EndowUs Roboadvisor: investing using CPF

[andyhtc]

41% of CPFIS-OA investors made losses last year. Cumulatively, 25% made losses. If those making 2.5% or less profit are included, then overall statistic does not look very good for the investors. I think it is rather high-risk to put your retirement saving in such investment. 2.5% interest rate from CPF is already very good and entirely risk-free.

THE TOTAL PROFITS/LOSSES FOR INVESTMENTS HELD UNDER CPFIS-OA FOR THE PERIOD ENDED 30 SEPTEMBER 2020

https://www.cpf.gov.sg/Assets/common/Documents/FY2020_CPFIS_OA_PL_Report.pdf

 

[eAtNeAt]

Is it because cpf pre selects the 'correct' stocks to buy. Hence investors lost coz of cpf mistake.

 

[hkchew03]

41% of CPFIS-OA investors made losses last year. Cumulatively, 25% made losses. If those making 2.5% or less profit are included, then overall statistic does not look very good for the investors. I think it is rather high-risk to put your retirement saving in such investment. 2.5% interest rate from CPF is already very good and entirely risk-free.

THE TOTAL PROFITS/LOSSES FOR INVESTMENTS HELD UNDER CPFIS-OA FOR THE PERIOD ENDED 30 SEPTEMBER 2020

https://www.cpf.gov.sg/Assets/common/Documents/FY2020_CPFIS_OA_PL_Report.pdf

No pain no gain i guess, I started investing CPF mid Feb last year, right before the massive dip, DCA monthly, currently standing at 13-14% exuding the $2 transaction fee. I don't suppose 2021 will be anywhere close, but if can hit more than 7% would be great compared to the 2.5% compounded.

 

[FinalDestiny...]

https://endowus.com/insights/endowus-cpf-investment-outperform-2020/

• Endowus’ 2020 CPF portfolios returned 15.7% for 100% equities, and 6.7% for 100% fixed income, outperforming the average returns of CPFIS-included funds by 2.2% and 0.4%, respectively.
• Cumulative returns from 2018 to 2020 for Endowus CPF portfolios were 35.6% for 100% equities, and 13.4% for 100% fixed income.* For equities, this represents outperformance of 14.8% cumulatively (4.2% outperformance on an annualised basis), driven by Endowus’ exclusive access to Vanguard-managed low cost passive funds that track the S&P 500, and MSCI World indices.

 

[dappermen]

Dont believe blindly

 

[s0crates]

"It is on track to hit S$1 billion in assets under advice by the second quarter in Singapore."

Given how stashaway just hit US$1billion after so many year out in the market, with Malaysia as well, does this means Endowus will soon overtake SA to be the largest robo in SEA?!

Still damn small compared to the likes of Ifast though lol.

https://www.businesstimes.com.sg/ba...-in-series-a-funding-from-venture-capitalists

 

[Okenba]

https://endowus.com/insights/endowus-cpf-investment-outperform-2020/

• Endowus’ 2020 CPF portfolios returned 15.7% for 100% equities, and 6.7% for 100% fixed income, outperforming the average returns of CPFIS-included funds by 2.2% and 0.4%, respectively.
• Cumulative returns from 2018 to 2020 for Endowus CPF portfolios were 35.6% for 100% equities, and 13.4% for 100% fixed income.* For equities, this represents outperformance of 14.8% cumulatively (4.2% outperformance on an annualised basis), driven by Endowus’ exclusive access to Vanguard-managed low cost passive funds that track the S&P 500, and MSCI World indices.

It may be worth considering that portfolio performance isn't the same thing as investor performance.
If an investor panic sells in March/Apr 2020, it doesn't matter how well the portfolio did, he will probably still suffer a loss...

 

[yuzu28]

Sorry that I didn't manage to completely read the whole thread...

Just wanted to know why you think using OA for Emdowus is ok?
OA 2.5%
Unless Endowus giving a return of 6%, else maybe not so worth?
Cos when u sell, u still need to return the OA 2.5% to yourself.
If p.a. return is only 5%, u are also just like getting 2.5% from OA, without having the service fee in mind?

 

[RedsYWNA]

Sorry that I didn't manage to completely read the whole thread...

Just wanted to know why you think using OA for Emdowus is ok?
OA 2.5%
Unless Endowus giving a return of 6%, else maybe not so worth?
Cos when u sell, u still need to return the OA 2.5% to yourself.
If p.a. return is only 5%, u are also just like getting 2.5% from OA, without having the service fee in mind?

For investment, there's no need to return the 2.5% back to OA. Its considered as you lugi the 2.5% liao.

On the other question, do you think that after 30 years, it is likely that (S&P 500 - 0.8%) will beat 2.5% ? If so, why not go with Endowus for your CPF OA, assuming you dont need the OA for housing?

 

[s0crates]

Sorry that I didn't manage to completely read the whole thread...

Just wanted to know why you think using OA for Emdowus is ok?
OA 2.5%
Unless Endowus giving a return of 6%, else maybe not so worth?
Cos when u sell, u still need to return the OA 2.5% to yourself.
If p.a. return is only 5%, u are also just like getting 2.5% from OA, without having the service fee in mind?

Because the broad market should do better than 2.5% p.a. long term. Simple as that. Endowus is the lowest cost diversified platform for cpf now.

2.5% risk free is good but it's not great for long term hold. Especially if you have no use for the money short term.

Then again there are people who paper hands and sell their endowus cpf investments within a year - they acted in the worse possible way, worse than not doing anything lol.

 

[Okenba]

Sorry that I didn't manage to completely read the whole thread...

Just wanted to know why you think using OA for Emdowus is ok?
OA 2.5%
Unless Endowus giving a return of 6%, else maybe not so worth?
Cos when u sell, u still need to return the OA 2.5% to yourself.
If p.a. return is only 5%, u are also just like getting 2.5% from OA, without having the service fee in mind?

10,000 left in OA will be 10,250 in one year.
10,000 giving a return of 5% will be 10,500 in one year.

So long as Endowus returns more than (2.5% + Endowus Fees + Fund/ETF Fees), you'll be fine.
Endowus fees is a flat 0.4%. Fund/ETF Fees can range from maybe 0.5% - 1%?
So if you can get a return of > 4%pa from Endowus, you should be fine.

 

[yuzu28]

10,000 left in OA will be 10,250 in one year.
10,000 giving a return of 5% will be 10,500 in one year.

So long as Endowus returns more than (2.5% + Endowus Fees + Fund/ETF Fees), you'll be fine.
Endowus fees is a flat 0.4%. Fund/ETF Fees can range from maybe 0.5% - 1%?
So if you can get a return of > 4%pa from Endowus, you should be fine.

Just now i pulled out a spreadsheet to do a quick calculation, compounding 10k in cpf and 10k in endowus 5% less cpf int. For a 5 yr period, cpf is thru endowus is about 1% higher than compounding in cpf. (provided i no count sala). Whether nett 1% gain in 5 yrs worth the risk is subjective. Cos the yield go higher too.

 

[s0crates]

Just now i pulled out a spreadsheet to do a quick calculation, compounding 10k in cpf and 10k in endowus 5% less cpf int. For a 5 yr period, cpf is thru endowus is about 1% higher than compounding in cpf. (provided i no count sala). Whether nett 1% gain in 5 yrs worth the risk is subjective. Cos the yield go higher too.

That's not you compare man. You should just compare 2.5% versus 6% that's all. 6% should be nett of fund fees and Endowus fees already 2+6 you deduct cpf interest again?

 

[VanquishShadow]

Just now i pulled out a spreadsheet to do a quick calculation, compounding 10k in cpf and 10k in endowus 5% less cpf int. For a 5 yr period, cpf is thru endowus is about 1% higher than compounding in cpf. (provided i no count sala). Whether nett 1% gain in 5 yrs worth the risk is subjective. Cos the yield go higher too.

Think there is a conceptual flaw

Why are you deducting CPF int from the endowus 5%?

 

[yuzu28]

Think there is a conceptual flaw

Why are you deducting CPF int from the endowus 5%?

Cos if I redeem and refund back to cpf, need to refund back interest that supposed to accumulate if I did not use for investment?

 

[Okenba]

Just now i pulled out a spreadsheet to do a quick calculation, compounding 10k in cpf and 10k in endowus 5% less cpf int. For a 5 yr period, cpf is thru endowus is about 1% higher than compounding in cpf. (provided i no count sala). Whether nett 1% gain in 5 yrs worth the risk is subjective. Cos the yield go higher too.

I think this is a fair statement because anyone investing in endowus should be expecting to earn more than 2.5%

In fact, they should expect to earn more than 2.5%+total fees to endowus. Assuming total fees is 1.5%, they should expect to earn more than 4%. So your question is, if they earn 5%pa, that is only 1% more than the bare minimum they should be targeting, and so, is that worth the risk compared to a risk free 2.5%

This is a fair question and there are a few points to consider.
1) 1.5% total fees is slightly on the high side. One may be able to get 1% total fees instead.
2) Depending on what fund one chooses, 5%pa might be slightly on the low side.
6-7% might also work.
3) Depending on how long the time frame of the investment is, a longer time frame might also equate to lower risk (again depending on what fund is chosen) A longer time frame also means compounding works better and the slight difference will grow larger.

I think if one has a long time frame, chooses a global diversified fund with reasonable fees, then endowus might be worth the risk to seek to outperform 2.5%

 

[RedsYWNA]

I think this is a fair statement because anyone investing in endowus should be expecting to earn more than 2.5%

In fact, they should expect to earn more than 2.5%+total fees to endowus. Assuming total fees is 1.5%, they should expect to earn more than 4%. So your question is, if they earn 5%pa, that is only 1% more than the bare minimum they should be targeting, and so, is that worth the risk compared to a risk free 2.5%

This is a fair question and there are a few points to consider.
1) 1.5% total fees is slightly on the high side. One may be able to get 1% total fees instead.
2) Depending on what fund one chooses, 5%pa might be slightly on the low side.
6-7% might also work.
3) Depending on how long the time frame of the investment is, a longer time frame might also equate to lower risk (again depending on what fund is chosen) A longer time frame also means compounding works better and the slight difference will grow larger.

I think if one has a long time frame, chooses a global diversified fund with reasonable fees, then endowus might be worth the risk to seek to outperform 2.5%

I am using Endowus to invest 100% of my CPF OA into Infinity 500. Exp ratio is 0.8% (including endowus fee 0.4% + fund fee 0.4%).

Honestly it will be super suay if I fail to beat 3.3% (2.5% + 0.8%) in 20 years time.

 

[iceblendedchoc]

I am using Endowus to invest 100% of my CPF OA into Infinity 500. Exp ratio is 0.8% (including endowus fee 0.4% + fund fee 0.4%).

Honestly it will be super suay if I fail to beat 3.3% (2.5% + 0.8%) in 20 years time.

Yeah it is good that endowus finally allow people to customise the portfoilo. When i started , it has to be a special snowflake order through emails.

 

[Okenba]

I am using Endowus to invest 100% of my CPF OA into Infinity 500. Exp ratio is 0.8% (including endowus fee 0.4% + fund fee 0.4%).

Honestly it will be super suay if I fail to beat 3.3% (2.5% + 0.8%) in 20 years time.

I tend to agree. But if Dalio is right and US loses supremecy to China in those 20 years, then you might end up being super suay.
I'm in Infinity Global myself.

 

[VanquishShadow]

Cos if I redeem and refund back to cpf, need to refund back interest that supposed to accumulate if I did not use for investment?

I can kind of see where you're coming from, but IMO there's a better way to look at it:

a) if you leave your money in CPF OA, you get 2.5% interest p.a.

b) if you use CPF funds to invest via Endowus, you (ideally) want to get >2.5% returns. Now, Endowus offers various options with differing risk-return profile, so you have to determine what is your risk appetite, what is your investment horizon etc., and then see if what Endowus can offer is suitable for you. There could be portfolios that give say ~3.5% avg returns, with a low level or risk, or portfolios that give ~7.5% avg returns, with a higher level of risk.

c) it may also be attractive to consider the one-way transfer from CPF OA to CPF SA, so that you earn 4%, rather than 2.5%. Over the long-term, this makes a big difference, and I guess most of us will view the 4% rate is being guaranteed (i.e. no risk) although in reality, CPF can change it. This options also depends on whether you have plans for your OA monies (e.g. to fund housing purchase, etc.)

For me personally, 2.5% p.a. is low. I am quite young, and my investment horizon is long. I am prepared to stomach risk, because I feel that over the long-term, the average returns will exceed 2.5%. A few years ago I transferred some OA to SA. There was no Endowus option available then. Currently, I prefer Endowus because I feel that in the long-term, the portfolio I am invested in has a good chance of exceeding 4%.