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Reader says...
My mom is now 71 and she has $200k retirement money.
She is not on the CPF life scheme but on the past retirement sum scheme.
I am trying hard to help her get some passive income.
She has parked this money in short term duration funds but the returns has been really peanuts.
I am trying to see how to help her.
Do you have any suggestions?
I would say that at her age, it is more about capital preservation and she should not take any risk with her savings.
The CPF is a good risk free tool in helping to fund her retirement and topping up her CPF-RA will ensure that her retirement money earns 4% to 6% per annum.
I would say that for any investor, 4% to 6% returns per year is difficult to achieve without taking any risk at all.
So, she should take full advantage of her CPF membership and max out her CPF-RA.
Doing so would most probably help to make her retirement money last quite a bit longer.
If her MA is maxed out, she could also consider doing voluntary contribution to her CPF to max out the CPF Annual Limit.
To her, then, the CPF is like a savings account that earns 2.5% interest per annum in her OA.
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