Tips for the Young: Earn $146,000 more on your savings

If you save $300 a month for 30 years, your total saving is $108,000.

The interest that you can earn depends on how your invest your savings.

If you invest in a low risk investment, such as bank deposit, and you earn 2% per annum, you will get $148,000.

If you invest in a large, well diversified fund, with low charges, and you earn 6% per annum, you will be $294,000.

The difference is $146,000. You can get $146,000 more, just by choosing the right type of investment.

If you look at the historical record of the return on equities for the past 10, 20 or 30 years, the average return is actually much higher than 6% per annum. In my view, it is quite safe to assume an average return of 6%, provided that you choose the right fund.

What is the right fund?

- choose a large, well diversified fund (preferably $500 million or more)
- preferably, invest in global equities
- choose a fund with low charges, say 1% per annum or less
- invest for the long term, say 10 to 30 years
- choose a right time to realise your investment (if necessary, wait 1, 2 or 3 years)
- choose an investment fund that acts in the interest of the investors and not the shareholders

Attend an educational seminar conducted by NTUC Income. Visit, http://www.income.coop/seminar/