Careful Now
Response: Conrad, EPF money is a critical sum of money for many people. The fact that you are now considering to put the funds into the market is not necessarily a smart move. The danger is you are probably basing your decision on the perception that the market has corrected some 20% from the recent highs. We all suffer from this, "benchmarking" or "anchor and adjust" decision making strategy. We take a certain known level (recent levels), say 1500 and anchor it. Then we adjust it to current levels 1200 or thereabouts, and assume its already 20% lower, and therefore should present opportunity. Maybe it is.
Your decision should be based on why the market prices are where they are NOW. Your decision should also be looking at the kind of risk you are willing an able to take. Are you willing to take a 50% loss in capital? Nobody wants that, but would you be able to stomach that? If you do NOT want to, and CANNOT afford to lose any of your capital - then make it easy on yourself by looking at blue chips and yield instruments. Blue chips that pays 3%-5% dividend yield would be your best route. Slightly riskier would be to get into bigger and better managed REITs that gives you 5%-8% yield rates. Nobody can ask you to go into stock without the danger of losing a huge chunk of it, even at current levels or even at 1000 or 900. No level is really safe. When you are looking at index levels, you are looking at sentiment.
Go the Buffett way, look at stocks as businesses, and if you like their strategy, go for it. Don't pick small cap stocks as they have bigger propensity for screwing up. Pick mid-large caps with decent dividends and a great business model. A couple of stocks to look at: Evergreen Fibreboard (great dividends and excellent business model but punished for being in the wrong sector) and KNM (low dividends for now but great business strategy).
p/s yes, its Joyce Sialni again
Salvatore,
I'm writing to you as a complete idiot on stocks and warrants and what have you. I'm eligible for taking out some of my money that's been with the EPF since God knows when. With the market the way it is, and FD rates equally uninspiring, I was wondering whether I'd be better off leaving the money there. Or should I still go ahead and take it out to invest, since the market should bounce back sooner or later. And I'm prepared to go long, as they say.
You seem to know a lot about finance and you write well too.
Please advise.