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Interest income from CPF in 2020.

Saturday, January 2, 2021

When most people think about passive income, they think about investing in income producing assets like stocks and properties.

Most wouldn't think of interest income from saving money in a bank account given the very low interest rate environment we have been in and the even lower interest rate environment we are in today. 

This isn't wrong, well, if you are not a Singaporean. 

This is because we have the CPF in Singapore and all Singaporeans are CPF members. 

Whenever I have conversations with foreigners about retirement funding, they are always in awe of the CPF system in Singapore. 

Actually, they are envious. 

The CPF pays relatively attractive interest rates of 2.5% to 5% to those of us who are younger and up to 6% for members who are more senior in age. 

I just heard the jaws of some foreign friends hitting the floor. 

Jaw droppingly good.
Source: CPFB.

Anyway, regular readers know that I am a strong advocate of the CPF and I put my money where my mouth, er, CPF account, is. 

As a retiree, I have not had mandatory contributions to my CPF account in the last few years. 

However, I have been making voluntary contributions to max out the annual limit allowed per CPF member. 

Yes, there is a CPF annual contribution limit which we cannot exceed. 

Want to contribute more? 

Sorry but the CPF system is not designed to help the rich. 

So, how much interest did CPF pay AK in 2020?

 OA interest: 

 S$ 15,191.75

 SA interest: 

 S$ 11,647.46

 MA interest: 

 S$ 2,380.98

If we are new to wealth building and if our mandatory CPF contributions leave room for voluntary contributions, consider doing so. 

Not only does the CPF offer attractive interest rates, the CPF is as risk free and volatility free an instrument as we can find as Singaporeans. 

We should take full advantage of it. 

If people tell you that CPF is a PONZI scheme, read this: 

If people tell you that our CPF money is fake money, read this:

Rumours and gossip about friends can be fun but it isn't the way if we want to keep our friends. 

Why do I say this? 

You might want to read this:

That's all for now but I promise to blog about my CPF pie (chart) soon.

Related posts: 

Recently published:
4Q 2020 passive income.


Investminds said...

Happy new year AK. Every year i look forward to see your CPF post. I adopted your method to transfer OA to SA for my wife and mine CPF accounts many years ago and very happy to see the compounding effects. We are aiming to have CPF payout of $4K (combined) for our retirement.

AK71 said...

Hi Investminds,

Every year, I look forward to my CPF posts too. ;p

Transferring OA to SA to eventually hit the FRS is undemanding and effective.

I am glad you are happy with the results. :D

Happy new year! :)

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