Jump to content

Many CPF investors get their fingers burnt


 Share

Recommended Posts

Turbocharged

Best option depends on individuals. Those with extra money and plan to use CPF as one of their retirement plans or investment portfolios is to put as much money in SA beyond the min sum of 155k.

 

It appears the CPF intends to increase the min sum annually by about 3.5%. So if you already have 155k in SA, the annual increase in min sum would not impact you as the interest earned on the SA at 4% will make up for the increase, besides contributions from your employment. That is to say, the SA will outstrip the min sum and the gap gets wider. At age 55, the excess SA over the min sum can be withdrawn if you want to. But if you don't, the excess will remain in the SA and continue to earn 4% assuming they don't reduce the interest rate. Anyway, even if they reduce the rate in future to a rate not to your liking, you can still withdraw the excess anytime.

 

Those with load of CPF at age 55 and beyond and have met the min sum, have the advantage of earning min interest rate 2.5% on OA and 4% on SA and MA - better than any fixed deposits or treasury bills and yet the money can be withdrawn anytime. They also have the advantage to withdraw interest on OA, SA and MA earned up to the month before withdrawal, anytime during the year. Such interest can be substantial if the amount in OA, SA and MA is substantial especially if interest is withdrawn in Dec of each year.

 

Hopefully, the CPF will not try to fix this part of the "advantages".

 

Not too long ago, I was fixed by them. I have been nominated to receive a deceased's CPF comprising OA, SA and MA. In the earlier years, these accounts were earning interest at the respective rates and I choose not to withdraw the CPF. Then not too long ago, they changed the rules and merged all amount in SA and MA with OA. So there is no SA and MA anymore. Not only that, they also introduced rule that if the money is not withdrawn within 7 years from date of death, the amount in OA will cease to earn interest.

Cannot say fix. They just want u to redraw the money.

↡ Advertisement
Link to post
Share on other sites

Twincharged

Cannot say fix. They just want u to redraw the money.

 

ya lor. the interest is to benefit the person when he/she is alive. no point to continue to pay interest after the person is gone. if not everyone also use it as a fixed deposit and park money there earning interest.

Link to post
Share on other sites

Turbocharged

 

ya lor. the interest is to benefit the person when he/she is alive. no point to continue to pay interest after the person is gone. if not everyone also use it as a fixed deposit and park money there earning interest.

Think they just don't want people to have the impression that they want to keep their cpf money.

 

I also understand that if after 55 years old and u want to put in more money then the mini sum into RA they will also reject.

Link to post
Share on other sites

Cannot say fix. They just want u to redraw the money.

 

 

Of course I don't really mean that they fixed me. They simply changed the rules so that I can't benefit anything , zero, if I were to leave the money in the CPF. By not wanting to pay anymore interest, I will be forced to withdraw the money which is enough for me to buy an E200. This is inconsistent with their policy of encouraging people to leave their money in CPF to earn better interest.

Link to post
Share on other sites

Can't wait for it to be launched. FD rate is like shit.

 

Those on DBS FHR home loan better hope DBS has ample liquidity.

This is not an attractive investment.

  • Praise 1
Link to post
Share on other sites

This is not an attractive investment.

 

 

Attractive for those who do not know what to do except to leave money in FDs year after year.

Link to post
Share on other sites

Turbocharged

 

 

Of course I don't really mean that they fixed me. They simply changed the rules so that I can't benefit anything , zero, if I were to leave the money in the CPF. By not wanting to pay anymore interest, I will be forced to withdraw the money which is enough for me to buy an E200. This is inconsistent with their policy of encouraging people to leave their money in CPF to earn better interest.

Take out and throw into some endowment lor.

Link to post
Share on other sites

Take out and throw into some endowment lor.

 

 

Ha ha. Throw into an E200 more likely as it is fund that I do not intend to touch or to use for a long long time.

Link to post
Share on other sites

I copied from yahoo  [thumbsup] , if you disagree with it dont scold me. I am proud to be a Singaporean!!! :a-panic: 

 

As markets crumbled, it paid to be Singaporean in 2015  :a-panic: 

This fund outperformed the markets in 2015, but you're probably not allowed in. Unless you're Singaporean or near enough.

Singapore's Central Provident Fund (CPF), a mandatory retirement savings plan open only to the country's citizens and permanent residents, offered its usual, steady 2.5 percent-to-5 percent payouts, depending on the nature of members' balances.

But that compares with an essentially flat S&P 500 year-to-date and a near-15 percent drop in the Singapore Straits Times Index over the same period. Other assets haven't done well either: The SPDR Barclays High Yield Bond Exchange Traded Fund (ETF) has mirrored a tough year for junk bonds, dropping more than 12 percent year-to-date.

Singapore's private residential property prices have ticked lower as well, falling 1.3 percent on-quarter in the third quarter after slipping 0.9 percent in the previous quarter.

All of these factors made the CPF a much more attractive prospect that one might have imagined, for those eligible to save with it.

The last time CPF returns outperformed the S&P 500 was 2011, during the European debt crisis, when the index fell 0.9 percent. In 2011, the CPF pegged the payout to 1 percentage point above Singapore government securities. At the beginning of 2011, the 10-year Singapore government bond was yielding around 2.7 percent, but by the end of the year, that had fallen to around 1.6 percent.

Tony Nash, chief economist at Complete Intelligence, blamed the "cat-and-mouse game that the Fed has played with market investors this year" for the paltry returns available in financial markets, adding that market expectations for a Federal Reserve interest rate hike had been building since June.

In early December, the Fed finally raised interest rates by 25 basis points to an 0.25 percent to 0.5 percent range, its first hike in nearly a decade.

"Expectations around higher interest rates (created) muted expectations for equity returns," said Nash, who noted that he, too, is a CPF account holder. Expectations that the Federal Reserve would increase rates led to fund outflows from riskier assets, such as equities. After a rate increase, higher returns from lower-risk securities, such as U.S. Treasurys, make riskier assets less attractive to investors. Additionally, higher rates can also impact corporate earnings as interest costs rise.

The CPF payout rate is set at the higher of the 2.5 percent minimum or a computed rate based on the 12-month savings deposit rate at local banks. After years of low yields globally, that rate would likely be around 0.2 percent, making the 2.5 percent minimum look generous.

But CPF returns can be politically contentious in Singapore - which isn't surprising when most workers aged 50 and below are required to pay in around 20 percent of their wages; that cohort's employers also pay in about 17 percent of workers' wages.

And it's not all roses for CPF members, even in tricky times for financial markets.

The government's moves in recent years to increase the minimum age for collecting some of the funds, in line with life expectancy increases, and to increase the "minimum sum" which must be set aside as an annuity, in line with inflation, have proved unpopular. Starting in 2016, the program will allow more flexibility in withdrawing funds from age 55, but that can result in lower payouts in retirees' golden years.

The interest rate paid on CPF balances is also a point of contention. During a national election in September, opposition candidates pushed to increase the payout, with one even reportedly calling for a 15 percent return. (He didn't win a seat in parliament.)

By comparison, Singapore's 10-year government bond currently yields about 2.5 percent.

The return on the U.S. Social Security program - which unlike the CPF's defined-contribution model is a defined-benefit plan -- was estimated at about 6.5 percent at its best at the end of 2014, but can vary per person.

CPF contributors may grumble about the returns, but they aren't always doing terribly well on their own in the broader markets. One quirk of the program is allowing some members to invest some of their funds in approved securities.

For the financial year ended September 30, 2014, the most recent data available, only about 15 percent of the participants who sold investments posted a net realized profit in excess of 2.5 percent and 45 percent posted profits equal to or less than 2.5 percent, while around 40 percent posted losses.

  • Praise 1
Link to post
Share on other sites

I copied from yahoo  [thumbsup] , if you disagree with it dont scold me. I am proud to be a Singaporean!!! :a-panic: 

 

As markets crumbled, it paid to be Singaporean in 2015  :a-panic: 

 

 

 

how much did PAP pay yahoo news for this promotional article?

 

damn shiok to be outperforming in 2015. How about the last 20 years?  [laugh]

 

guess they are trying to lure more pppl to sink in $$$ to cpf, capital raising time for the tough times ahead

  • Praise 1
Link to post
Share on other sites

how much did PAP pay yahoo news for this promotional article?

 

damn shiok to be outperforming in 2015. How about the last 20 years?  [laugh]

 

guess they are trying to lure more pppl to sink in $$$ to cpf, capital raising time for the tough times ahead

 

alamak, forget to ask them to pay me to copy the article and post it here  :a-bang:

  • Praise 1
Link to post
Share on other sites

I'm a strong supporter of not doing anything with your OA.

 

After making the mistake of buying some funds etc when i started out.

I'd much rather leave them in the OA.

 

At most just buy some STI ETF to gamble if u want.

  • Praise 3
Link to post
Share on other sites

I stupid go and buy some cpf funds from prudential

All lose money

Puiz

Now even got donno what fund kena delisted from cpf

Ask me want to transfer to other funds or not

I tell to get lost

Puiizzzzzz!!!!!! [thumbsdown]

Should have just left the money to earn the 4%

Knnbccb!!!!!!!!!!!! Arghhhhhhh!!!!!!!!!!!!

[mad]

  • Praise 4
Link to post
Share on other sites

Avoid Insurer's fund! Most are feeder funds anyway and the fees add up very substantially.

 

Must well you DIY at FSM. Follow the annual recommendations, chances of making $$$ higher.

 

I stupid go and buy some cpf funds from prudential
All lose money
Puiz
Now even got donno what fund kena delisted from cpf
Ask me want to transfer to other funds or not
I tell to get lost
Puiizzzzzz!!!!!! [thumbsdown]
Should have just left the money to earn the 4%
Knnbccb!!!!!!!!!!!! Arghhhhhhh!!!!!!!!!!!!
[mad]

 

Edited by Kangadrool
Link to post
Share on other sites

Avoid Insurer's fund! Most are feeder funds anyway and the fees add up very substantially.

 

Must well you DIY at FSM. Follow the annual recommendations, chances of making $$$ higher.

Learnt my lesson already

Next time any agent come and look for me, i will tell that fellow to get lost [mad]

What is fsm?

Orh I know already fund supermart

I think I just buy etf

Link to post
Share on other sites

I stupid go and buy some cpf funds from prudential

All lose money

Puiz

Now even got donno what fund kena delisted from cpf

Ask me want to transfer to other funds or not

I tell to get lost

Puiizzzzzz!!!!!! [thumbsdown]

Should have just left the money to earn the 4%

Knnbccb!!!!!!!!!!!! Arghhhhhhh!!!!!!!!!!!!

[mad]

Don't trust Insurance Agent...

  • Praise 2
Link to post
Share on other sites

I stupid go and buy some cpf funds from prudential

All lose money

Puiz

Now even got donno what fund kena delisted from cpf

Ask me want to transfer to other funds or not

I tell to get lost

Puiizzzzzz!!!!!! [thumbsdown]

Should have just left the money to earn the 4%

Knnbccb!!!!!!!!!!!! Arghhhhhhh!!!!!!!!!!!!

[mad]

I never trust Unit Trust or funds. If anyone going to lose my money, it's going to be Mr Lim Peh. Only one person to be blamed.

 

I have been lucky, used CPF to buy several stocks. I have never sold but some companies were acquired and money auto returned to CPF. So far more money has been returned than taken out, but I still have a couple of counters unsold.

  • Praise 3
Link to post
Share on other sites

I bought my whole life policy 25 years ago, the simulated breakeven year is 10. But, after 25 years, still cannot breakeven. :XD:

 

I see the insurer's statement every year, I feel so lousy.

 

Now I prefer to see my CPF annual statement. :grin:

 

 

Edited by Kangadrool
↡ Advertisement
  • Praise 6
Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...