I am now 60 years old. I have savings from my CPF (taken out at 55 years) and past savings from other sources.
At present, my total savings are invested in the following sources:
1. Foreign currency fixed deposits - 20%
2. REITS (real estate trusts) - 20%
3. Singapore and global shares - 50%
4. Life insurance policies - 10%
My investment in foreign currency fixed deposits earn an interest rate of 7% but is subject to currency risk. The REIT earns a dividend yield of about 5%. The Singapore and global shares earn a yield of about 3%.
All of these investments have risks. However, as I am investing them for 10 to 20 years, I can ride out the volatility in the markets. I hope that the good years will offset the bad years, and give me an average yield of more than 5%. In the case of the foreign currency fixed deposits, I expect the excess interest to offset a potential deprecation of the currency.
My savings in life insurance policies were made during the past 30 years. I keep these policies, if they continue to give a reasonable yield. I shall be discontinuing the policies that earn less than 3% p.a.
I will not be putting any new investments in a life insurance policy, as the return is poor. I do not like policies that have high terminal bonus, as a large part of the future yield is uncertain, non-transparent and beyond my control.
Hi Mr Tan
ReplyDeleteI notice you don't have bonds in your portfolio. Long-term Government bonds are giving yields of as much as 3.7% recently.
What is your thinking on this?
Just to share with you something that has been guiding me in my investments. I am 64 years old and quite risk adverse:
“Fixed-income investing often takes a backseat in our thoughts to the fast-paced stock market, with its daily action and promises of superior returns, but if you're a retired investor, or are approaching retirement, fixed-income investing must move into the driver's seat. At this stage, preservation of capital with a guaranteed income stream becomes the most important goal.” - from Investopedia, a US based investment advisory website
Best regards.
As I am investing for the next 20years, I am prepared to take risk to invest in equities and REITs, to achieve a higher yield (compared to bonds).
ReplyDeleteBy investing long term, I will be averaging the good and bad years, and get an average return that is better than bonds.
I have more than adequate to meet my needs, so I can afford to take the risk.
If a person just have enough, it is better to invest in a life annuity to ensure a payout for the whole of life.