Last week, the US Fed announced another round of money printing programme known as QE3. It was reported that US$40 billion of new money will be issued every month until the US jobs situation improves. Does this latest move by US government means opportunities for investors?
Since 2008, the US government had purchased trillions worth of Treasury securities, hoping to revive the economy and stimulate job growth. However, the strategy doesn’t seem to work and US unemployment remains stubbornly high at about 8%.
Muddling through the years
I am not surprised that the US Fed announced this QE3. This stimulus measure comes at a time when the US citizen is voting for a new president. President Obama’s job is on the line, so he has to make a last-ditch attempt to win votes and placate the citizen’s rising unhappiness over the persistenet high unemployment rate.
But whether this third round of money printing will be effective is a big question mark. The previous two round of money printing had flooded world wide markets with “hot money” but ultimately those moves were widey regarded as flops, in terms of job creation for the US citizens.
Yes, its true that QE1 and QE2 had helped US to avert financial disaster in 2008 – 2009 but until now, the US economy still remain in a state of limbo. I think the US economy will continue to languish and muddle through for the next few years until 2017.
Make money through US properties investment
So what opportunities does QE3 represent for Singapore investors? Well firstly, our local banks take the cue from US banks. So until 2015, the interest rates for borrowing will probably remain low. So it might be prudent for houseowners to shop around and refinance their home loans with the most competitive interest rates.
The amount of compounded interest saved can be thousands of Sing dollar. Another thing investor might want to take note is that as US economy is not doing well at the moment, this is the best time to shop around and invest in US propeties.
As I always advocate in my blog, the best time to invest is always during the down times and not the boom times. So do not miss the window of opportunities. Otherwise when US economy recovers, the housing prices over there will rise again.