Many people have the misconception that retirement insurance plans means locking away your money until it's time to retire. Of course, there are some plans designed that way – after all, the more you leave your fund untouched, the more interest it gains for your later years.
But if you're uncomfortable with the thought of having your money locked in, preferring liquidity instead, unit trusts and dividend-paying funds may be the right retirement instruments for you.
If you prefer to take on a higher risk in exchange for a potentially higher return, you can consider investing with Aviva's unit trust platform, Navigator. A unit trust is a fund that is managed by a fund manager and invested into a variety of assets, according to the unit trust's stated objectives and investment approach. All investors' money is pooled together to be invested as one.
The money in the fund is used for different investment opportunities. So losses in one area of investment may be balanced by profits made in another. You can even do this with small amounts, as little as S$200 monthly or S$1,000 as a lump sum investment.
If you're not sure how much you can or should put aside, speak to a financial adviser representative or do the following simple calculation as a general reference:
Your Income – Fixed monthly expenses (including bills & debt repayments & other non-fixed expenses) – Treats for yourself to enjoy your hard-earned money = $X
Unit trusts typically don't provide a capital guarantee but can offer higher returns in accordance to market performance, and has the benefit of liquidity. Alternatively, you may also choose to use your CPF monies from your Ordinary Account (OA) or Special Account (SA) to invest directly in unit trusts.
The best part? You can withdraw your investments anytime you want! If you want to keep your account going, there are some minimums to meet, for example, a minimum withdrawal amount of S$1,000 and also a residual balance amount of S$1,000.
Remember that if your intention is to save money for retirement, find out how much you'll need using our retirement calculator and make sure that you don't end up withdrawing the entire amount way before retirement!
TL;DR: Having a regular savings plan and unit trusts is a great way to diversify your retirement plan, along with offering you liquidity when you need it. Some options you may consider are MyRegularPay and Navigator.