The Smart Investor
    Facebook Instagram
    Monday, January 30
    Facebook Instagram LinkedIn
    The Smart Investor
    • Home
    • About
      • About Us
      • Careers
    • Smart Investing
      • Getting Started
      • Investing Strategy
      • Smart Analysis
      • Smart Reads
    • Special Free Reports!
    • As Featured on BT
    • Our Services
      • Our Services
      • Subscribe now!
    • Login
    • Cart
    The Smart Investor
    Home»Growth Stocks»Worried About the Upcoming GST Increase? 3 Ways Investing Can Help You Beat It
    Growth Stocks

    Worried About the Upcoming GST Increase? 3 Ways Investing Can Help You Beat It

    Here's how investing can help you beat the upcoming GST increase and ease your worries.
    Royston YangBy Royston YangFebruary 25, 20225 Mins Read
    Facebook Twitter LinkedIn Email WhatsApp
    GST - Goods and Services Tax
    Share
    Facebook Twitter LinkedIn Email WhatsApp

    All eyes were on the recent Singapore Budget 2022 as the government announced specific dates for the impending hike in the Goods and Services Tax (GST).

    GST will increase from the current 7% to 8% on 1 January next year, followed by another increase to 9% on the first day of 2024.

    This increase will, no doubt, put pressure on a wide swath of households as daily expenses look poised to rise.

    Singapore’s core inflation has also risen to 2.4% on a year on year basis for January, its highest level in more than nine years.

    The increase was driven by higher food, electricity, and gas prices, as a disruption in supply chains caused demand to greatly exceed supply.

    These two pieces of news should naturally make you worry as it signals higher expenses ahead.

    However, there is an effective way to beat both inflation and the upcoming GST increases — by investing your money.

    Here’s how investing can not only ease your worries but also help you to build ample funds for your retirement.

    Increasing your passive income flow

    A great way to beat inflation and cover higher expenses is to invest in stocks that pay out a steady stream of dividends.

    REITs are a great asset class for dividends as they need to pay at least 90% of their earnings to enjoy tax benefits.

    Many REITs sport a distribution yield that exceeds the inflation rate, allowing you to more than keep pace with rising prices.

    Some examples are Mapletree Logistics Trust (SGX: M44U), or MLT, and Frasers Centrepoint Trust (SGX: J69U), or FCT.

    MLT sports a trailing 12-month distribution yield of 4.9% while FCT’s units provide a distribution yield of around 5.3%.

    Meanwhile, other REITs have steadily increased their distribution per unit (DPU), allowing you to enjoy a larger payout over time.

    Parkway Life REIT (SGX: C2PU), a healthcare REIT, has increased its core DPU every year since its IPO in 2007.

    In the industrial space, Mapletree Industrial Trust (SGX: ME8U) has also raised its DPU without fail since fiscal 2011/2012.

    Steady portfolio growth

    Not all investors have their eyes on income investing.

    Some may tilt more towards growing their investment portfolio to an amount that can give them peace of mind for retirement.

    In such cases, it makes sense to invest in a handful of growth stocks.

    Some companies have done well in the last two years as the pace of digitalisation has accelerated.

    Take iFAST Corporation Limited (SGX: AIY) for instance.

    The financial technology company has seen its assets under administration (AUA) hit a new all-time high of S$19 billion as of 31 December 2021.

    For its fiscal 2021 (FY2021), net revenue jumped by 31.9% year on year while net profit surged by 44.8% year on year.

    Its share price has risen more than six-fold over the last two years.

    Alphabet (NASDAQ: GOOGL), the owner of the Google search engine, also reported a stunning set of earnings for FY2021.

    Revenue climbed by 41% year on year to US$257.6 billion while net profit soared by 88.8% year on year to US$76 billion.

    Unsurprisingly, its share price is up 72% since late February 2020.

    By including such stocks within your investment portfolio, they can provide you with capital gains that more than offset the GST rise.

    The beauty of compounding

    Finally, a third method is to employ the power of compounding to grow your wealth.

    Compounding involves the reinvestment of the dividends you receive in the very same companies that paid out the dividends.

    By buying more shares in these businesses, you slowly and steadily increase your stake in them.

    As time goes by, you will receive even more dividends as you now own more shares.

    And as the business grows and prospers, it can also pay out an increasing stream of dividends.

    This process, done over years, will result in a comfortable pot of money that you can use for your retirement.

    It will also help to boost your passive cash inflow to counteract the effects of inflation and the GST increases.

    Get Smart: Start the ball rolling now

    If you have yet to start investing, what are you waiting for?

    You should start the ball rolling now and deploy your money into well-run companies that can grow over the long term.

    We have prepared a handy beginner’s guide that you can use to start your investment journey.

    Not only will investing ease your worries about GST, but it can also help you to achieve your long-term wealth-building objectives and ensure you have a comfortable retirement.

    For over 30 years, David Kuo has successfully built many winning portfolios. What’s his secret? We break it down for you in our latest FREE special report. Discover his strategies and stock insights for 2022. Click here to download now.

    Disclaimer: Royston Yang owns shares of Mapletree Industrial Trust, iFAST Corporation Limited and Alphabet.

    Yahoo
    Share. Facebook Twitter LinkedIn Email WhatsApp

    Related Posts

    Merger and Acquisition

    What Makes Some Serial Acquirers So Successful

    January 30, 2023
    Data Centre (Sunlight)

    5 Key Takeaways from Mapletree Industrial Trust’s Latest Business Update

    January 30, 2023
    Screen Showing Share Prices

    Get Smart: Why You Shouldn’t Focus on Share Prices Alone

    January 29, 2023
    Facebook Instagram LinkedIn Telegram
    • Careers
    • Disclaimer & Privacy Policy
    • Subscription Terms of Service
    © 2023 The Smart Investor. All Rights Reserved. The Smart Investor, thesmartinvestor.com.sg, an investment education website managed by The Investing Hustle Pte Ltd (Company Reg No. 201933459Z) is not licensed or otherwise regulated by the Monetary Authority of Singapore, and in particular, is not licensed or regulated to carry on business in providing any financial advisory service. Accordingly, any information provided on this site is meant purely for informational and investor educational purposes and should not be relied upon as financial advice. No information is presented with the intention to induce any reader to buy, sell, or hold a particular investment product or class of investment products. Rather, the information is presented for the purpose and intentions of educating readers on matters relating to financial literacy and investor education. Accordingly, any statement of opinion on this site is wholly generic and not tailored to take into account the personal needs and unique circumstances of any reader. The Smart Investor does not recommend any particular course of action in relation to any investment product or class of investment products. Readers are encouraged to exercise their own judgment and have regard to their own personal needs and circumstances before making any investment decision, and not rely on any statement of opinion that may be found on this site.

    Type above and press Enter to search. Press Esc to cancel.