in the Singapore stock exchange.
The thing about buying reits is that you are able to “touch the brick” easily, especially REIT that are commercial based.
So, if you are shopping in say, Plaza Singapura or Tampines Mall, and you see all the shops are still pretty much in operation… well, in a way, you can say that your distribution yield are pretty much in safe hands.
The fact that the tenants needs to pay their rents, and rents will be distributed back to you, the passive income you get should be fairly consistent each and every year.
For example, Wisma Shopping Mall is under Starhill Global, Tampines Mall is under Capital Mall etc
Suntec for example, is a REIT listed in the Singapore stock exchange. Back in 2009, the share price for Suntec REIT is hoavering between $0.5 and $0.80. if you track back their history, Suntec issues a fairly consistent DPU of between $0.09 and $0.1.
Assuming you bought it at $0.80 back then…. today, you could be receiving a yield of about 12.5% each and every year. Not too bad considering some banks only gives you just close to 0.1% interest each year.
Of course, that was back in 2009… should you consider buying Suntec today at $1.5, you are looking at a yield of just 6%… which is not fantastic but still beats out what you put in the bank.
Investing in REITs is a good way to get consistent passive income. However, you should always be weary of what REIT you are buying. Remember, there are good reits and bad reits. It is wise to do your homework before putting your money in whatever investment vehicle you deem fit.
To me, it is always about buying them at undervalue prices so that not only do I get to have a stream of high passive income, I do stand a good chance to reap the capital gains as well. =)