Maximising Wealth Through Property or Equities? Perhaps the Answer Is Both.

I recently ran a poll asking readers a simple question: if your objective is to maximise wealth, would you prefer to do it through property or equities?

Interestingly, many preferred a combination of both.

At first glance, this seems like the sensible answer. Diversification is one of the oldest principles in investing, and owning different assets should theoretically reduce our dependence on any single market.

But if the objective is specifically to maximise wealth, diversification introduces another question. If one asset has historically produced higher returns, wouldn't concentrating on that asset produce a better outcome?

So I decided to look at the numbers.

What Has Actually Produced Better Returns?

Let's start with Singapore residential property.

Using the Bank for International Settlements' Singapore residential property price series, which goes back to 1998, the index stood at approximately 74 in early 1998 and 163 by the end of 2025.

That represents approximately:

2.9% annualised nominal price appreciation over almost 28 years.

The starting point matters considerably. Singapore property suffered through the Asian Financial Crisis, and prices were depressed in the late 1990s. Starting instead from Q1 2000, when the index was around 74.4, produces approximately:

3.2% annualised price appreciation through 2025.

This means S$1 million of Singapore residential property appreciating at 3.2% annually would become approximately:

S$2.25 million after 26 years.

Property clearly created wealth, but the long-term price appreciation is probably lower than many Singaporeans intuitively expect.

Now compare this with global equities.

The MSCI World Index's net total return has annualised at approximately 8.7% since the end of 2000, including reinvested dividends.

At 8.7%, S$1 million compounded for 25 years becomes approximately:

S$8.0 million.

The difference is enormous.

Of course, this comparison is deliberately incomplete. The property calculation only measures price appreciation, while equity total return includes dividends. Property can also generate rental income.

But there is another factor that changes the equation far more dramatically.

Property Has One Superpower: Leverage

Most people do not buy a S$2 million property with S$2 million in cash.

Suppose you purchase a S$2 million property using:

• S$500,000 downpayment

• S$1.5 million mortgage

• 
  

You now control S$2 million of assets with S$500,000 of initial equity.

If the property appreciates by 3%, its value increases by:

S$60,000.

Relative to the S$500,000 downpayment, that represents a 12% gross increase in equity before financing costs, stamp duties, maintenance and other expenses.

This is why comparing a 3% property CAGR directly against an 8% equity return does not tell the whole story.

Property investors are frequently investing with three or four times leverage. Equity investors usually are not.

DBS actually studied this from Q1 2009 to Q1 2021, incorporating financing and other relevant considerations. Their analysis found that S$100 invested grew to approximately:

• S$635 in the S&P 500

• S$486 in S-REITs

• S$399 in a first private property

• S$339 in an HDB flat

• S$209 in a second private property

  
  

This is interesting because even with property leverage, equities still produced the strongest outcome during that particular period.

It also highlights something else: the economics of your first property and your second property can be very different.

Why The First Property Can Be So Powerful

For Singaporeans, the first property enjoys several structural advantages.

You need somewhere to live anyway. Instead of paying rent, part of your housing expenditure builds home equity. Mortgage financing also allows you to control a large asset using relatively little initial capital.

Suppose a couple buys a S$1.5 million home with S$375,000 down and the property appreciates at 3% annually.

After 20 years, the property would theoretically be worth approximately:

S$2.71 million.

The capital appreciation alone is approximately S$1.21 million. Meanwhile, the mortgage is gradually being paid down.

This combination of:

leverage + capital appreciation + mortgage amortisation

is an extraordinarily effective forced wealth accumulation mechanism.

This may explain why property has created so much wealth for Singapore households even though the underlying asset's long-term price CAGR has been considerably lower than global equities.

But the same argument becomes much weaker when buying the second investment property.

You now face additional stamp duties, potentially lower financing flexibility, property taxes, maintenance, agent fees and a substantial concentration of capital in one physical asset.

At that point, equities start becoming considerably more competitive.

What If You Simply Bought Equities Instead?

Suppose instead of upgrading aggressively into a larger property, a household keeps a reasonably priced home and accumulates S$500,000 in equities by age 40.

Assuming 8% annual returns and no additional contributions:

Age	Equity portfolio
40	S$500,000
50	S$1.08 million
60	S$2.33 million
65	S$3.42 million

The investor does not need to select individual winners for this to work. The historical MSCI World return since 2000 has actually been slightly higher than the 8% assumption used here.

Equities therefore have their own superpower:

Compounding without requiring additional leverage.

They also provide something property cannot easily provide: liquidity.

You can sell S$50,000 of a S$1 million equity portfolio. You cannot sell one bedroom of your condominium.

So Why Not Just Own Equities?

If equities have historically produced superior unleveraged returns, perhaps the wealth-maximising strategy is simply to buy the cheapest possible home and invest everything else.

Mathematically, there is a strong argument for doing exactly that, but it ignores how wealth is actually accumulated in the real world.

Property and equities have very different characteristics. Property's illiquidity, often considered its weakness, can paradoxically become an advantage.

Few homeowners check the value of their property every morning. They do not sell because property prices declined 10% last month.

Equity investors can do exactly that.

The MSCI World experienced a maximum drawdown of approximately 58% during the Global Financial Crisis. Singapore residential property prices also declined, but property owners were not confronted with a red number flashing on their phones every day.

An investment strategy only works if the investor can stay invested.

Perhaps The Better Strategy Is To Give Each Asset A Different Job

This is where I think the answer from the poll becomes interesting.

Rather than asking whether property or equities are superior, perhaps we should ask:

What job should each asset perform in our wealth-building strategy?

For a Singaporean household, the structure could be relatively simple.

The primary residence becomes the leveraged wealth anchor. Equities become the liquid compounding engine. CPF becomes the retirement floor. Cash becomes the liquidity buffer.

Consider a household with S$2 million of net worth:

Asset	Allocation
Home equity	S$800,000
Equities	S$800,000
CPF	S$300,000
Cash	S$100,000

This household is exposed to property appreciation but is not dependent on it. It participates in global corporate growth but is not forced to sell equities to pay for housing. CPF continues compounding for retirement, while cash provides liquidity during periods of unemployment or market stress.

More importantly, the two major wealth engines behave differently.

If property underperforms, equities can continue compounding. If equities suffer a 40% bear market, the family still owns its home and does not necessarily need to liquidate the portfolio.

That diversification has value even if it does not mathematically maximise the best possible terminal outcome.

But Does Diversification Reduce Wealth?

Potentially.

If we knew with certainty that global equities would return 8.7% for the next 25 years while Singapore property would appreciate at only 3.2%, concentrating entirely in equities would obviously produce more wealth.

But we do not know future returns.

The relevant question is therefore not:

Which asset produced the highest historical CAGR?

It is:

Which portfolio gives me the highest probability of reaching my financial objective?

There is a subtle but important difference.

Concentration maximises your exposure to being right. Diversification reduces the consequences of being wrong.

The Property Allocation Can Also Become Too Large

There is another issue that is particularly relevant in Singapore.

Suppose a household has:

• S$1.5 million property equity

• S$300,000 CPF

• S$200,000 equities

Net worth:

S$2 million

They may feel wealthy.

But 75% of their net worth is tied to one property, while only 10% sits in liquid equities.

Contrast this with another S$2 million household holding:

• S$800,000 property equity

• S$300,000 CPF

• S$800,000 equities

• S$100,000 cash

• 
  

Both households have exactly the same net worth. But their financial flexibility is completely different.

The second household can rebalance, fund a career break, invest during a market crash or gradually finance retirement without selling its home.

This becomes especially important when pursuing FIRE.

Property can make you wealthy. Liquidity allows you to become financially independent.

My Thoughts

Looking at almost three decades of data, the conclusion is more nuanced than simply saying equities beat property.

Singapore residential prices have compounded at roughly 3% annually over the long run, while global equities have historically compounded considerably faster. Yet property investors benefit from cheap long-term leverage, mortgage amortisation and the fact that their home also provides a service that would otherwise need to be paid for through rent.

The two assets therefore create wealth through different mechanisms:

Property = leverage + appreciation + amortisation + housing utility

Equities = higher expected return + dividends + liquidity + compounding

Trying to decide which one is "better" may therefore be solving the wrong problem.

If the sole objective were to maximise expected long-term returns, there is a compelling historical case for concentrating more heavily in diversified equities.

If the objective were to maximise leveraged exposure to Singapore's housing market while simultaneously securing somewhere to live, the first property remains an extremely powerful wealth-building tool.

But for many Singaporeans, perhaps the most robust strategy is neither to become a property investor nor an equity investor.

It is to use both deliberately.

Own enough property to benefit from sensible leverage and secure your housing needs, but not so much that most of your wealth becomes trapped inside your home. At the same time, build a sufficiently large equity portfolio that global compounding increasingly becomes the dominant driver of your liquid wealth.

Property can provide the leverage while equities can provide the compounding. And liquidity gives you the freedom to actually use the wealth you have created.

Perhaps maximising wealth is therefore not about choosing the best-performing asset. It is about combining assets in a way that allows you to stay invested long enough for each of their advantages to work.

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