Equities seen as a short term investment?

This afternoon, I was taken aback by a friend's remark:

"My agent said that equities is the best for short term investment and that I'll be able to enjoy the maximum returns possible."

That's a BIG misconception ... ... well, I think that may happen only AND only if the market is verrrry bullish. But then, how big is the chance?

And what if you have an urgent need of cash and decides to sell within a year of purchase, when the equities aren't performing? That's a big problem. Isn't it? Which is why equities should never be looked upon as a short term investment.

I shared with her, that for equities, you never know when it's going to rise or fall. As the equities' performance will be largely dependent on market conditions, companies performance, and world events; how is it possible for anyone to know whether the market is going up or down? Anyone can predict. But who knows for sure?

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Personally, I think that even if the individual is a risk-taker, he shouldn't have the perception that equities are suitable as a short term investment, as this may result in unexpected cashflow problems.

Having a portfolio consisting of equities and bonds may be a better idea. Diversification and asset allocation is definitely one of the key to successful investing.

Retirement in Singapore

The CPF Minimum Sum is currently set at $92,000 from July 1, 2006 and will be raised gradually until it reaches $120,000 in 1 July, 2013. (Source: www.cpf.gov.sg)

The Minimum Sum is supposed to last 20 years from the statutory retirement age of 62.

TWO potential problems may arise from this:

1. How many Singaporeans are able to hit the Miniumum Sum? Especially after paying for their kids' education & HDB loans.
   
   Which is perhaps why there are so many retirees still working at fastfood restuarants, food courts, as cleaners, etc. I doubt that most of them are working to kill time. Given a choice, I believe most of them would rather go for a holiday, look after their grandchilds, or do any leisure stuff, after working for at least half their lifetime.
   
   
2. For those who are able to meet the Minimum Sum of $120,000* when they retired in 2013.
   

A huge question mark looms over their heads - Is it enough for retirement? To last for 20 years? For simplicity, if you do a calculation without inflation and interest accrued on the $120,000, you will realise this:

$120,000 for 20 years
--> $6,000 for 1 year
--> $500 for 1 month

Is $500/month enough for a retiree? Would this $500 be able to cover for medical care, expenses, food, utilities, transport costs? What kind of lifestlye will he be leading?

What kind of lifestyle do you want?