CPF Investment

[Perisher]

Would not recommend touching cpf till either
1) you understand and have the skill to pick what to invest in or
2) GFC comes, just throw into STI ETF

 

[teerance85]

I think the TS does not know that the first $60,000 in the CPF gets an additional 1% interest so you get up to 3.5% in your OA and up to 5% for SA.

If you are risk adverse and want to get 4% to 5% of interest per year, might as well transfer the existing additional OA into the SA account and ignore all those insurance agent trying to sell you their products which may or may not make money for you.

Mistake. The OA will still attract 2.5% interest. However, the 1st 20k in the OA will earn extra 1% interest, the extra interest will be credited into SA. So techincally, an extra $200 goes into the SA.

Edit: My mistake. TS might be above 50. Apologies makav31i

 

[teejaywai]

Not really, poems quote the UT price at 73cent and the agent told me if buy through prudential it's 80cent.

That's sounds weird, daily NAV publish should be the same across all platform. Not sure the difference in NAV though.

 

[hwmook]

I think the TS does not know that the first $60,000 in the CPF gets an additional 1% interest so you get up to 3.5% in your OA and up to 5% for SA.

If you are risk adverse and want to get 4% to 5% of interest per year, might as well transfer the existing additional OA into the SA account and ignore all those insurance agent trying to sell you their products which may or may not make money for you.

Do not advocate people to transfer from OA to SA, next time he buy property got no OA to use, that's stupid.

Only the first $20k in OA give the 1% extra, TS obviously got more than $20k in OA since he already know the rules that the first $20k in OA cannot be use for investment. Its 2.5% interest only vs potential investment gains. I have got no problems earning more than 2.5% on my investment using OA so i invest. For TS, if you do not know what you are doing then don't do it. Don't trust agents, they sux at investments, only know how to take money from you to line their pockets, true experience which my family members got conned already. Their sale charge are so high that its ridiculous.

 

[antonpoh]

That's sounds weird, daily NAV publish should be the same across all platform. Not sure the difference in NAV though.

If you buy the UT through prudential, there are added insurance coverage so price is higher. Plus agent need to earn some commission mah.

 

[wahkao3]

2) GFC comes, just throw into STI ETF

yes, invest after crash

 

[hwmook]

If you buy the UT through prudential, there are added insurance coverage so price is higher. Plus agent need to earn some commission mah.

That explain a lot, if buy UT through banks and insurance coy then need to pay 3-3.5% sales charge, buy through poems, dollardex only 0.75% or so.

 

[tiny]

For me. OA funds in excess of 20k are potential funds to be deployed for ad-hoc stock investments while it continues to earn risk free (2.5% / 12) per month.

I used OA to purchase Kep Corp at $8 low range and sold at near $9 range which gave me about 7% gains in ~3 months (minus the CPF transaction fees)

 

[antonpoh]

For me. OA funds in excess of 20k are potential funds to be deployed for ad-hoc stock investments while it continues to earn risk free (2.5% / 12) per month.

I used OA to purchase Kep Corp at $8 low range and sold at near $9 range which gave me about 7% gains in ~3 months (minus the CPF transaction fees)

Lucky you sold it. Kep not doing too well for 2014.

The nature of Keppel Corp’s business means that its top-line can be volatile. This can be seen in how the firm’s revenue had 1) dropped by 25% to S$9.14 billion in 2010 and 2) subsequently spiking by some 39% in 2012 to S$13.96 billion. Growth wise, Keppel Corp’s revenue in 2014 is up by less than 9% compared to 2009, representing an annual growth rate of just 1.6%.

As of the end of 2014, Keppel Corp had $5.74 billion in cash and equivalents, and $7.38 billion in borrowings.

Can read more here.
Is Keppel Corporation Limited Good Enough to Buy?

 

[makav31i]

Do not advocate people to transfer from OA to SA, next time he buy property got no OA to use, that's stupid.

Only the first $20k in OA give the 1% extra, TS obviously got more than $20k in OA since he already know the rules that the first $20k in OA cannot be use for investment. Its 2.5% interest only vs potential investment gains. I have got no problems earning more than 2.5% on my investment using OA so i invest. For TS, if you do not know what you are doing then don't do it. Don't trust agents, they sux at investments, only know how to take money from you to line their pockets, true experience which my family members got conned already. Their sale charge are so high that its ridiculous.

It seriously depends. We don't know what the TS intends to do with the CPF, whether it is for retirement or to make small gains for buying a house in the future or he had already purchased a house or how much is his monthly contribution to his CPF.

If the TS already purchase a house and his monthly contribution to CPF is higher than the amount paid to HDB, isn't it better to transfer the OA to SA to gain 4% or 5% rather than let it be in OA to get 2.5% or 3.5%? This would enable TS to hit minimum sum faster.

CPF main intention is for retirement and not for you to purchase property. Just like insurance main intention is to cover you for unforseen circumstances and not make money for you.

So I am basing my assumption that the TS intend to grow his CPF for retirement and hence advocating the transfer. Even if he had not purchased a house yet and intends to do so in the future and assuming that he wanted to purchase a BTO, it would enable him to save up his OA while waiting for the BTO.

 

[hwmook]

It seriously depends. We don't know what the TS intends to do with the CPF, whether it is for retirement or to make small gains for buying a house in the future or he had already purchased a house or how much is his monthly contribution to his CPF.

If the TS already purchase a house and his monthly contribution to CPF is higher than the amount paid to HDB, isn't it better to transfer the OA to SA to gain 4% or 5% rather than let it be in OA to get 2.5% or 3.5%? This would enable TS to hit minimum sum faster.

CPF main intention is for retirement and not for you to purchase property. Just like insurance main intention is to cover you for unforseen circumstances and not make money for you.

So I am basing my assumption that the TS intend to grow his CPF for retirement and hence advocating the transfer. Even if he had not purchased a house yet and intends to do so in the future and assuming that he wanted to purchase a BTO, it would enable him to save up his OA while waiting for the BTO.

LKY said CPF is for retirement and buying a property is for retirement so using your CPF to buy property is the correct way to go about it, don't question ah gong on what is CPF main intention.

From TS choice of user name, i guess he is just 28 and is not looking at retirement. Your assumption is base on? Don't go around advocating things when you ain't even clear on TS situation, you are telling people to do something irreversible and you can just said it so easily without considering whether its suitable for TS.

 

[makav31i]

LKY said CPF is for retirement and buying a property is for retirement so using your CPF to buy property is the correct way to go about it, don't question ah gong on what is CPF main intention.

From TS choice of user name, i guess he is just 28 and is not looking at retirement. Your assumption is base on? Don't go around advocating things when you ain't even clear on TS situation, you are telling people to do something irreversible and you can just said it so easily without considering whether its suitable for TS.

He wants to grow his CPF more than 2.5%, he did not say that he wants to grow it to buy property. Read his first post again. How is my assumption wrong? You rather he get 4% or 5% at almost zero risks and no fees incurred or you rather let those agents sell him products which may or may not make him more than 2.5% that he wanted. If TS come in and say that he want to use his CPF for buying property, I stand corrected. But if he still say just to grow his CPF more than 2.5% and not for buying property, so how?

 

[Jeremy1]

Why not you invest yourself instead of depending on those insurance fund manager who you still need to pay them higher commission and it's not a guarantee return ?

If they are that good, then they no need to ask those strangers in their road show to buy liao........................

It's time to open an account like fundsupermart and attend some free seminar to learn to invest yourself.

 

[Funerei86]

I wouldn't advocate transferring OA to SA so early. Most singapore want to own a home. Leaving money in OA allow you to earn risk free 2.5% & additional 1% of first combined 60K which is credited to your SA. Meanwhile, let funds in OA compound to build up balance for downpayment of property.

Even if have slight excess, leaving it inside is smart for unforseen circumstances. E.G retrenchment, sickness etc
Unless foreigner(PR) with no intention to stay here or buy a house then do transfer OA to SA. Or maybe when you about 50 & loan paid up then do it bah.

My humble 2 cents

 

[djchris]

I wouldn't advocate transferring OA to SA so early. Most singapore want to own a home. Leaving money in OA allow you to earn risk free 2.5% & additional 1% of first combined 60K which is credited to your SA. Meanwhile, let funds in OA compound to build up balance for downpayment of property.

Even if have slight excess, leaving it inside is smart for unforseen circumstances. E.G retrenchment, sickness etc
Unless foreigner(PR) with no intention to stay here or buy a house then do transfer OA to SA. Or maybe when you about 50 & loan paid up then do it bah.

My humble 2 cents

I disagree with that. I feel that with proper planning, transferring some money from OA to SA is not a bad idea. In my case, I intend to top up the excess money from my OA to SA each month starting from next year when the salary ceiling moves from $5000 to $6000. I don't need the excess $230 each month for my mortgage loan and will compound nicely in my CPF with 5% interest rate.

 

[makav31i]

I wouldn't advocate transferring OA to SA so early. Most singapore want to own a home. Leaving money in OA allow you to earn risk free 2.5% & additional 1% of first combined 60K which is credited to your SA. Meanwhile, let funds in OA compound to build up balance for downpayment of property.

Even if have slight excess, leaving it inside is smart for unforseen circumstances. E.G retrenchment, sickness etc
Unless foreigner(PR) with no intention to stay here or buy a house then do transfer OA to SA. Or maybe when you about 50 & loan paid up then do it bah.

My humble 2 cents

I totally agree with you...TS did not reveal any details and expect people to advice him... His goals is to earn more than 2.5% and his current solution is that an agent want to sell him a variety of funds to ripoff his cpf...No one knows till TS clarify if he is ASK and inherited a property or he is Forever Alone or he intending to buy a property in the future or etc. Not only that, TS did not mentioned if he working in public or private sector and whether he is a self-employed or entrepreneur. Whether he is a Sinkie or PR or intending to migrate overseas.

There are so many different possibilities and no one size fits all but if he just want to earn above 2.5% at relatively low risks, I don't see any other better solution than to transfer from OA to SA. If he come in and said that he would be buying a house in the future, of course the solution would differ.

Until TS come in to clarify, there is no right or wrong or "that's stupid" as everyone just derive a solution on their own assumptions of TS situation which may or may not reflect actual reality.

 

[Funerei86]

I disagree with that. I feel that with proper planning, transferring some money from OA to SA is not a bad idea. In my case, I intend to top up the excess money from my OA to SA each month starting from next year when the salary ceiling moves from $5000 to $6000. I don't need the excess $230 each month for my mortgage loan and will compound nicely in my CPF with 5% interest rate.

Assuming you earn 6k a month, i would top up using cash instead of doing CPF transfer for tax relief. I would still leave funds in OA cause i probably being servicing a big mortgage for many years to come. You won't know when your company tell you that your services are no longer needed. Sure, retirement planning is important but SA funds are really for long term. 55(assume you meet your
Min sum) or 65(to start drawing down from).

OA has better usage. Education, DPS, Investment, HPS, Housing payment. No right/wrong here in our discussion but more of learning from each other's perspective

 

[hwmook]

I totally agree with you...TS did not reveal any details and expect people to advice him... His goals is to earn more than 2.5% and his current solution is that an agent want to sell him a variety of funds to ripoff his cpf...No one knows till TS clarify if he is ASK and inherited a property or he is Forever Alone or he intending to buy a property in the future or etc. Not only that, TS did not mentioned if he working in public or private sector and whether he is a self-employed or entrepreneur. Whether he is a Sinkie or PR or intending to migrate overseas.

There are so many different possibilities and no one size fits all but if he just want to earn above 2.5% at relatively low risks, I don't see any other better solution than to transfer from OA to SA. If he come in and said that he would be buying a house in the future, of course the solution would differ.

Until TS come in to clarify, there is no right or wrong or "that's stupid" as everyone just derive a solution on their own assumptions of TS situation which may or may not reflect actual reality.

Yes, TS didn't make it clear so we shouldn't be making any recommendations that have serious repercussions. Doing a OA to SA is permanent damage, you won't see the money forever until you are 55. I would recommend to stay on the safe side. TS ask for advise on how to grow his money in OA not ask for advise on how to wipe out his OA.

 

[capri87]

Do not ever invest through insurance companies.

Does it include those savings plan as well?

 

[capri87]

3-6% monthly that fund is consider a high risk volatile fund. More likely an emerging market funds.
You should check on the fund fact sheet on the past performance of the funds , whether it outperform the market benchmark on a yearly basis.
You should also consider you would like to invest in industry specifics or country specific. It depends on your risk appetite
There are funds which do outperform the cpf 2.5%, so you do have to be selective in that .

Generally the sales charge would be 3% for a one time fee and 1.6% mgmt fee for the fund on a yearly basis.

If sales charge is 3% and mgmt fee another 1.6%, doesn't this mean in order to perform better than the default 2.5%, the fund needs to earn me at least 7.1% annually?