Do you think I should just invest into a REIT ETF for safe and stable dividend returns?

Hi Anonymous, thanks for the question.

While REITs can provide income, just using a REIT etf exposes you to a few risks. 1) Concentration risk as all your eggs are in one sector. 2) REITs do not protect your capital unlike bonds, so there will be a lot of equity like volatility to consider. An alternative is to use a mix of Singapore Savings Bonds, REIT ETF, STI ETF, and Retail bonds (eg Temasek bond etc) to diversify and also the bonds will help protect the capital.

Also, do note that there is a min brokerage charge per trade and so if you only put in $5,000 per trade, with a min brokerage fee, your cost of investing can be high.

REITs are not safe. Their volatility is as high, if not higher than stocks (the REIT portfolio has a higher volatility than the STI ETF, which is already abysmal). (Source: Wilfred Ling's article). So they overcome inflation, give you dividends and potential capital appreciation, but safe is not the word I'd use to describe them, especially in the short term.

You have concentration risk, like Christopher mentioned. I would have missed out the brokerage charge, so that's a good point in relation to placing in sums. Besides, statistically you'll make more as a lump sum investment, if you really decide on REITs regardless (Source, Blackrock, Vanguard).

If you'd like safety AND dividends, I could offer you funds that have less volatility and as high dividends as REITs. Do drop me a message if you'd like to have a conversation about it.

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