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What to do if we don't trust the CPF system?

Friday, June 23, 2017


I have been sharing quite a bit of stuff on Facebook regarding the CPF in recent days. Nothing new, really. They are mostly conversations with readers on stuff I have blogged about.

I shared how I grew my CPF savings and also why it is an important part of my overall retirement funding strategy. I have also shared my numbers to exemplify the magic of compound interest.

Of course, we know that there are people who do not believe in the CPF. This is nothing new.

I am constantly amused by the reasons put forth as to why we should not trust the CPF system.



People are free to trust or not to trust. Hey, I am not dogmatic. Don't believe me? OK, you happy can liao.



What do we do as investors when trust is lacking? Avoid investing any money.

For example, I no longer invest in S-chips although some of them might have fantastic looking numbers.

I used to. 


Remember China Minzhong?

I simply don't know if their numbers are bona fide.


Don't trust the CPF? 

Don't top up. 

Don't make voluntary contributions.

Simple.

Wait a minute.

How do I know if the companies which I do invest in have bona fide numbers? What if their books are cooked too?

Alamak. Stress!

Is our country financially sound? Is the government going to default on its obligations?

Alamak. Don't ask me lah. Stress!


Hey, do you believe in feng shui? The late Mr. Lee was asked why did he want his house demolished? 

AK is trying to change topic, right? Shhh...

What? You really want to know? 

These posts might interest you then:
1. Do better than the CPF?
2. Worried about retirement adequacy in the right way?

2 comments:

Spur said...

I used to know some people who tried to circumvent the CPF system by having their company registered in some tax haven like Cayman Islands or BVI, paying minimal local salaries, and transferring the bulk of the company's profits & revenues to those overseas tax haven banks. Once in a while, monies will be transferred to the employees' local bank accounts as "gifts".

The official minimal salaries meant minimal CPF and zero personal income taxes.

Net-net not sure how workable it was as I believe a different set of corporate taxes apply for companies who "repatriate" their earnings overseas. Basically depends on the amounts of earnings, and the differential between the various tax rates as well as CPF rates etc.

Anyway that company no longer operating here. So I guess it wasn't worth the efforts & the risk. Hahaha!!!

I suppose there are many who don't trust or believe CPF and govt.

At the same time, many (if not all) also don't believe in lifelong slogging to survive. This being the case, then everyone should adopt attitudes, behaviours, methods to cut short that lifelong slogging.

In today's reality, CPF is just a small part of that equation. As you say, there are many roads & highways leading to Rome. :) :)

AK71 said...

Hi Spur,

CPF forms a cornerstone of my retirement funding strategy. I doubt CPF Life would cater for 100% of my funding needs when I turn 65.

Having said that, whatever I have done in the last 20 years is geared towards having an option for a more substantial amount to withdraw from my CPF account at age 55.

So, although I have said that the CPF is a cornerstone, for the more frugal, it could be more than that. :)

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