Invest in the Growth plan to earn about 4% p.a.

Dear Mr Tan,

I read in your blog that you have parked your fund into Money market to earn 3% interest, as you feel that the stock market is too high and will wait for the correction in 1 to 2 years time before you reinvest.

Does this mean that the Ideal Plan is considered risky in the next 12 months?

Besides the Flexicash, what other form of investment using SRS account would you recommend while waiting for the stock market to correct? 3% interest is pretty good actually!

W

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Dear W

The Ideal plan takes in monthly investments over a period of many years. So, it does not matter that the market is too high at any point of time. The investments will be averaged out over the years.

If you are investing a lump sum (through FlexiLink), then you will to be careful not to commit all the money at a time when the market is too high. This is why I wish to wait for a better time.

If you are keen to earn a return of about 4% to 4.5% over 10 to 15 years, you can consider the Growth plan. A part of the return (about 2%) is guaranteed and the remaining return is variable (ie in the form of bonus declared by the NTUC Income).

The plan is locked in for 10 to 15 years, so you cannot withdraw it early. Please read:

Growth

Tan Kin Lian