As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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Sunday, 1 February 2015

Your CPF Investment Account : Uncle8888's foolish advice again!!! (4)



Read? Your CPF Investment Account : Uncle8888's foolish advice again!!! (3)


Read? Realistic ways to raise CPF returns



CPF Investment Scheme


CURRENTLY, CPF members who are willing to take risks to earn a higher return on the CPF savings can invest their money through the CPF Investment Scheme (CPFIS). This scheme allows them to invest part of their savings in a wide variety of financial instruments that could potentially earn a higher yield than the default CPF interest rates.

While the CPFIS is open to all members, the 2008 study found that only 12 per cent of Ordinary Account (OA) savings and 20 per cent of Special Account (SA) savings were committed to investment. These statistics indicate that the participation rate in CPFIS is low.

Possible reasons for leaving money in the SA include the relatively high guaranteed annual interest rate of 4 per cent, and an unwillingness to risk retirement savings. However, these may not be the only reasons. The research indicated that the reasons for the low investment in professionally managed unit trusts also include poor investment performance, the high fees and transaction costs charged by funds, and a lack of financial literacy on the part of CPF members.

So far, those CPF members who have risked their savings have not done very well. Almost half of CPFIS-OA investors (47 per cent) incurred losses on their investments between 2004 and 2013, while 35 per cent obtained net profits equal to or less than the default OA rate of 2.5 per cent. Only 18 per cent made net profits in excess of the OA interest rate.


Do you know why Uncle8888 keep telling you to keep your itchy hands off your CPF Investment Account?

See for yourself!

Create wealth with your CPF investment account and NOT destory your future retirement fund. Your Future You will hate or love you!





CPF Investment Scheme
CURRENTLY, CPF members who are willing to take risks to earn a higher return on the CPF savings can invest their money through the CPF Investment Scheme (CPFIS). This scheme allows them to invest part of their savings in a wide variety of financial instruments that could potentially earn a higher yield than the default CPF interest rates.
While the CPFIS is open to all members, the 2008 study found that only 12 per cent of Ordinary Account (OA) savings and 20 per cent of Special Account (SA) savings were committed to investment. These statistics indicate that the participation rate in CPFIS is low.
Possible reasons for leaving money in the SA include the relatively high guaranteed annual interest rate of 4 per cent, and an unwillingness to risk retirement savings. However, these may not be the only reasons. The research indicated that the reasons for the low investment in professionally managed unit trusts also include poor investment performance, the high fees and transaction costs charged by funds, and a lack of financial literacy on the part of CPF members.
So far, those CPF members who have risked their savings have not done very well. Almost half of CPFIS-OA investors (47 per cent) incurred losses on their investments between 2004 and 2013, while 35 per cent obtained net profits equal to or less than the default OA rate of 2.5 per cent. Only 18 per cent made net profits in excess of the OA interest rate.
- See more at: http://www.straitstimes.com/news/opinion/more-opinion-stories/story/realistic-ways-raise-cpf-returns-20140530#sthash.92wUxidE.dpuf

6 comments:

  1. 2.5% return is a low number to beat. I am quite sure many retail investors close one eye also can beat it.

    But, 2.5% CAGR over next 20 to 30 years is NOT easy to beat. You don't think so?

    ReplyDelete
    Replies
    1. That's why i always say the day you hand in your I.C. is your real realistic return(CAGR) of your stock investment. Or the day you call it a day in the stock market. Don't be too happy if you make more then 15 or 20 % for one year(only).

      Delete
  2. It will interesting if we know the breakdown of how much people made or lost money via CPFIS.

    ReplyDelete
  3. I bought SGS bonds NY 03100A-010918 gives me 4% and OCBC NCPS gives me 4.2% using CPF-OA. Been holding them for ~6 years. The returns beat CPF-OA of 2.5%.

    ReplyDelete
    Replies
    1. You are in 18% category. A regular investment blogs reader who is savvy retail investor too.

      :-)

      Delete
  4. CPF member choice: Default option is good enough for most.

    http://www.ipscommons.sg/cpf-member-choice-default-option-is-good-enough-for-most/

    ReplyDelete

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