Over the last four decades, the life expectancy of Singaporeans has increased by 16 years to 82 years in 2010.

At the same time, the nation's statutory minimum retirement age is 62 years old with re-employment up to the age of 65. This translates to 17 years in retirement if one retires at the age of 65.

In contrast, in 1970, the average Singaporean retired at 55, and spent about 10 years in retirement.

While Singaporeans are starting to pay closer attention to retirement planning, a majority expect to use cash savings or deposits as their main source of income, to sustain their retirement lifestyle.

However, the average family living in a four-room flat has less than $300 to invest each month after setting money aside for daily expenses and short-term savings.

In addition, more than 40 per cent of Singaporeans' Central Provident Fund (CPF) savings is tied up in property.

In the current low interest rate environment, it is also advisable for customers to invest using excess cash in their savings or CPF accounts instead of allowing inflation to eat away at their savings.

There are many long-term investment tools available in the market depending on one's risk appetite and activity level.

However, for the average Singaporean who has little time, excess funds or investment knowledge, here are a few options that can help instil investment discipline and allow one to potentially benefit from dollar-cost averaging and the power of compounding.

Exchange-traded funds

Investing in exchange-traded funds (ETFs) is a low-cost and efficient way to access an entire asset class or market.

A key advantage of ETFs is transparency. An ETF's objective is to produce a return that tracks or replicates a specific index. They are passively managed by ETF fund managers and aim to track the performance of the underlying index. Hence, an ETF has fees and charges that are usually lower than those of actively managed investment funds.

Given that ETFs seek to track an index such as the Straits Times Index (STI), they will invest only in the securities that make up the index.

For instance, the POSB Invest-Saver allows one to invest in the 30 blue chip companies listed in Singapore through the Nikko AM Singapore STI ETF. Therefore, investors can gain a level of diversification when they buy into an ETF such as the STI ETF.

By investing in an ETF, you can gain exposure indirectly to the underlying component stocks in the index without having to spend more money buying actual stocks or securities.

Because an ETF invests in a basket of securities, the retail investor can also gain access to an entire portfolio with a single trade.

Unit trusts

Other than investing in ETFs through a regular savings plan, you can also consider investing relatively small sums into a unit trust every month.

Unit trusts are managed professionally by fund managers who aim to uncover value through their selection of the underlying stocks or bonds. The key difference between unit trusts and ETFs is that the former is actively managed by the fund manager while the latter is passively managed.

When investing in unit trusts, the selection of an experienced fund manager is important. Investors should consider the investment mandate of the fund, as well as the expertise and track record of the fund manager during their selection.

With unit trusts, retail investors can get access to a diversified portfolio that would otherwise require large initial investment outlays.

Another advantage of unit trusts is that the fund managers can add value through their active management of the underlying securities.

Investment-linked plans

ILPs are investment-linked policies that help investors invest their monies while getting insurance coverage at same time.

When considering how ILPs fit in a portfolio, you should think of ILPs as a hybrid of investment and insurance products. This is a two-in-one solution for customers who wish to seek investment and yet have life protection coverage.

However, the insurance component and the benefits and yields from it should be considered separately from the investment component.

ILPs are commonly considered to be an insurance wrapper that offers a wide range of ILP sub-funds to help you accumulate or preserve your wealth, or provide you with a regular stream of income if required, provided by insurance companies.

Insurance companies create an ILP sub-fund that feeds into the underlying unit trust. These are likely to be unit trusts that are invested in various or a combination of asset classes - for instance, equities, bonds or a mixed asset class.

Greater scrutiny should be given to the risk related to the asset class/region of the funds incorporated within the ILP and whether these match the existing portfolio, risk profile and time horizon.

As regular-premium ILPs usually pay the insurance coverage charges by selling fund units, the liquidated amount for a fund that performs poorly may not be sufficient to cover the rising insurance coverage costs as you get older, and may thus erode the investment objective.

With the above options, you make fixed monthly investments, regardless of market conditions, thus avoiding the uncertainties of market timing.

By investing a regular sum each time, you also have the benefit of dollar-cost averaging as you buy fewer investment units when prices rise but more units when prices fall. Over time, your average unit cost is lower than the average market price of the security during the same period of time.

Prior to investing, you should understand the risks associated with the various investment options such as the possible loss of the principal amount.

Other considerations include convenience, ease of subscription and associated fees.

Remember, start investing early and you will find yourself in a much more comfortable position later on.

The writer is head of consumer investment and insurance products at DBS Bank.