An update on AK's CPF-SA which outperformed in 2015.

Exactly one year ago, I shared my CPF-SA numbers, as a friend put it, to shock and awe the most cynical of readers into action. 

I think it worked as that blog post has received almost 400 FB Likes so far and also generated quite a bit of discussion.

Last month, I receive a request from a reader:

At that time, I was not sure that it would be helpful to share my CPF-SA numbers one year on but, on second thoughts, it could be a good idea. 

After all, the shock and awe generated by that blog post a year ago could have worn off by now.






So, here are the numbers:

"VC" stands for voluntary contribution. 

AK is not allowed to do Minimum Sum (MS) Top Up to his CPF-SA anymore as he has exceeded the MS.

There was a "VC refund" for excess contribution made the year before. 





I blogged about it here: 
The CPF is a national PONZI scheme.

So, I received a full year interest of $8,210.28 for my CPF-SA savings. 

The interest I receive yearly, I believe, would more than cover the planned 3% annual increase in the MS, now the FRS, from year 2018.





To find out more about the BRS, FRS and ERS, read this: 
Proposed changes to the CPF system.


All of us should try to benefit fully from the CPF system and make our CPF savings a cornerstone of our retirement funding strategy. 

To me, it is really a no brainer.





The CPF outperformed the S&P 500 and the STI in 2015. S&P 500 was flat. 

The STI declined 15% and Barclays junk bonds ETF dropped 12%.
Source:
http://www.cnbc.com/2015/12/30/singapores-cpf-saving-plan-beat-markets-in-2015-with-steady-returns.html

We should always make room for a risk free and volatility free component in our investment portfolio. 

What might that be? 

I am sure you know the answer.





(If you are new to my blog, you might want to read related post number 1 below.)

Related posts:
1. A lot of money in my CPF SA is... 
2. 2016 changes to the CPF and SRS. 

2016 changes to the CPF and SRS for a better retirement.

I was reading the papers on changes to the CPF and SRS which took effect on 1 Jan 2016 and thought to myself that working Singaporeans are a lucky bunch.

If you are a middle income worker, rejoice because mandatory CPF contributions by both employer and employee per month are now based on a higher salary ceiling of $6,000 a month instead of $5,000 a month. Your CPF savings will grow at a faster clip.

If you are a worker between 50 to 65 in age, your employer will now contribute an additional 0.5% to 1% based on your monthly wage into your Special Account (SA). 

If you are 55 years old or older, you will also receive an additional 1% interest on your first $30,000 in CPF savings which means you get 6% interest per annum, risk free!

It would be a good idea for younger readers to communicate this change to their parents. If at all possible, consider topping up your parents' CPF SA or MA if they do not have that first $30,000 in their accounts. 

We really should not pass on a 6% annual return from a AAA rated sovereign bond!

A comfortable retirement need not be a dream.

As for the SRS, the ceiling is raised to $15,300 for Singaporeans and PRs. It is $35,700 for foreigners. So, if you pay plenty of taxes each year, this is another tool to help pay less in income tax.

I think it is important to count our blessings and not keep complaining. Probably, there is more than a handful of people who think that the changes are not good enough. Fion Lau, 41, said that the changes do not go far to provide retirement adequacy.

Well, I would like to remind Fion that the CPF is, like I always say, a cornerstone in our retirement adequacy strategy. It is not the entire foundation.

Related posts:
1. SRS: A brief analysis.
2. Retiring before 60 is not a dream.
3. Retirement: Buy a AAA rated bond.