A recent topic.
Maybe you will find something there that could be of use to you.
"16, Singaporean, need advice"viewtopic.php?f=1&t=115334Stocks.
Own a global stock portfolio. My own preference is to limit my home country exposure (Singapore) to its weight in the world marketplace... just in case Singapore tries to repeat Japan's decades-long economic woes of the '80s. Hopefully the whole world will not experience a market crash at the same time. (Yes, I do own a global stock portfolio.)Bonds.
Own a local bond portfolio. (I own only bonds from my home country, to avoid the currency exchange risk.)
Sorry, I can not help you select stock/bond funds/ETFs.Learning your risk tolerance
. If just starting to invest, the advice is to own no less than 25-30% bonds (75-70% stocks) until you know your risk tolerance in the stock market; that is, until after you have weathered your first multi-year stock market crash. After your first crash, then you may adjust your bond allocation (percentage) based on your reactions during the crash.
If during the crash, you were:
(1) Very worried and sold stocks, then you need more bonds. You have a lower tolerance for stock market risk than you believe.
(2) Worried but didn't sell, and did buy more stocks, then your current bond allocation is probably correct.
(3) Not worried, kept buying stocks, and wished you could have bought more, then maybe less bonds would be appropriate for you. You have a higher tolerance for stock market risk than you believe.
After you know your reaction to your first multi-year stock market crash, then adjust your bond allocation by 10% absolute: lower (15-20% bonds) to increase, or higher (35-40% bonds) to decrease your risk exposure to the world stock market. (These are the rules of thumb that I learned are appropriate for me.)CPF. US history.
Your CPF scheme sounds a lot like our Social Security (SS) system. In its beginning (1930s), our SS system worked similarly: we pay in, the government holds the funds, and we get it back when we retire at 65.
However, after ~20 years, there was so much money in the SS system that our government could not resist the temptation. So in the 1950s, our government raided the SS fund, spent the money on favorite projects, and promised all SS owners that they would be paid, from then forward, from current income (taxes) each year. In this way, our SS system was turned from a pay-as-you-go system, into a Ponzi scheme---where current workers directly pay retired workers. Our SS system has been in trouble (underfunded) since then. Why?
In the 1930s, our average life expectancy was ~65, today it is ~80. Result: each year, the number of retired people living longer and withdrawing more from SS is increasing faster than the number of new workers paying into SS. It is simple math.
Bottom line. Plan for the worst; hope for the best. Don't count on your CPF scheme to be there when you need it. Be happy if it is.
Action step. Don't consider your CPF to be a part of your bond allocation; instead, consider it to be a reduction in the amount of money you will need each month during retirement... that must be made up by withdrawals from your investment portfolio (stocks and
This is my opinion why you need more bonds than you think.
I hope your government can resist the urge, and keeps its hands off your citizens' CPF funds.
: linguini's correction.
d.r.a, not dr.a.