Consider having more financial aid that Singaporeans receive flow into local equities and bonds

[SINGAPORE] The Republic can be an expensive city to live in. However, the government actively addresses cost-of-living issues and Singaporeans receive plenty of financial help. 

For the nation’s 60th birthday, all Singaporean adults received an early hongbao in July. Singapore citizens aged 21 to 59 in 2025 received S$600 in SG60 vouchers, while citizens aged 60 and above in 2025 were given S$800 of such vouchers.

Subject to eligibility, there are social transfers under schemes such as the Assurance Package, GST Voucher, Pioneer Generation Package, Merdeka Generation Package, Majulah Package and so forth.

In recent years, a popular item with Singaporean households is the Community Development Council (CDC) Vouchers. In 2025, each local household could claim S$300 and S$500 of such vouchers in January and May, respectively. 

The CDC Vouchers can be used at participating heartland merchants and hawkers, as well as supermarkets. When these vouchers are disbursed, many local merchants can look forward to a bump in sales.

Eligible Singapore citizens also receive SkillsFuture Credit and training allowance. Individuals can tap SkillsFuture Credit to pay for a wide range of approved skills-related courses.

In short, locals receive much help to cope with higher costs, acquire relevant skills and age with grace among others.

HDB BTO homes

Besides the above schemes, a huge gift for many eligible young local couples is the opportunity to buy a Build-To-Order (BTO) flat from the Housing and Development Board (HDB).

Take the flats at Woodlands North Grove in Woodlands that were offered as a Standard project in July’s BTO exercise. The four-room 99-year leasehold BTO units were priced at S$388,000 to S$544,000 versus S$660,000 to S$720,000 for comparable resale HDB flats nearby, with remaining land leases of about 93 years. 

Put simply, a buyer of a subsidised BTO home in the above example might enjoy a mark-to-market gain of possibly S$250,000. Add to that, many eligible buyers receive housing grants.

Indeed, the chance to make sizeable financial gains from buying HDB homes may result in over-consumption of housing.

Taking a step back, should some of the generous financial assistance that is tied to consumption, investment in training and home buying be diverted to encourage saving and investing for retirement years? Specifically, give more cash disbursements to Singaporeans, which they can use as they like, including to invest in local equities and bonds.

Local equities and bonds

Many local companies issue Singapore-dollar bonds and equities to fund business operations and expansion. Having thriving local businesses benefits the community via contribution to tax coffers and job creation.

At the same time, locals have a pressing need to save and invest in order to achieve financial adequacy when they retire. Given rising life expectancy and inflation, building up passive income is vital.  

Moreover, each generation may need to look after their own retirement needs instead of relying on the younger generation to support their parents financially when parents are in their silver years.

Take a young local couple who are fine living in the home of one set of parents. The couple may still buy an HDB BTO flat because they can get subsidies and grants when doing so.

Perhaps, the couple might prefer to channel housing-related financial help from the government to buy equities and bonds in order to generate passive income for retirement instead.

Possibly, consider letting eligible young local couples choose between buying an HDB BTO flat and receiving a cash gift from the government of say S$200,000 which can be invested in high-quality stocks and bonds. For one thing, a meaningful retirement nest egg can be built from a portfolio of stocks and bonds through the power of compounding.

Might the various credits and vouchers which locals receive for the purchase of goods and services be better given as cash that can be invested?

For example, I appreciate having an available balance of S$5,500 of SkillsFuture Credit. There are many courses where I can use my credits. I could pick up cooking or digital skills, or enrol for a personal development course.

Nonetheless, I cannot find a compelling course. But at the same time, I feel it is a waste if I do not use my SkillsFuture Credit.

Possibly, funds that one can access for training course fees should be made available to purchase local stocks or bonds.

Interest rates and inflation

Investing in high-quality stocks and bonds is sensible for individuals looking to achieve financial adequacy in retirement years. 

As it stands, the returns from risk-free instruments such as Singapore dollar fixed deposits and treasury bills have been declining. In such a scenario, a fixed deposit that matures soon may roll over at a lower interest rate. 

US President Donald Trump’s policies could be inflationary and stay the Federal Reserve’s hand for now, but there might still be room for the Fed to lower interest rates.

Moreover, a retiree here who seeks to live off passive income for two to three decades has to take into account the erosion of his funds’ purchasing power due to inflation. 

Buying equities can hedge against inflation as all else being equal, a company’s nominal profits could grow in line with inflation. Also, should a business prosper due to productivity gains arising from using artificial intelligence, stock investors will be richly rewarded.

Domestic capital is critical to finance the growth of local enterprises. Hence, getting more individuals to support the local capital markets yields the added benefit of providing local businesses with ample funding at competitive rates.

In short, the financial aid that individuals receive from the government, which goes into buying local stocks and bonds, can create a win-win for individuals and businesses. 

Of course, disbursing cash to individuals comes with the risk that people fritter money on consumption for immediate gratification. Should there be constraints placed on how the cash disbursements are to be used?

I hope a light touch prevails should cash be disbursed to individuals. With an increasingly well-educated population, perhaps stepped-up efforts in financial education can help steer people to wisely embrace saving and investing for retirement needs.

Let’s work towards helping Singaporeans achieve financial adequacy in their retirement years, while supporting the growth of local enterprises by building strong portfolios of domestic equities and bonds.