What is the right retirement investment strategy? 75% “core money”, 25% “play money”

A buffet offers dozens of desserts; tastes and sweetness tolerance differ, so choices differ. Retirement strategy is the same: there is no one-size-fits-all answer. Even at the same life stage, different retirement goals, finances and risk appetites mean different MPF strategies.

Where do you start?

Young or old, first set aside emergency cash covering 18 months of expenses, then run a “core and satellite” strategy over remaining personal assets (including MPF). Core assets serve long-term goals and reflect affordable risk; satellite assets chase opportunities — “core money” versus “play money”.

How do you split core and satellite?

Consider 75% as core and 25% as satellite: even if the play money is wiped out, the core still funds retirement — attack and defence in balance. Before planning MPF, define its role: core or satellite asset, then pick suitable funds. Providers’ risk-assessment questionnaires help gauge your risk tolerance.

Is retirement the end of investing?

No. People live longer; post-retirement life can stretch 15+ years. Don’t turn ultra-conservative years before retiring by parking all MPF in bonds and time deposits. Set equity-fund weightings by risk tolerance to fight inflation — if MPF is only your satellite asset, you can stay bold even near retirement.

What theory backs diversification?

Nobel laureate Harry Markowitz’s Modern Portfolio Theory shows assets move in different cycles; basketed together, their risks offset each other, maximising return within a set risk band. Built in the 1950s and widely applied in finance ever since — the academic root of diversification.

To pick funds by risk level for your strategy, visit MPF fund comparison.