Building Your CPF Portfolio

The Central Provident Fund (CPF) is a mandatory social security savings scheme here in Singapore. It is funded by both yourself and the employer, with the aim of helping you achieve financial security and meet your retirement, housing, and healthcare needs. If you're wondering where the small monthly deduction in your paycheck goes to, this is it!

Now, there are actually four types of CPF accounts that each individual will have, and that is the:

• Ordinary Account (OA): for housing, insurance, and investment;
• Special Account (SA): for retirement funding and retirement-related financial products;
• MediSave Account (MA): for hospitalisation expenses and approved medical insurance; and
• Retirement Account (RA): formed after the age of 55 solely for the CPF LIFE annuity scheme, and funds are sourced from your SA and OA accounts.

Of course, these accounts do accumulate interest over time, although it should be noted that the interest rates are not entirely fixed, but rather, reviewed by the CPF Board every quarter. The rates for each are as follows:

• Ordinary Account: 2.5%
• Special Account: 4%
• MediSave Account: 4%
• Retirement Account: 4%

It's safe to say that with this scheme set in place, that most, if not all, Singaporeans will be set for their future in general. However, the Government introduced the CPF Investment Scheme (CPFIS) that provides members with the option to invest their savings! What's better than having your money work for you?

What is the CPF Investment Scheme?

With the CPFIS, you'll be given the option to invest the savings in your Ordinary Account or Special Account in a variety of instruments, from insurance products and unit trusts, to fixed deposits and bonds and shares, to enhance your retirement savings.

Am I eligible for CPFIS?

Investing under CPFIS is fairly simple, as anyone above the age of 18 can invest so as long as they meet the criteria below:

• Are at least 18 years old;
• Are not an undischarged bankrupt;
• Have more than $20,000 in your Ordinary Account; and/or
• Have more than $40,000 in your special account; and
• Have completed the CPFIS Self-Awareness Questionnaire (SAQ).

How do I build my CPF portfolio?

First things first, you must first evaluate your current situation before you decide to invest. A few key factors that you should take into consideration are:

• What is your investment goal? Why are you investing and do you have an objective that you wish to achieve?
• What is your risk appetite? How much risk can you afford and tolerate?
• Are you sure that through investing that you'll be earning more than the CPF interest itself?

Once you've identified those key aspects, you can then begin to invest! Building your CPF portfolio will not only take time, but effort. You'll need to do your due diligence and research and understand that while investing is risky, it can also be rewarding.

Now, when you're investing, know that the best course of action you can take is to diversify. Diversification is key! You do so to spread out the risk, as investing in a mixture of assets might bring you higher returns all while reducing risk at the same time. You can spread out your investments across different products like stocks, bonds, or Exchange-Traded Funds. Here, you can view all of the different products that you can invest in under the CPFIS.

Looking to get started with CPFIS? First, check your eligibility with the SAQ! If you're still unsure of where and when to start, I'd love to walk you through the process. Just reach out to me and I'd be more than glad to help you out on your first investment journey.