The dos and dont's of retirement planning

✓   Set clear goals early – For those who have just joined the workforce should set a monthly saving target as early as possible, increasing the amount they save as their income increases. With the compounding effect, they can save up a sizeable nest egg at retirement.

✓    Brush up on investment knowledge regularly – Without proper knowledge in investment, one may see little growth in their investment even after years. The key to managing your investments – and reaching your retirement goals – is constantly enriching your knowledge while regularly reviewing your financials at the same time.

✓   Consolidate your provident fund accounts – Every time you switch jobs, new MPF accounts are created. The number of accounts grows with each new job you take, requiring more of your time, effort and making it hard to follow your MPF funds. Consolidating your accounts saves time and effort when managing investments and switching funds.

✓   Make voluntary contributions – With dollar-cost-averaging and compounding effects, as low as few hundred dollars in voluntary contributions each month can go a long way toward building a sizeable nest egg and requires no effort at all.

✓   Take the long view when balancing your investments – Balance risks and return for the long run. For example, avoid concentrating your investments in a single market or asset type.

✓   Regularly review your provident fund investment portfolio – Make a habit of regularly reviewing your provident fund account. For example, check it every six months and when life goal and market climate changes. Switch funds when necessary.

✓  Talk to your spouse – Discuss retirement plans with your spouse and make saving for retirement a mutual effort. 

✓   Regularly review your provident fund investment portfolio – Make a habit of regularly reviewing your provident fund account. For example, check it every six months and when life goal and market climate changes. Switch funds when necessary.

✓  Seek professional advice–With professional advice, you can plan your investments with half the effort but double the results. If you are too busy to manage your retirement savings, let professionals give you a hand in your retirement planning. 

✕   Ignore your statements of account – Provident fund statements of account provide a wealth of critical information, including your accrued benefits and fund performance. Successful retirement planning requires effort.

✕   Rely only on your savings or MPF funds – By allocating your capital only to savings or fixed deposit accounts, or relying on MPF as the sole source of retirement savings, your asset growth may fall behind inflation. Allocating your assets to investments such as stock allows you to grow wealth more effectively.

✕   Delay retirement preparations, or save too little – Even a modest retirement requires sizeable capital and given increasing longevity, savings may need to last 20 to 30 years. Starting early and giving your capital time to grow makes reaching your goals easier.

✕   Combining your retirement savings – Most people mix their retirement savings with other types of savings, for example, using the same pool for travel, marriage and purchasing a home. Maintaining dedicated accounts for different types of savings makes it less likely that you’ll spend everything before retirement.

✕   Be too conservative in your investments – Young members tend to misjudge their risk tolerance, and are often too conservative in their investments. Plainly speaking, the younger you are, the higher your risk tolerance. Use different instruments to optimise your investment returns and you will create a nest egg in no time.