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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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

It is here where I share with you how I did it! FREE Education in stock market wisdom.

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Thursday, 18 October 2018

Is CPF OA 2.5% Compound Interests A Low Return On Capital???

Read? Salutation To This Warrior: 17 Years Long Service And Outstanding Award For Bringing Food To Monks In The Temple Of Capital

No re-investing of dividends from Kep Corp which was bought in Sep 2001 at $1.32 till now. All dividends were refunded through CPFIS back to CPF OA to earn 2.5% compound interest since Dec 2001.

After 17 years, ROC based on total compounded interests from Dec 2001 to Dec 2018 = 135%

Average ROC per year = 7.9%

The beauty of compounding will only happen near the tail end and then it will make the Average looks attractive.

Compounding interest separates the rich from the broke. The great Albert Einstein once said “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn't … pays it.”

The 1st decade of dividends sitting in CPF OA  earning 2.5% return was boring!

Any difference from ugly duckling or ugly caterpillar?


  1. You may see your investment success at the end of the Rainbow. The end of Rainbow may be decades away and nearer your retirement; but you may not be aware now. The beauty as long-term successful retail investors.

  2. Congrats !! Yes , the wonder of "compounding effect " and also buying solid and good fundamental company ..Cheers !! :D

    1. Huge difference in buying at the right price and be lucky at right time

  3. CW,

    This is a good example of financial alchemy to "verify' whether the reader's Mind easily fooled or not!

    You har!

    1. If you had re-invested your Keppel dividends, DEFINTELY the compounding returns will be greater than leaving in CPF OA ;)
    Your past powerpoints said so!

    2. For greater CLARITY, just compound the 31 Dec 01 dividends of 50 cents by 2.5% for 17 years; that's the true effect of
    compounding ;)

    3. The main growth and compounding from your example comes mainly from your Keppel dividends. Naughty, naughty!

    This is like someone starting with $50K, never invest but put under the mattress. Every year continue to add $50K. Then
    10 years later proundly declare his "investment" portfolio has grown and compounded to a 10 bagger!

    How's that for the magic of "compounding"?

    To answer your question, YES, a nominal return of 2.5% is LOW RETURN on capital :(

    If we discount 2% for inflation, that REAL return is only 0.5%...

    Have fun with FIRE goals based on 0.5% real returns :( (You think why GIC and Temasek measures REAL returns?)

    That's why voluntary contribution to CPF is not investng.

    Your dividends strategy in Keppel is!

    And that's Earn More ;)

    1. I am with Earn more camp. Corporations earn more will be winning stocks for investors

  4. A man is as rich as he can leave his assets alone.

    Compounding anyone?


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