Economic Expectations in 2013
In order to plot your financial future, you must understand the current economic outlook. In Singapore, this is especially important because our trade-reliant economy is vulnerable world events. Increasing oil prices caused by political upheaval in the Middle East or contractions from the Global Financial Crisis (GFC) of 2008 or the European Debt Crisis (EDC) are key examples events that influence our economy.
Relying on the advice of a Certified Financial Planner™ (CFP®) will help grow your wealth, even in slow economic conditions. While taking the advice of a financial planning expert is recommended, you should always stay up-to-date on the status of the economy.
Slow and Steady in 2013
The latter part of 2012 was affected by slow growth, due in part to weak performance by the manufacturing and the financial sectors. According to the Straits Times, slow economic growth will continue into 2013 with an expected growth of 1% to 3%. However, this percentage is still dependent on the financial actions of the United States, China and Europe. So keeping an eye on events outside of Singapore is a necessity.
While Singapore’s economic growth is nowhere near pre-GFC levels, it is also not to the point of being recessionary. Singapore’s status as one of the world’s most “free” economies means that growth will continue to be affected until the economic conditions in the United States and Europe stabilise.
According to the Straits Times, Inflation is expected to increase by 3.5% to 4.5% in 2013, due to rising transportation, housing and food costs. Inflation must be factored into any long-term financial plan. This is because the amount you save up today will not be worth the same amount in the future, as currency depreciates over time. To protect yourself from the effects of inflation, it is wise to diversify your investment portfolio to hedge against currency devaluation.
A CFP® can provide valuable investment advice that can help ensure that can offset the effects of inflation. According to Bloomberg Businessweek, there is the possibility that government inflation-protected bonds may soon be available to Singaporeans. These money-saving bonds would make a welcome addition to any inflation-proof investment portfolio.
The prospects for economic growth in 2013 may not be optimal. However, this is the time when you should be even more focussed on how to protect and grow your savings. By being aware of economic developments and financial opportunities, you can ensure the growth of your wealth even in slow conditions. While it is good to utilise the expertise of a CFP®, you can expand your own financial planning knowledge by attending seminars and courses offered by financial education organisations.