Many others were wary, including myself without any guts and only getting a miserable 0.002% interest from savings put in banks or no interest at all, might as well spend the money for a cause. Was this a false dawn, only to be followed by more market mayhem? They were reasonable fears, given the prognostications of so-called experts.
But now that the market rebound is proving resilient, many more investors have regained their confidence and are keen to take their chances. However, prices of stocks looks like have peaked to back in 2007 highs and is now still a time to dive in ??
A recent nationwide survey by Citibank on the financial well- being and attitudes of Singaporeans showed that consumers are looking for higher returns and ways to better build their wealth, though it did indicate that there is also greater caution now.
A total of 44 per cent of respondents stopped investing during the crisis, but have either resumed investing or are open to doing so once the right opportunity arises.
One plus is that the survey found that the majority of Singaporeans are not relying on their Central Provident Fund (CPF) savings as their only source of retirement income. About 73 per cent of respondents believe CPF will provide 'only some' or 'very little' of their retirement income.
The start of 2010 is an opportune time to reassess the impact of the financial turmoil on your portfolio, learn from mistakes and re-work your investment strategy if you have some spare $$$ in hand to try and see if you senses giving the right note.
If you are doing just that, here is what some financial experts recommend for investors:
AGE GROUP ( where I am in this category and going to reach 55 years soon in a blink of the eye )
41 - 59
If you are employed, keep working. After a review of your portfolio, you may need to re-organise your affairs and set new financial priorities.
The risk outlook for this group of investors, particularly those nearing 55, should be moderate as retirement is not far away. Besides, you are likely to have school-age children entering the tertiary phase of their education so you would need cash. [ My two girls, one will be going JC and the other first year of secondary education....... so I am in need of MORE $$ ?? ]
With this in mind, you are likely to be shifting your investment mix towards a balanced portfolio.
A suggested asset allocation would be 30 per cent to 50 per cent fixed income and 50 per cent to 70 per cent equities exposure. Think of creating an income stream when in retirement.
Investors who took a beating in the crisis should stay invested to recover their losses but how to when you got no $$$ and if you lost your pants during last year ??? However, as these investors approach the maturity of the investment timeline, it is important to move towards safer assets. This might occur about three years from retirement or when they need the cash to fulfil an objective.
Another tip is 'Watch your spending and start reducing your debt'. That is standard theory and everyone should follow, not just this age group investors. But what if some has sickness and need $$$ to set aside for treatment, insurance would be better bet and make sure you are covered.
AGE GROUP
60and above
If you have not done so, it is time to reassess your retirement nest egg by determining your sources of retirement funds. Re-examine how long the funds would last you and take actions such as lowering your cost of living. This means you will have to eat less into your retirement portfolio every month.
You should work towards creating an income stream for when you retire. This includes seeking part-time jobs and downsizing your home or renting out one of the rooms at your existing home to supplement your income. [ OK, I will start looking for part time tution at some private institutions offering degree courses maybe ]
Capital preservation is key for this age group. One tip is to move some of your assets into high interest or dividend bearing instruments for income. A recommended portfolio mix is 20 per cent to 30 per cent in equities and 70 per cent to 80 per cent in fixed income.
Keep track of your expenses to make sure you are not living beyond your means. And ensure you have adequate medical insurance coverage.
At the end of the day, a retiree's investment mix would be determined by his personal situation. For instance, a rich retiree who has already built up his retirement nest egg can probably afford to take on more risk and have a higher equity allocation. But a retiree with only enough money to get by cannot afford any losses and needs to be more conservative. Needless to say about the rich, their wealth nest would have enough to suffice till their next generation if they have cash assets in the region of double digit millions and above........ what have they got to lose ? Those lower income earners would have hard time and if they need to support kids and their parents, I just wonder how they will get through at the end of the day. Ask the financial advisers, they tell you from the book after crunching some figures and those are ridiculous calculated sums that no one would be able to achieve in their lifetime.
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