Read? CPF Contribution and Allocation Rates
Read? 2016 : Key Fact of Household Income In Singapore
Read? Government to review CPF Investment Scheme: DPM Tharman
Read? The Dilemma Of Young Personal Financial Investment Influencers
Few points to take note:
1. The CPFIS was set up to offer CPF members a way to earn higher returns on their savings but it is "not fit for purpose", Mr Tharman told an audience at the Economic Society of Singapore's annual dinner.
Over the past 10 years, more than 80 per cent of the CPF members who put their savings into an investment product via the CPFIS would have been better off just leaving their money in the Ordinary Account, which earns a guaranteed 2.5 per cent each year, Mr Tharman noted.
Some 45 per cent of those who made use of the CPFIS even made losses over the same period.
3. The Ordinary Wage (OW) Ceiling limits the amount of OW that would attract CPF contributions. The OW Ceiling is capped at $6,000 currently. (Before 1 Jan 2016, OW Ceiling was $5,000)
4. Assuming 3 months year end bonus.
5. Median gross monthly income in 2016 is $4,056 and i.e. 68% of OW Ceiling of $6,000
How much can we possibly have in our CPFIS as war chest?
By simplifying the Maths
Maximum mandatory contribution to CPF OA as employees at OW Ceiling = 23% x $6,000 x 15 = $20,700 per year
For 10 years : $207,000 in CPFOA or 35% for CPFIS = $72, 450
For 20 years : $414,000 in CFP OA or 35% for CPFIS = $144,900
For many of us, if not most of us as employees will not have large CPFIS as war chest. Right?
So how to win this CPFIS war game?
Understand their wise words
"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." ~ George Soros
In the famous book entitled Reminiscences of a Stock Operator, Jessie Livermore said: “After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!
It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level, which should show the greatest profit.
And their experience invariably matched mine -- that is, they made no real money out of it.
I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”
Men who can both be right and sit tight are uncommon.
Many financial investment writers out there in the cyber world like to share on theories and concepts so it is about time for Uncle8888 to share with you the story of Coca Cola - The Real Thing!
Hmm .. may be too young to know this past long running advertisement of Coca Cola.
It is harder to tune to the whisper of lone voice among the loud Pipers' call in the social media of investing circus showing amazing acts with CPF accounts for retirement; but finally we still have to choose our own poison to act!
That is equivalent of $17.8K top up to his CPF OA per year for 17 years since Uncle8888 started as serious retail investor from Jan 2000 to 2017.
On top of $303K, each refund back to CPF OA will continue to earn 2.5% compound interests for X to 1X years.
Total investment gains will include another $XX,XXX interests and the best part is that counting of investment gains is not ending soon.
For how many more good years to count? Don't know!
PS: The current CPF Annual Limit is $37,740 since 2016.
Effective top up to his CPF OA = $20,700 + 17,836 = $38,536.
CPF OA has exceeded CPF Annual Limit of $37,740 for voluntary CPF Top up!