Tuesday, October 16, 2007

Get your CPF Savings out of the OA/SA

Get your CPF Savings out of the OA/SA AccountsOctober 16, 2007 at 10:20 pm · Filed under Investments

Real money down the drain. Lots of Singaporeans (and PR’s), 90% in fact, are losing out in passive income by keeping their CPF (Central Provident Fund) savings in the government default fund. Yep, official records show that as of December 2006, only 10% of CPF funds have been invested while another S$79 billion is retained in the OA and SA accounts.

While its “safer” and easier to just leave the money in the default fund, it also means that you probably won’t have enough to retire comfortably on if you only have a single source of income that is less than $5,000 a month, which is the case for the majority of Singaporeans.

So it makes sense to take some time to study how to invest a portion of your OA and SA funds in a wide range of capital market instruments. We’ve consistently made 10-20% returns over the years with minimal investment effort after initial studies. The government allows: fixed deposits, bonds, property funds, equities, annuities, endowment policies, unit trusts, investment-linked insurance policies (ILPs), exchange traded funds and my personal favourite gold (with limits)- although now it’s reaching a pretty high point but still $100 to go to reach its historical high. (Side note: I had asked my students in the beginning of the year (2007) and again a few months back to buy anytime it dipped below $650. I don’t know if anyone listened.)

If its just too overwhelming, you don’t have the time, just can’t quite make heads and tails out of investment instruments then do yourself a favour & get a financial advisor. And please, don’t talk to the ones who are selling insurance, the pay out is peanuts and really not worth it. You should look into managed funds with global portfolios

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