Extracted from Larry Haverkamp in TNP

How to make the most of your money

THE ideal private pension plan would look like this:

1) Super-low costs, which would be under $5 per $1,000 invested (0.5 per cent) for both the initial commission and the yearly expense ratio.

2) Super-flexible. Each of us has a different appetite for risk. Some of us want very low risks and returns. Others want the opposite. The best would be if each of the three million CPF members could make their own customised fund.

3) Super-cheap to set up. Costs to set up a giant new fund like PPP could be substantial. The most economical would be a PPP requiring no new expenditures.

4) Super-available. It would be great not to wait one or two years but have a PPP that is available right now, like today. Get ready for a surprise. This impossible dream is attainable in five easy steps.

Step 1: Decide what risk/return combination you prefer. For example, let's say you would like higher than average risks and returns. Then invest 70 per cent of your money in a risky investment (like a stock fund) and 30 per cent in a risk-free investment (like your CPF account).

Step 2: For your risky investment, choose an exchange-traded fund (ETF). It is like other funds but costs are super-low. In part, this is because the fund does not need expensive stock analysts. It is an index fund and simply tracks a market index like the Straits Times Index (STI).

Step 3: At the moment, only one ETF is permitted for CPF investments. It is the STI-ETF (trading symbol: STTF). You buy it through a broker. So, take 70 per cent of your CPF investment money and buy the STI-ETF.

Step 4: This is the easiest part. For your risk-free asset, do nothing. The 30 per cent you have not invested in STI-ETF simply remains in your risk-free CPF ordinary account.

Step 5: Congratulate yourself. You now have 'a home-made PPP'. It has everything on our wish list. Best of all, it is available now.