As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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Saturday, 18 December 2010

Invest with CPF investment fund or Cash in the stock market?

Your CPF investment fund is earning compounding interests rate at 2.5% while your cash is only earning at 0.X% - 1.X%. Why would you use up your higher rate first while holding on to lower rate to wait for better investing opportunities?

I believe the biggest obstacle is that most investors see their CPF money as "stuck" money that needed to be "unlocked" first for investing while forgetting that their free-flow cash for investing purpose are actually sitting idle at a lower rate.

Somehow, I manage to overcome it by adopting Interests-wise thinking. My CPF investment fund is used as last line of defence or for holding pillow stocks which have dividend yield of more than 2.5%. The dividends received will be automatically "lock up" by CPF for compounding interests at 2.5% and they are fully protected from the future bear raids.

Be interests-wise!


7 comments:

  1. HI,
    I am 60 but continue to work. At age of 55 I leave my CPF untouched and also continue my "CPFIS". I wonder at what age will the CPF BOARD forced me to close my "CPFIS" and withdraw my CPF?
    Does anyone knows?

    ReplyDelete
  2. Q: How can I withdraw my CPF after I have turned 55?

    A: You may apply to withdraw your CPF one month before you reach 55 or any time thereafter. If you had previously withdrawn your cash balances upon reaching 55, you may make yearly withdrawals on or after your 56th, 57th birthday and so on.

    Go to CPF to read more
    http://ask-us.cpf.gov.sg/explorefaq.asp

    or let me know if you still have doubts as I am turning 55 next year and researching on options too.

    ReplyDelete
  3. Hi,
    Sorry my question is if you leave your CPF money untouched from age 55, and continue to operate your "CPF Investment Scheme", will CPF Board ask you to withdraw your CPF money and close your "CPFIS" at a certain age after 55?

    ReplyDelete
  4. Basically, you have two options after 55:

    Option 1: You may continue to invest your Ordinary Account balance under the CPF Investment Scheme - Ordinary Account (CPFIS-OA) and your Special Account balance under the CPF Investment Scheme - Special Account (CPFIS-SA). However, the stock and gold limits applicable to you may change.

    Option 2: If you have set aside the CPF Minimum Sum and Medisave Required Amount, you can apply to the Board to withdraw your CPFIS-OA and CPFIS-SA investments as well as the cash balance in your Investment Account. Your CPF Investment Account will be closed once you withdraw your investments. The Board will inform your agent bank to close your CPF Investment Account. You may approach the bank for the release# of your investments and cash after the Board has notified you. Your investments will be transferred to your own name and you may liquidate them as you wish and have the proceeds paid to you directly.


    So the choice is yours: 1 or 2

    You can read more at http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-6.htm

    ReplyDelete
  5. HI,
    I am actually under option 1 now.
    And I am already 60 years old.
    I am just wondering will they ask me to close my CPFIS and withdraw my CPF OA & SA one day?
    If so at what age?
    Many thanks.

    ReplyDelete
  6. Current CPF rules on withdrawal after 55 allow you to keep there as long as you wish.

    I think more CPF members are more worry that Govt may change rules and their money get stuck there. :-)

    ReplyDelete
  7. Hi,
    Ya lo, even money with the Govt is not 100% safe.
    Is there really no free lunch in this world?
    Will monitor closely the banks's current interest rate to CPF's interest rate.
    But may I know your opinion, at what's minimum spread of interest in favour of money in CPF, before we should close the CPFIS account?
    Anyway, banks's interest rate seems going to stay below 2.5 % for a few more years.
    But how to make sure we can withdraw the CPF money before Govt shift the "Goal Post?"
    Which the Govt is quite capable off.
    Like the compulsory annuity scheme for those below 55 years now.

    Cheers.

    ReplyDelete

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