Dear Mr Tan,
I bought $40,000 of NTUC Income shares a few years ago. I am happy with the dividends. Should I keep the shares as my retirement portfolio?
I have been buying unit trusts through monthly regular savings plan. Some of these unit trusts (Asia ex Japan equities and Global equities) were bought since 1999. I have not redeemed any of the units. I plan to keep them for my retirement. The unit trusts have appreciated more than 100%.
Should I reap the profits now and continue investing through regular savings plan in a diversified portfolio comprising core and supplementary funds?
I have transferred my excess funds from my CPF Ordinary Account to the Special Account in the CPF to earn 4% interest. My flat is fully paid for 5 years ago.
REPLY:
You have managed your financial affairs very well and have earned a good return on your investments. Congratulations.
Your experience will be useful for other people. It is a good case study. My views are:
* keep your Income shares, as it gives a good dividend (5 to 7% p.a.)
* keep your unit trust investments (if the funds are large and well diversified)
* check that the expense ratio is less than 1.5% p.a (better, if less than 1%)
* you are astute in transfering the excess funds from orinary to special account in CPF to earn a higher intrest rate.
Another avenue you can consider is to top up your Medisave Account to the maximum allowed (currently $33,500) to earn 4% interest. This is more feasible if you are retired and don't contribute to CPF regularly.
ReplyDeleteI do this and use the interest to pay for my IncomeShield medical insurance.
Good idea to maximise your assets' return to be self funding.
ReplyDeleteYou have a good plan.Stick steadfastly to it and review it periodically to see if it is still relevant to your changing circumstances if they should arise.
Get a qualified planner to review if you need a second opinion.If your plan is not laid on strong foundation and conviction "birds of the air may just pick it up" and everything may go kaput. Beware