The Central Provident Fund (CPF) Board advisory panel has proposed the Lifetime Retirement Investment Scheme, which has been accepted by the Government ("Simpler investment scheme to grow retirement nest egg"; last Thursday).
While the initiative is meant for members who do not have the financial knowledge and/or time to select and manage their investments, if investors do not even grasp the basics of investments, or if strict rules are not put in place on transactions, the plan will fail to bring good returns on members' money.
Buying the correct investment (fund, stock, bond, and so on) is only part of the equation. The other part is to hold on to the investment over the correct time period.
While the idea of investment is to "buy low and sell high", most people fail to do this, as they would give in to temptation and fear, and end up doing the opposite.
If the new plan does not have a mechanism to prevent members from "buying high and selling low", members are better off (and richer) with their money inside the CPF and earning the fixed interest.
Ng Chee Siang