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Old 13-05-2019, 07:23 AM   #1226
BBCWatcher
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Join Date: Jun 2010
Posts: 9,142
Assuming that I'm a 37yr old typical Singaporean and retiring here. Let's say I have only 7K a year to invest in stocks. Should I contribute it to my CPF SA for tax relief as well as compounded interest for retirement or buy IWDA ETF in one lump sum / DCA quarterly.

Buying IWDA is more liquid though.
If you’re still eligible for bonus interest, I think I’d favor CPF since that’d be 5% interest. Otherwise I’d probably either go with IWDA or split the $7K and do a little of both.

However, if you’re eligible for tax relief it means your earnings are at least decent. One would think more than $7,000/year of savings should be possible.

I think I might be asking about the opportunity cost of not investing in stocks. Capital protected, interest guaranteed, low returns, may not keep up with inflation vs potentially higher returns?
CPF MA/SA/RA are going to stay ahead of inflation in all likelihood. They’re certainly designed to do that.

Maybe I'll just split my dollars three-ways. Can't get out of learning about investment then!
Adulting sucks.
You can be more conservative, more risk averse than other savers/investors if you wish. Just allocate a lower percentage of your total wealth than the “textbook” advises to a couple low cost stock index funds, and save monthly/bimonthly/quarterly (depending on the cost) accordingly. You’ll then likely end up with an “in between” result: something between the “textbook” forecast and barely ahead of inflation.

Depending on which “textbook” you pick the generic advice is 80% or 69%. You’re currently at zero. So pick a lower percentage if you want to be more conservative. Right now you’re really, really, really, even more conservative.

For long-term investing into low cost stock index funds you don’t even look at it for years and decades, except very occasionally to make sure your regular, dogged savings are being credited properly. It’s all very mechanical and as automated as you can make it.
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