Have a lower yield target of 6%

Dear Mr.Tan

I am now 30 years old, and have just started investing. Currently, I hold the following:

Fixed Income: 100k in Fixed deposits @ 2.8%
Unit trust: 100k worth in 5 products, expecting 8% p.a. or more

I am aiming for 10-15% returns, yet unwilling to risk, thus 50% in the FD. I have opened an account in Australia and invested some funds as FD @ 6.5%p.a.

How would you go ahead to invest and have a safe yet higher returns?

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MY REPLY:

I suggest that you read my FAQ on "Financial Tips for the Young". It gives some information that is relevant to your situation.

Your target of 10% to 15% is too high. Over the long term, equities earn an average of 6% to 8% per annum.

If you target 8% on the risky portion of your portfolio (say 50%) and 3% on the safe portion (say 50%), your average yield will be 5.5%. This is a reasonable expectation.

Personally, I wanted to invest in Aus$ and NZ$ but an expert told me that the current level of these currencies is too high. So, I backed down. Do be careful when you invest in foreign currency.

Generally, I prefer to invest in a large, well diversified low cost fund, such as the combined fund of NTUC Income (see www.income.coop/faq) or in the STI tracker fund in the SGX.