Can I use CPF for investment?
You can use your CPF savings that are in the OA and SA for investing under the CPF Investment Scheme(CPFIS). To do that, you will need to open a CPF Investment Account with either UOB, DBS or OCBC bank. Any one of these banks will do, there is no difference in the fees.
How much can I invest with CPF?
In this post, I will focus more on investing with CPF using monies in your OA. Because monies in your SA earns 4% interest risk free. And also, the products that you can invest with using SA is rather limited. I like to think of SA as my Bonds component, so I wouldn’t use the amount in SA for investing.
Back to OA.
The first $20,000 in OA cannot be invested.
With OA, you can invest up to 35% of the investible savings on stock and up to 10% on Gold. There is no limit for the other investment products.
Example of how much you can invest using OA
| Example 1 | Example 2 | Example 3 | Example 4 | |
|---|---|---|---|---|
| Balance in OA | $50,000 | $50,000 | $22,000 | $18,000 |
| Net Amount used for OA (assuming no amount used for stock) | $0 | $20,000 | $0 | $0 |
| Investible Savings (Balance + Amount Used) | $50,000 | $70,000 | $22,000 | $18,000 |
| Stock Limit (35% of Investible Savings) | $17,500 | $24,500 | $7,700 | $6,300 |
| Gold Limit (10% of Investible Savings) | $5,000 | $7,000 | $2,200 | $1,800 |
| Available Balance (Balance in OA – $20,000) | $30,000 | $30,000 | $2,000 | -$2,000 |
| How much can you invest in stock? (The lower of Stock Limit and Available Balance) | $17,500 | $24,500 | $2,000 | $0 |
| How much can you invest in gold? (The lower of Gold Limit and Available Balance) | $5,000 | $7,000 | $2,000 | $0 |
| How much can you invest in Professionally Managed Products? (No limit. Balance in OA – $20,000) | $30,000 | $30,000 | $2,000 | $0 |
Or simply login to your CPF, under My Statement -> Section C on Investment:
What can I invest with CPF OA?
You can use your savings in CPF-OA for investment such as stocks, gold, unit trusts, bonds. You can view a more comprehensive list here.
You can view the list of stocks that are under CPFIS here. That is an exhaustive list of stocks.
Before researching for this article, I always thought that only those well established blue chip stocks are included under CPFIS. I’m actually quite surprised that some of the stocks included rather speculative stocks like Best World.
Come on CPF board, if we are allowed to invest our OA in those type of stocks, how about including some of those low cost global passive index ETFs in it! Rather than us paying a fee to invest in unit trusts.
(Apologies for the rant.)
Can I withdraw my CPF Investment?
Short answer, No. Profits made from CPF Investment will be transferred back to the OA/SA account. The whole purpose of CPFIS is to allow you to grow your savings for retirement through investing.
You can only withdraw when you reach 55 years old, and have set aside your Full Retirement Sum (FRS) which at $186,000 for 2021.
Should You Invest With CPF OA?
It depends. Are you planning to use the monies in OA to purchase a flat soon? You will need to set aside money for the down payment.
But if you are not planning to do anything with your savings in OA, then here’s a question to ask:
Do you think the investment you are going to purchase with your CPF-OA is going to beat the 2.5% interest rate that CPF offers, in 10, 20, 30 years time when you hit retirement age?
Did you know… You can invest in S&P 500 using CPF-OA?
Yep. You can now, through Endowus. Endowus is the only Robo Advisor to offer investing with CPF into S&P 500.
There are 2 funds which I really like that Endowus is offering under CPFIS:
- Lion Global Infinity US 500 Stock Index Fund (feeder fund in Vanguard’s US 500 Stock Index Fund)
- Lion Global Infinity Global Stock Index Fund (feeder fund in Vanguard’s Global Stock Index Fund)
Lion Global Infinity US 500 Stock Index Fund
Lion Global Infinity US 500 Stock Index Fund invest in S&P 500 as a feeder fund in Vanguard’s US 500 Stock Index Fund. I wish that we could just invest in the Vanguard’s VOO ETF, but we can’t. This is the next best thing.
Endowus rebates the trailer fees back to their investors. The expense ratio for this fund is at 0.40%. And if you add the Endowus all in access fee of 0.4%, then that works out to be at 0.80% of fee per year. If you compare this fee to that of VOO’s 0.04%, it’s expensive.
But if you compare to other US Centric Funds that are available for investment under CPFIS-OA, it is cheap. To give an example, I generated this table from FSM. The annual expense ratio for all these US centric funds are above 1%
Lion Global Infinity Global Stock Index Fund
Lion Global Infinity Global Stock Index Fund invest in S&P 500 as a feeder fund in Vanguard’s Global Stock Index Fund.
The expense ratio for this fund after trailer fee rebate is at 0.46%. And if you add the Endowus all in access fee of 0.4%, then that works out to be at 0.86% of fee per year.
Again, if you compare this to other global funds under CPFIS-OA, it is still better.
I know it is not exactly an apple to apple comparison of the funds, but if you are looking for a passively managed fund, then investing in these 2 Lion Global Infinity funds under CPFIS-OA via Endowus makes sense.
Lastly, if you are interest in opening an account with Endowus, you can do it via this referral link. Both of us will each get $20 in Access Fee credit (equivalent to $10,000 advised free, assuming Access Fee of 0.40%).
