A Beginner’s guide to investing with CPF
Have you been thinking about how you can make your CPF monies work harder for your retirement?
CPF interest rates today1 stand at:
👉 2.5% p.a. interest for savings in CPF OA
👉 4% p.a. interest in the Special Account (SA)
👉 up to 5% on the first S$60,000 of your combined balances (including up to S$20,000 from your OA) for members below age 55
BUT if you're thinking of investing your CPF, you can potentially earn a higher return than the guaranteed interest rates to grow your wealth and retire comfortably. 📈
1. Eligibility
You can invest through CPF Investment Scheme (CPF-IS)1 if you
- Have more than S$20,000 in your CPF-OA and/or S$40,000 in CPF-SA
- Are at least 18 years old
- Are not an undischarged bankrupt
- Have taken the Self-Awareness Questionnaire (SAQ)
- Have opened a CPF investment account with a CPF-IS approved agent (e.g. DBS, UOB or OCBC)
2. How Much Can You Invest?
You can invest up to1:
- 100% of your investible savings* in unit trusts/mutual funds, fixed deposits and ILPs
- 35% in CPF-approved stocks and bonds listed in SGX
- 10% in gold
3. Calculating Your Investible Savings
For example, if you have S$60,000 in your OA:
- You can invest up to 35% of your OA amount:
- 35% of S$60,000 = S$21,000
- But the first S$20,000 cannot be invested:
- S$60,000 - S$20,000 = S$40,000
CPF will always take the lower of the 2 amounts, so you can invest up to S$21,000. If you're not sure, you can always let the CPF Board calculate it for you!
4. What Happens To Your Capital Gains?
Any gains you make in your investments will be returned to your CPF account (after fees) but they can only be withdrawn when you reach 55 years old provided you have hit your Full Retirement Sum (FRS)1.
This includes any dividends or interests you receive from your CPF-IS investments paid out to you.
If you haven't hit your FRS, you'll only be able to withdraw S$5,000 at age 55.
So... Is Investing With Your CPF A Smart Choice?
Our CPF monies could be utilised in many ways. If you need help deciding whether it is the right decision for you, we hope this article can help!
1Source: CPF website. "Investing your savings with CPF Investment Schemes." Retrieved on (2022, March 14) from https://www.cpf.gov.sg/member/growing-your-savings/earning-higher-returns/investing-your-cpf-savings.
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