Evidence: Many of the unit trusts that give annualized rate of return significantly above 4% p.a. (i.e. almost guaranteed to outperform the CPF-SA interest rate in the long-term) that were offered on the CPFIS are no longer available for CPF investment using CPF-OA. Just check the old factsheets which showed that CPF-OA could be used. Now the current factsheets for these unit trusts state that only cash or SRS can be used for the investment.
You forgot a few key element here:
1. You pay one time service charges for the UT. Some bank took 3% some 1%. It varies. Given the 4% p.a payout for example. Your first year earning may be 1%.
2. Some bank also charge annual or quarter to maintain your UT. It cam be anywhere from 0.2% to 1%.
3. CPF pay you compunded intereat. ie interest to accumulate interest. SA account as per my understanding is 4% and +1% for firat $30k (need to varify this).
4. No risk on CPF vs risk rating of above 4 based on MAS. This means if company burst, you get nothing and you loss all your principal too.
Only down side is SA account will get converted to RA by the time you reach age 55. So different is if you take UT as long term saving for retirement, then the clear choice is CPF. For short term case, even UT market price remain unchanged, you should be looking at around 3 to 5 years to realize good gain. It can be much longer if UT has dropped below the price thatyou jump in.
If you compare UT with CPF OA account, then story change. But not to forget OA currently is 2.5% interest and 3.5% for fisrt $x.
