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You can start setting aside an additional sum or use your existing CPF Special and Ordinary Account in a regular investment plan. “What? And risk my money?” you say. Well let’s put things in perspective.

Besides taxes, the biggest thief is Inflation. It erodes the value of your money and depreciates it even if you leave it ‘safely’ under your pillow. Officially our inflation rate has been hovering around 2% to 3%, but that’s only the official rate. The actual rate may really be much higher. (Ask your self how much the prices of things have gone up in the past few months alone.)

An inflation rate of 3% would half the value of your ‘under the pillow money’ in about 24 years. So if you have $100,000 and are not investing it, you’ll still physically have $100,000 in 24 years, but you’ll be able to purchase only $50,000 worth of items with it then.

So the real RISK is not doing any investment with your money – you’ll definitely lose it in the long run!

If you have the time horizon of 15 to 25 years, you might consider investing in relatively safe instruments like unit trusts. Many have been able to give annual average returns of 8% and more (despite the bad years) in the long run i.e. 15 to 25 year period and NOT on a year on year basis.

They are safer because when investing in them you are placing your dollars into a large pool of funds. This is managed by experienced fund managers, who’ve done the proper due diligence and are armed with the most updated financial reports, valuations and information about the basket of companies, stocks or bonds they are investing in.

At a poker table, who do you think will always win – the guy with $1 to bet or the guy with $100million?

You still have to exercise due diligence though as not all unit trusts are safe bets. One way to be more certain is to invest in those that have been around for some time already and have consistently been performing well. Even if it did a meagre 7% is it definitely better than the paltry 1% that the banks are currently paying. At least your money will double in 10.2 years instead of the 72 years it’ll take with the bank at 1%.

Actually if the bank is paying 1% and inflation is 2.5%, your will never ever double your money much less see it grow in real value.

In a unit trust, you can always switch in and out of funds, while keeping in mind your risk tolerance profile and time horizons, into different types of funds, to maximise your returns. If you’ve invested in bonds and if that’s not doing well, you could switch into a managed or equity fund, provided it fits your investment horizon.

Again it’s good to check what kind of bonds and equity the fund is investing in. Whether they are blue chip equities, secured corporate bonds; whether they are narrowly focussed into one particular industry – which gives them great potential growth BUT exposes you to much higher risk, in general, or very widely spread across countries and industries – which then greatly reduces your risk but may also give you low returns in the long run.

And it’s not about timing the markets. Warren Buffet once said this about investing, “It’s about Time and NOT about Timing.” Markets have always and will always move up and down; that’s what they do. But in the long run (compare the performance of all major markets for the past 40 years, and you’ll see this trend) almost all markets have only seen an upward trend.

So invest when the markets are high and when it’s low – the key is regularity. In the long run it will only go upward*. (*This is based on the economics of our time – that price is directly proportional to demand.)