If you have been sitting on some cash for a while now, watching as the stock market continues to climb, it is probably because you are worried about a pullback.
It’s only natural to be wary of a market correction after a strong rally.
However, nobody knows when it will arrive, how bad it will be, or whether it will even happen at all.
How Much Has the Singapore Market Risen?
The Straits Times Index (SGX: ^STI) has risen 22.4% year-to-date, hovering near 5,700 points as of 24 August 2026.
It is even more impressive when we look at the one-year return, up 33.6% since August 2025, or the five-year return, up 83.1%.
Banks have done most of the heavy lifting, with DBS Group Holdings Ltd (SGX: D05), Oversea-Chinese Banking Corporation Limited (SGX: O39), and United Overseas Bank Limited (SGX: U11) accounting for 57.3% of the STI.
The three banks have substantially outperformed STI’s returns, and the rally has been heavily concentrated in a handful of big-cap names.
Why Singapore Stocks Keep Rising
The local banks’ strong earnings and steady dividends have supported investor demand.
Robust corporate earnings and positive economic expectations have also boosted investor sentiment.
The dividend culture in Singapore’s stock market also makes selected blue chips and real estate investment trusts (REITs) popular with income investors.
Additionally, foreign and institutional interest is an important tailwind for the Singapore stock market.
Singapore has benefited from capital shifting away from some riskier US-dollar assets.
Does an All-Time High Mean the Market Is Overvalued?
Markets regularly make new highs over long periods.
Valuation is what tells you if prices are high, not an index reaching record levels.
As of 24 August 2026, SPDR STI ETF (SGX: ES3) price-to-earnings (P/E) ratio of 17.3x.
Its price-to-book (P/B) ratio stands at 1.8, and its dividend yield is approximately 3.09%.
While this is above Singapore’s historically low valuation levels, it is not extreme by global standards.
The iShares Core S&P 500 ETF (NYSEARCA: IVV), which tracks the 500 biggest public companies in the US, has a P/E ratio of 30.15x, a P/B of 5.63 and a dividend yield of 1.09%.
Similarly, the iShares Core Nikkei 225 ETF (TSE: 1329), which tracks 225 top Japanese companies, has a P/E ratio of 21.78x, a P/B of 2.45, and a dividend yield of 1.51%.
When compared, STI has lower P/E and P/B ratios while offering a higher dividend yield than its peers.
Buy Now or Wait?
Perhaps the most important investing tip is this: time in the market beats timing the market.
Sitting on the sidelines means missing out on potential gains and dividend payouts.
Remember, a rising index does not make every stock expensive; focus on healthy companies with earnings and cash flows that justify their growth.
While sharp rallies can temporarily push valuations ahead of fundamentals – leaving the market vulnerable to economic or geopolitical shocks – trying to time the bottom adds unnecessary stress.
For long-term investors, choosing a durable strategy you can stick with through all market environments is far more important than landing a perfect entry point.
Should You Buy the STI or Individual Stocks?
For investors who want simplicity, an STI ETF is often the more straightforward choice.
STI ETFs provide exposure to a broad basket of Singapore’s largest companies in a single investment, reducing company-specific risk.
However, if you seek income or outperformance, individual stocks can offer targeted opportunities, particularly among banks and selected small- and mid-cap companies.
DBS, for example, has had an impressive 2026 so far, trading at S$75.56 per share as of 24 August 2026, up over 50% on a trailing twelve-month (TTM) basis.
The bank reported a record net profit of S$3.08 billion for 2Q2026, and a total dividend of S$0.81 per share, rising 8% year-on-year (YoY).
Bus-and-rail operator SBS Transit Ltd (SGX: S61) is a small-cap company that is debt-free and sits on a healthy cash position of S$310.1 million.
For 1H2026, SBS declared a total dividend of S$0.2442 per share, including a special dividend of S$0.1597.
Real estate investment trusts (REITs) are also a popular choice for income-oriented Singapore portfolios because they are required by law to distribute at least 90% of their taxable income to unitholders.
A good example is CapitaLand Integrated Commercial Trust (SGX: C38U), or CICT, which offers broad exposure to prime office, retail and integrated real estate assets.
The REIT delivered a strong 1H2026, reporting a 7.5% YoY increase in gross revenue to S$846.8 million.
With an overall portfolio occupancy of 95.6%, CICT also reported a 7.1% growth in 1H2026 distribution per unit (DPU) to S$0.0602.
With all that said, stock selection remains extremely important, especially when the broader market’s valuation is elevated.
Some companies simply benefited from market enthusiasm.
Investors must look beyond the headline yield and consider the company’s business fundamentals and prospects.
A Middle-Ground Strategy: Buy, But Don’t Go All In
Instead of an all-or-nothing approach, stagger your investment with dollar-cost averaging (DCA).
Keep some cash to stay nimble during market sell-offs, and to deploy when better opportunities pop up.
Focus on companies with strong balance sheets, sustainable dividends, growing earnings and durable competitive advantages.
Instead of trying to time market tops or bottoms, monitor your portfolio – trim overextended positions and reallocate capital to assets with stronger valuations and fundamentals.
Get Smart: Don’t Let a Rising Market Make the Decision for You
A record-high market does not mean a crash is imminent; stock prices can continue to rise.
Waiting indefinitely for a pullback that might not come, and holding too much cash, can cause you to miss significant market gains and payouts.
At the same time, a strong rally doesn’t mean you should ignore valuation and go all in.
The smartest investors will know to approach each investment with prudence, focus on quality businesses, and invest according to their long-term strategies.
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Disclosure: Wenting A. does not own any of the stocks mentioned.
