Thinking whether their work-save-and not take risk principle will be sufficient for their retirement, considering inflation, I went back to do a simple calculation. Assuming an annual income of $60,000, savings rate of 30% and a life expectancy of 90, it’s shocking that to retire at 45, their investments will have to be earning 23.5% which is far higher than the best interest rate on savings!

Investment in treasury bills is about 2-5% while higher risk investments like bonds, equities or options can fetch a higher return. With at least 15 more income-earning years, it is worth exploring higher risk investments such as stock trading.

ETF (Exchange-Traded Fund) is a possible start for the novice. ETFs generally carry no sales charge with low management fee of below 1%. It is a starting point because it is well-diversified and normally tracks the prices of stocks that together form a high market capitalization.

After understanding better the movements in the stock market, it is then recommended to allocate a sum of money that one can afford to lose in individual stocks. There are various good online trading stock sites that are user-friendly and offer investor advice. Another option for those who have a higher risk appetite is to go into options trading. Options are available for equities, ETFs and indexes, for instance the OEX Option (S&P 100), QQQ Option (NASDAQ 100) and SPX (S&P 500). The OEX Option for instance consist of the top 100 blue-chip stocks from diverse industry groups (OEX is the ticker symbol for the Standard & Poor’s 100 Index traded at the Chicago Board Options Exchange ). There are also several websites that provide trading signals for those interested in option trading, such as OEX Options that provide at least a trading signal per day and a good list of option-related articles.

I had been holding my unit trust funds and watching the current correction.

Originally my plan was to hold and wait out the correction. However, there are new signs to indicate that the current correct will be deeper than anticipated. In view of this, I’m switching strategy.

Most of my unit trust are invested with CPF monies. While some school of thoughts believe that dollar cost averaging is the best strategy, it is not for me.

Active management is my preferred strategy and I believe it is best for my situation. The point is not to catch the maximum (if I had taken action a month back) but to lock in profit.

It is painful to see the gain shrank. But it will be more painful if I had to cut at a lost later. I am selling my Asia, Japan, Korea, Thailand funds.