Should You Invest Your CPF money? Watch This Before Investing!

CPF allows you to invest your CPF money. But, should you actually do it? In this video, I will share with you everything you need to know about investing your CPF money, what’s the requirement, what can you invest in. And I’ll also share whether I would personally do it or not. Enjoy!

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0:00 - Introduction

2:04 - Considerations before investing
Before you invest your CPF money, here are a few things to consider:
1) Do you need your CPF money in the short term?
If you need your CPF anywhere between 1-5 years, maybe for buying HDB or for retirement. Then you might want to avoid investing it. That’s because the market is very volatile and it might suddenly crash when you need it.

2) Have you invested your cash?
It is better to invest your cash first, because your cash will only earn around 2% interest in a high yield savings account, while your CPF earns at least 2.5% interest. That means you have more to lose if you do not invest your cash first.

3) Were you successful in your cash investments?
By successful, I mean achieving 5% or more every year. Which is really easy if you know what you are doing, especially during the bull market which has been going on for the past 10 years until the pandemic came along.

However, despite so, it was found out that only 60% of the people have actually performed better than 2.5% returns while the remaining 40% either performed lesser or even lost their CPF money.
https://www.cpf.gov.sg/Assets/common/Documents/FY2019_CPFIS_OA_PL_Report.pdf

It’s mainly due to the Dunning Kruger effect, where people with lesser experience tend to overestimate their investment abilities.

5:15 - CPF investment requirements
CPF requires you to have at least 20k CPF OA, 40k CPF SA, at least 18 years old and you must not be an undischarged bankrupts
https://www.cpf.gov.sg/Members/Schemes/schemes/optimising-my-cpf/cpf-investment-schemes

You can only invest in specific instruments which CPF deems to have lesser risk.
https://www.cpf.gov.sg/Assets/members/Documents/CPFISInvestmentProducts.pdf

6:37 - How to invest?
For CPF SA, you do not need to open a CPF investment account, but for CPF OA you need to open with either DBS, UOB, OCBC. The account is for the banks to handle your CPF funds. These are the charges for the accounts:
https://www.uob.com.sg/web-resources/personal/pdf/personal/invest/financial/cpf-investment-account/CPFIS-charges.pdf
https://www.ocbc.com/assets/pdf/investment/cpfia_schedule_of_charges_201112.pdf
https://www.dbs.com.sg/iwov-resources/media/pdf/invest/cpf_schedule_charges.pdf

There is also a quarterly service charge of $2 per counter.

You will then need to open a stock brokerage account, then link your CPF investment account to it. For trading, the steps are almost the same as a normal cash trading, except that you would need to change the settlement mode to CPF instead.

9:13 - Would I invest my CPF?
Personally I would not invest my CPF money, unless I really have too much money in it, like $200k or more. But also because I am treating my CPF as my bond investment when I retire. It will act as a backup in case the market crashes. I will still be able to rely on my CPF payout while waiting for the market to recover.

Видео Should You Invest Your CPF money? Watch This Before Investing! канала Kelvin Learns Investing