cpfis - should we consider sti etf?

[ftpofmpo]

For those cpf funds that are not accumulating 4% interest but 2.5% interest, should we invest them into sti etf under cpfis?

 

[SKenny]

For most people, ETF is one of the best way to invest in a market.

 

[yoongf]

Dividend 6% range.
Paying out soon.
Has capital appreciation opportunity too.
Been accumulating on dips.

https://sginvestors.io/sgx/reit/au8u-capitar-china-tr/target-price

 

[limster]

I've been holding for 10+ years. Every year, the dividend outperforms the 2.5% CPF interest rate plus capital gain.

The STI ETF dividend was even higher than my housing loan at 0.98%+SOR...

 

[ryaanp51]

I've been holding for 10+ years. Every year, the dividend outperforms the 2.5% CPF interest rate plus capital gain.

The STI ETF dividend was even higher than my housing loan at 0.98%+SOR...

inluding the dividends and appreciation, has the sti etf generated 7-8% CAGR?

 

[Mecisteus]

Not that worthy investing OA with STI ETF because of the quarterly fees and broker commissions.

Your OA is already earning 2.5% risk free.

Invest your cash through POSB Invest Saver instead.

 

[JuniorLion]

There are funds better than STI ETF if you want to consider CPFIS.

 

[doody_]

No point, CPF rates are guaranteed and comparable.

 

[BBCWatcher]

I think ES3 via the CPF Investment Scheme (OA) is a reasonably good idea if all the following conditions hold:

1. Your Special Account has already reached the Full Retirement Sum (or, if applicable, your Retirement Account has already reached the Enhanced Retirement Sum). If it hasn't, then transfer OA dollars and/or make cash top ups to fix that first. The 4% yield is on balance more attractive.

2. You're flush with OA dollars.

3. You have a long time horizon ahead.

4. You have and maintain at least reasonable global diversification in your portfolio. If you're "all Singapore" already, this isn't going to help.

5. You minimize investment costs as best you can.

 

[rrr2015]

will capital gain be good for late starter? what the average dividend foe 10+ years?

I've been holding for 10+ years. Every year, the dividend outperforms the 2.5% CPF interest rate plus capital gain.

The STI ETF dividend was even higher than my housing loan at 0.98%+SOR...

 

[rrr2015]

personally i won't since i regard cpf oa as part of bond allocation in portfolio

For those cpf funds that are not accumulating 4% interest but 2.5% interest, should we invest them into sti etf under cpfis?

 

[peacefulday]

The cpf oa compound yield for a fixed sum at 10yrs will range 2.9~4.2%. A riskless diversified portfolio.

 

[limster]

source:fsmone.

FSB - 1 year, 2 year, 3 year, 5 year, 10 year.

All time periods beat CPF 2.5%

Here is my 2016 post on FSB. https://forums.hardwarezone.com.sg/103650554-post3.html


Vested via CPF-OA. Already posted many times since years ago why I like this fund.

 

[w1rbelw1nd]

Not a straightforward answer. I would priortise the following use of money in CPF OA in this order:

1. Payment of housing loan
2. Holding 2.5% cash in anticipation of any housing related payment
3. Investment in STI through CPFIS
4. Earn 2.5% for liquidity consideration OR put in CPF SA

I think 2.5% "risk free" is a terrible option for those with a long investment horizon. The money is locked in anyway, if you have no need for it for housing why not just invest it in a diversified equity ETF (even though STI is trash at diversification).

I have finally put in all my CPF OA in STI ETF, and yes I pay $5.35 a quarter for charges on my $60+k in STI, but at least my money is not earning a paltry 2.5%, with the excess returns made by GIC given to the fund our Budget. I can sleep better knowing my money is put to real use (ensuring retirement adequacy), rather than structured in a way that is not in line with my own goals.

I am of course happy to slowly liquidate this higher risk ETF to purchase something globally diversified with a reasonable TER, or put it back in CPF OA for the 2.5% (if still available) at older age.

 

[simon_84]

There are funds better than STI ETF if you want to consider CPFIS.

Agreed, I focus on a single reit typically those commerical or retail one.
Div yield must be more than 6%.

 

[BBCWatcher]

Agreed, I focus on a single reit typically those commerical or retail one.
Div yield must be more than 6%.

I guess Hyflux's bonds wouldn't have made the cut then. Too safe.

 

[assiak71]

Agreed, I focus on a single reit typically those commerical or retail one.
Div yield must be more than 6%.

What about rights?

 

[ryaanp51]

Not a straightforward answer. I would priortise the following use of money in CPF OA in this order:

1. Payment of housing loan
2. Holding 2.5% cash in anticipation of any housing related payment
3. Investment in STI through CPFIS
4. Earn 2.5% for liquidity consideration OR put in CPF SA

I think 2.5% "risk free" is a terrible option for those with a long investment horizon. The money is locked in anyway, if you have no need for it for housing why not just invest it in a diversified equity ETF (even though STI is trash at diversification).

I have finally put in all my CPF OA in STI ETF, and yes I pay $5.35 a quarter for charges on my $60+k in STI, but at least my money is not earning a paltry 2.5%, with the excess returns made by GIC given to the fund our Budget. I can sleep better knowing my money is put to real use (ensuring retirement adequacy), rather than structured in a way that is not in line with my own goals.

I am of course happy to slowly liquidate this higher risk ETF to purchase something globally diversified with a reasonable TER, or put it back in CPF OA for the 2.5% (if still available) at older age.

I have around 100k in OA and 50k in SA, after keeping aside the min sum, which I am not going to use for any housing needed.

I dont want to keep them in OA to earn 2.5%, but would like to deploy in market for long term for 15+ years


So my questions are,

1 is STI ETF likely to generate 7-8% CAGR (gain + dividend combined) and one is the best performing instrument to invest with OA/SA funds?

2 What other options can be also give comparable returns as STI ETF? I had studied the performance of unit trusts and seems only handful of them can give more returns than ETF (when we calculate ETF returns with capital gain and dividend reinvestment together)

Appreciate your inputs on this.

 

[simon_84]

What about rights?

Just take cash div, never bother about the drp.

 

[simon_84]

I guess Hyflux's bonds wouldn't have made the cut then. Too safe.

Maybe I'm lucky that I get to do a financial statement analysis on hyflux back during my uni times.
So that homework actually helps.

Cant have the same empathy for those who dont do their homework.
if the investment goes south, is probably good practice to cut early.