Sunday, March 16, 2008

Investing for the long term

If you are investing your savings for your retirement, you should look for the following:

a) A diversified fund
b) Blue chip investments, i.e. non-speculative
c) Low cost, i.e. less than 1% per annum
d) Low upfront fee, less than 1%

If you invest in equities for the long term, you should be able to get an average yield (net of expenses) of 2% to 3% above Government bonds. This should give a net yield of about 5% to 6%.
It is important to invest in a low cost fund, so that you can keep most of the yield.

Investing in equity has its risk. You will get a high yield in some years, and a low or negative yield in other years. If you invest for many years, you will average out the good and bad years and get an average yield that is better than Government bonds.

Currently, you can achieve this goal by investing in the STI exchange traded fund managed by StateStreet. I will try to look for a unit trust that offers similar features.
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3 comments:

Anonymous said...

When market is bullish, so many fnancial analyst write about the BULLS and how the index direction will be and how high it may hit.

Once the market dip, it is awefully quite. Where are the so called analyst?

Look to me that analyst only know how to see up, but unable to see the peak and when it dooms, it is all quiet , not knowing how deep and how far it will go.

Is this time to slowly top up investments along the way and see a "U" curve to the next boom from the doom?

Look like no need to analyse too much, is it?

March 16, 2008 8:21 PM
Zzz said...

Seems no fund has feature like ER less than 1% per annual, sales charge less than 1%.
But currently FSM does offer 0% sales charge for some funds using CPF.

March 16, 2008 11:42 PM
Anonymous said...

Hi anonymous 8.21pm, you are wrong to say there are no doomsayers. In fact , they come out in droves. It is easier to forecast doom than boom. Right now , you hear nothing but doom , don't you.? What do you want to know? That STI slumps to 1500 or 2500. Which is easier? Of course, it is easier to predict that it goes to 2500 but dunno when. What U curve? from where?

March 17, 2008 5:18 PM

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