Things Singaporean: SRS, CPF-OA and CPF-SA.

As long as a person is paying income tax, he should start a SRS account and contribute to it yearly so that he pays less income tax (or none at all). For me, it's that simple.

What is done with the money in the SRS account is another question. For me, I've always put the money in single premium endowment policies, shortest tenure being 8 years and the longest being 20 years. They have guaranteed returns of 3% p.a. to 4% p.a. The returns are not fantastic but I like how everything is stable and guaranteed (with insurance coverage thrown in). Beats FDs anyway.

I didn't start using money in my CPF and SRS accounts for investments until after Oct 08. Over the years, I stuck to my believe that if everything else fails, I would still have my CPF and SRS intact for my retirement.

However, after Oct 08, I changed my mind. Things were just too cheap and tantalising. I used my CPF OA to buy shares in F&N, SPH and Suntec REIT. All liquidated and now I'm purely in SPH.

I even utilised 10% of my CPF SA to buy units in a Singapore equities/bond unit trust in December 08 (since I cannot use SA to buy shares) and that made 9% in just 6 months, 4.5x more than if I were to leave it in the SA. If I did not liquidate the unit trust, I would have made a lot more. Well, it was a new experience and my SA money is sacred to me.

My CPF SA is now my opportunity fund. If the STI sinks to support, I'm pouring my SA into the same unit trust. I fully agree with Buffet, Faber and Rogers that the worst thing to be in now is cash and I fully believe that the recovery is genuine and things will only get better in the next two years. CPF OA, SA and SRS are all cash. Must put them to work.

Real value of gold

To look at gold as a hedge against inflation, we have to look at the real value of gold over time. For example, if someone bought gold at the peak in 1980, he would still have lost money after taking inflation into consideration today.

If someone had bought gold in 1914, he would have gained about 200% in the course of the last century after taking inflation into consideration. It is not an amazing return.

Everything must be put in context. I am a buyer of gold today but I will be a seller of gold one day, I'm quite sure.

With US government printing money and with almost 0% interest rate, inflation is likely to become a serious problem in future. As mentioned by Jim Rogers many times over, gold will probably see US$2,000 an ounce again.

The following chart is taken from an article on inflation adjusted value of gold by Barry Ritholtz - October 7th, 2009, 11:30AM: