Diversify your investments

Dear Mr Tan,

You have always advocated investing in a low cost widely diversified fund. My son and I have invested more than $X of our CPF funds in the Growth Fund and Balanced Fund managed by a local insurance company.

I favour this fund as it provides steady returns. Even if the market dips, I notice it bounces back again. I am of the opinion that it can safely let my money grow over the long term.

I wanted to invest another $X of my cash in these funds. My friend commented that with a new CEO, perhaps it is better to diversify and not "put all my eggs in one basket".

This falls in line with one of Dr Money's comments in his articles on the CPF website. What is your opinion?

REPLY:

It is a good idea to diversify your investment. Perhaps, you can spread your total investments into two or three financial institutions.

In my case, I have more than 50% of my investments with NTUC Income. I will try to diversify the invetments over the next few months.

If you wish to invest more of your savings in the stockmarket, take note that the stockmarket is now at a high level. I have decided to put my new savings in the money market and to wait for a better time to invest in the stockmarket.