Investing with your CPF money should be of no difference with investing your cash. CPF money is still your money which you will be able to spend in your retirement days. To be able to receive more than $3000 per month from your CPF during retirement or $1240 very much depend on what you do with your CPF now. This article will be sharing with you what are the options available for you to grow your retirement sum using CPF investing.
CPF OA vs SA
OA savings earn a minimum interest of 2.5% p.a. while SA savings earn risk-free interest at a floor rate of 4% p.a. You can take advantage of the SA savings interest rate by transferring your OA savings to SA savings. Compounding the interest over a 20-year period will more than double your savings.
CPF Investing Schemes
You can invest under CPFIS if you:
- are at least 18 years old;
- are not an undischarged bankrupt;
- have more than $20,000 in your OA; and/or
- have more than $40,000 in your SA.
CPF Investing – Professionally managed products
You can invest your CPF with professionals who manage funds for investors, commonly known also as mutual funds or unit trust. You’ll have to take note of the fees involved as these are professionals working for profit-orientated organizations, hence they don’t come free. To invest in these Professionally managed products, you ought to be really careful and not to be enticed by the high projected returns. Do not mistaken this as guaranteed returns.
CPF Investing – Equities
Other than letting others manage your money, you can also choose to manage it yourself. World-renowned investor, Warren Buffett, has been generating an average return of 20% annually since 1965 in equities. Equities are also known as Stocks. Behind every stock, there is a business. Great businesses will become valuable over time. Here’s a how to buy stocks in Singapore guide.
CPF Investing – Gold
Traditional investment in tangible assets like gold has been the hot favourite for some for many years. Using your CPF to invest in gold is limited to SPDR Gold Shares or other gold products with UOB bank. SPDR Gold Shares is a trust fund reflecting the performance of the price of gold bullion.
As gold itself does not generate more value like great businesses do where profits can grow over time and becomes more valuable, gold investment can be very speculative. Gold has lost its perceived value close to 40% since the high of $1889.70 in 2011.
CPF Investing – Properties
With proper money management and investment, you can own multiple properties. YES, properties, not just one. And your CPF can fund the properties itself passively and receive rental income from your properties. Of course, you have to meet the basic retirement sum in your SA and OA savings. Plus, you have to meet the Total Debt Servicing Ratio (TDSR) as well.
Each investment vehicle has its own pros and cons. You have to understand your objectives or goals before choosing which vehicle to invest in.
Investment in Singapore for Beginners
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