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Consider this before investing with your CPF monies

Is investing with your CPF a smart choice?

CPF investing is great for retirement planning...

but you'll need to be able to understand the risks and costs involved when doing so.

If you want to get started but aren't sure how to invest your CPF money, consulting a professional who understands your needs and objectives before investing is crucial.

We hope this article can help you make a clearer decision when considering investing with your CPF.

Besides your eligibility to invest using CPFIS, there are other investment factors you should probably take note.

1. How much investing knowledge do you have?

If you are unaware of the risks and costs of investing, it's probably a better decision to leave your CPF funds as it is.

Maybe consider moving some excess (not used for housing or education) OA funds to SA for higher interest rates (2.5% vs 4%). Note transferring funds from your OA to SA is a one-way street and it won't be possible for you to transfer your funds from SA back to OA.

2. How long can you leave your CPF money untouched?

If you're planning to utilise your CPF OA for housing/education in the next 3 years, it is better to keep your money in your OA to have your capital guaranteed.

The magic of compounding requires long-term investing and commitment for a higher chance of your portfolio performing better than the current CPF interest rates.

The longer time horizon you have, the better the returns.

3. What is your risk appetite/tolerance?

Investing always comes with a risk, and the risk-return trade-off should be something you're comfortable accepting before investing in anything (not just with your CPF).

Make sure to do your own due diligence before investing your CPF funds to choose an investment portfolio that's appropriate for your risk appetite and investment goals.

4. Don't forget to factor in investment fees

Most investment instruments will charge some form of fees: sales charges, management fees, wrap fees and brokerage fees.

Even a 1% difference in fees can amount significantly over the long-run. This means that even if your portfolio might be growing at 3%, after deducting relevant fees, it might return less than the interest rates given from your CPF accounts.

5. Finding a brokerage account suitable for you

Besides investment fees, there are also platform fees to consider.

Fees on brokerage accounts vary according to minimum commission on stocks, minimum funding or deposit required and management fees.

  • Opening a CPF investment account with DBS, OCBC or UOB:
    • Fees and charges are the same for all 3 local banks, so pick your favourite one. This will allow your bank to administer funds, but you will still need a brokerage account to invest your money.
    • If you're investing with CPFIS-SA, there's no need to open an investment account and you can directly approach the product providers listed here1.
    • The next step is to open an account with a CPFIS eligible investment brokerage or robo-advisor.

1Source: CPF website. (2022, October 21). "Service/Product Providers Included Under the CPF Investment Scheme (CPFIS)". Annex C. Retrieved on (2022, November 23) from https://www.cpf.gov.sg/content/dam/web/member/faq/documents/INV_AnnexC.pdf

CPFIS Eligible Investment Brokerages*:

*Your brokerage doesn't have to be the same bank as your CPF investment account.

ACCOUNT MIN. COMM ON SG STOCKS2 MIN. FUNDING2
DBS Vickers S$25 S$10
OCBC Securities S$40 or USD$20 S$0
UOB Kay Hian S$25 S$0
POEMS 0.08% S$0
CGS-CIMB Securities S$25 S$0

2The above information is accurate as at 2022, November 23. Please visit the respective account websites for the most up-to-date information.

CPFIS Eligible Robo/Human Financial Services Consultant:

ACCOUNT MIN. COMM ON SG STOCKS3 MIN. FUNDING3
Endowus 0.05% - 0.4% S$1,000
Financial Services Consultant Varies Varies

Contact your trusted Financial Services Consultant or drop us a message if you'd like to learn more about investing with your CPF from a certified professional.

3The above information is accurate as at 2022, November 23. Please visit the respective account websites linked above for the most up-to-date information.

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