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Don't trust AAA rated Singapore government bonds and trust some people who say investing in wine or paintings is better?
Oh, puh-lease lah.
Many or most Singaporeans do not realise what a good thing the CPF is.
Many or most Singaporeans do not realise what a good thing the CPF is.
This is the truth.
Many do not trust the CPF but are willing to put their money in alternative investments.
It just boggles my mind.
The CPF will help us secure a measure of retirement funding adequacy because we will retire with
1. an investment grade bond (excess beyond prevailing Full Retirement Sum can be withdrawn at age 55)
and
2. a lifelong annuity (CPF Life) that pays us monthly from age 65.
Which part of this is hard to understand?
Which part of this is hard to understand?
Whether alternative investments or more conventional forms of investments, in my opinion, they are not risk free nor volatility free.
Risk free and volatility free CPF gives me peace of mind.
Risk free and volatility free CPF gives me peace of mind.
Don't let people know how much you have in your CPF hor.
If you want to share, do it anonymously like AK.
Don't copy my disguise hor.
I don't want police investigating.
Seriously lah, some might start having designs on your CPF savings lah.
I don't want police investigating.
Seriously lah, some might start having designs on your CPF savings lah.
The horror!
"Learn why it's important to make a CPF nomination and the different types of nominations available."
https://www.moneysense.gov.sg/articles/2018/10/cpf-nominations-what-happens-to-your-cpf-when-you-pass-away
I always say that if all else fails, I would still have my CPF savings.
Why else would I build my CPF to be the relatively significant sum that it is today and still building?
Really, our CPF is also protected from creditors so that we do not run the risk of becoming old and broke!
Before you touch your CPF money or let someone else touch it, think and think again.
Haven't reached the prevailing Full Retirement Sum in your CPF account and thinking of buying a bond fund?
If you have yet to hit the Full Retirement Sum, why bother?
For most ordinary Singaporeans, if they want to hold some bonds to prepare for retirement, maxing out their CPF membership benefits is all they need.
This is the truth.
Don't believe me?
See:
$1 million in CPF by age 65?
Unless we have lots of money sloshing around and have already maxed out our CPF membership, we should focus on building our CPF savings as it should form the bond component of our investment portfolio and if we want to hold bonds, I repeat, this is all we need.
Related post:
Don't do silly things and retire smart.
Bloggy Award
14 comments:
Siew Mun Kwan says...
Yes, agree with you.
Currently my CPF stands at 80% of my wealth excluding my mortage free HDB apt.
I planing ahead, top up cash in my RA account to max out at prevailing ERS, when I turn 55 in 2 years time.
Why?
I cannot find another avenue to get a return of 5%+ risk free back by G.
I forgo the difference between RA interest rate and Reits for risk free and peace of mind.
I can also withdraw 20% of RA at 65.
Our plan to max out is:
- Currently maxed out SA to FRS already.
- On top of our mandatory CPF contribution, top up using voluntary CPF contribution up to max $37,740.
- At age 54.5, completely transfer out the OA/SA (except the required set aside $20k/$40k) to invest in SGS Bonds.
- At age 55, creation of RA for my wife and me.
- Then, top up RA to ERS amount using cash for my wife, and FRS for me.
- At age 55.5, release back SGS Bonds (hopefully with good price) back to OA/SA.
- At age 65, my wife will go for ERS Escalating plan with payout, but I will go for BRS Escalating with deferred payout from 70.
- We'll let CPF OA/SA continue to earn interest and only start drawn down from age 75-80 with target zero balance ending age 96.
Reason for BRS for me is that male has lower life expectancy. If we go ERS for both, and I die first, then she will loose a life partner and 50% household income at the same time (ignoring the bequest for now). So I will keep my CPF in OA/SA instead and do annual withdrawal.
BTW, on top of CPF Life, can also max out by buying additional annuity under CPF Life.
https://www.cpf.gov.sg/Assets/members/Documents/FORM_LIDAPP1A.pdf
Hi geekabyte,
That is definitely a plan!
Thanks for sharing with us in such detail. :)
Of course, nothing is set in stone and I can think of stuff that could throw a spanner in the works.
If we have ample resources, make the CPF a cornerstone in retirement funding but don't make it the entire foundation.
this "additional" cpf annuity quite interesting..
is on top of our FRS? or must be be on top of ERS?
the payout follows the same scheme as the FRS/ERS/BRS?
Hi fc,
I believe that ERS is the limit.
For people who did not have ERS at 55, they could top up their RA to the limit and ask for the top ups to become an additional annuity.
Just hazarding a guess. ;p
ah, i see... haha.
if not , AK would buy 5 x ERS to "top up"! haha
"Our plan to max out is:
- Currently maxed out SA to FRS already.
- On top of our mandatory CPF contribution, top up using voluntary CPF contribution up to max $37,740.
- At age 54.5, completely transfer out the OA/SA (except the required set aside $20k/$40k) to invest in SGS Bonds.
- At age 55, creation of RA for my wife and me.
- Then, top up RA to ERS amount using cash for my wife, and FRS for me.
- At age 55.5, release back SGS Bonds (hopefully with good price) back to OA/SA.
- At age 65, my wife will go for ERS Escalating plan with payout, but I will go for BRS Escalating with deferred payout from 70.
- We'll let CPF OA/SA continue to earn interest and only start drawn down from age 75-80 with target zero balance ending age 96.
Reason for BRS for me is that male has lower life expectancy. If we go ERS for both, and I die first, then she will loose a life partner and 50% household income at the same time (ignoring the bequest for now). So I will keep my CPF in OA/SA instead and do annual withdrawal."
geekbyte , for BRS, you have to pledge your ptty. so what happens if you pass on? dont u have to give up your ptty?
Hi fc,
ERS x5? No lah.
CPF forms a meaningful percentage as the investment grade bond component in my portfolio but I wouldn't want it to become too big a percentage.
I know what many will ask me next and, no, I am not going to say what is a good percentage.
Everyone should decide for themselves if they want more stability or if they can take on more volatility.
When the CPF is run by trustworthy organisation and people, I will agree with what you have stated about CPF being the only bond investment we need and shall do.
However an article, "880,000 pensions hit by Japan investment scandal", I read years ago boggles my mind till today. I also remember reading about how Temasak lost big chunk of money somewhere which I cannot recall now.
I wonder if my concern is too far-fetched?
Hi Chris,
If our portfolio size is billions of dollars in size, the acceptable margin of error in dollar terms is very different from if our portfolio is millions of dollars in size.
As investors, big or small, if we are right 6 times out of 10, we are considered good, so the famed investor Peter Lynch said.
Anyway, Temasek Holdings does not invest with CPF money.
Winston Wee said...
CPF has benefited a huge majority of Singaporeans including myself, in terms of helping to pay off my house and providing a monthly sum after my retirement.
In any scheme or policy, it is meant to benefit the large majority. There will always be some, who for some reasons or other, fall through the crack. There will be some who will take issue from a rather narrow perspective.
It doesn't take away the fact that CPF has met its main objective of providing housing for Singaporeans and some financial support after retirement. You hv to look hard to find a better scheme elsewhere in the world.
See:
What to do if we don't trust the CPF system?
Global economic growth and booming share markets helped Temasek Holdings hit record numbers last year, but it warned that near-term risks are on the horizon.
The investment firm reported yesterday that its net portfolio value hit a new high of $308 billion in the 12 months to March 31 - the first time it had exceeded $300 billion, and up $33 billion from a year earlier. Its one-year total shareholder return was 12.19 per cent.
Source:
https://www.straitstimes.com/business/companies-markets/temaseks-portfolio-value-hits-new-high-of-308-billion
Junda Huang says...
Indeed, a fake news article by straitstimesreview was very popular some time ago and shared widely, claiming Temasek has lost hundreds of millions and hence CPF monies are gone.
When I pointed out the simple fact that CPF monies were not even handled by Temasek but rather by GIC, all sorts of conspiracy theories and accusations came up 🙄
Henry said...
Don't think AK needs to bother about hedging volatility using bonds because he already has a 6 figures passive income every year. And a mil in his CPF. Even if his investment yield drop, its still 6 figures that enable him to live a very comfortable life. To be able to achieve that, think his net worth has to be in the range of 5 mil or more. So I think net worth matters? Correct or not? :)
AK said...
As I am not very rich, I don't bother looking for investment grade bonds to invest in because I have a meaningful amount of CPF savings which is risk free and volatility free.
Of course, if I am very rich, then, the CPF might not be enough but as it stands, it is enough for me.
I hope that answers your question. :)
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