Guide to CPF Investments (CPFIS) in Singapore

Are you considering investing your CPF savings to potentially boost your retirement funds?

You’ve come to the right place!

With years of personal experience in financial planning and a deep understanding of the CPF Investment Scheme (CPFIS), I’ll guide you through everything you need to know.

Here’s what you can expect from this post:

• What is the CPF Investment Scheme (CPFIS)?
• Eligibility criteria for CPFIS-OA and CPFIS-SA
• How to check your available savings
• Steps to withdraw your CPFIS investments
• The implications of investment performance

Did you know that not investing your CPF savings could mean missing out on potentially higher returns?

But, investing without the right knowledge can also be risky.

Curious about how to strike the perfect balance?

Let’s dive in!

What is the CPF Investment Scheme (CPFIS)?

The CPF Investment Scheme (CPFIS) is a programme designed to offer CPF members the opportunity to enhance their retirement savings by investing their CPF funds.

It allows you to take control of your financial future by diversifying your investments across various asset classes.

By investing, you can potentially earn higher returns compared to the standard CPF interest rates.

However, it’s important to remember that all investments come with risks.

It’s crucial to assess your risk tolerance and investment goals before diving in.

The 2 different CPFIS schemes

CPF Investment Scheme-Ordinary Account (CPFIS-OA)

The CPF Investment Scheme-Ordinary Account (CPFIS-OA) is a significant component of the CPF Investment Scheme, allowing you to invest the savings from your Ordinary Account.

To participate in CPFIS-OA, you need to meet certain eligibility criteria:

• Minimum Balance: You must have at least S$20,000 in your Ordinary Account before you can start investing.
• Investment Account: To facilitate your investments, open a CPF Investment Account with one of the agent banks (DBS, OCBC, UOB).

CPF Investment Scheme-Special Account (CPFIS-SA)

The CPF Investment Scheme-Special Account (CPFIS-SA) provides an avenue for you to invest the funds in your Special Account, aiming to enhance your retirement savings through potential higher returns.

To participate in CPFIS-SA, you need to meet specific eligibility conditions:

• Minimum Balance: You must have at least S$40,000 in your Special Account before you can start investing.
• No Separate Investment Account Required: Unlike CPFIS-OA, you do not need to open a separate investment account with an agent bank to invest your SA funds.

Who is eligible to invest through CPFIS?

To participate in the CPF Investment Scheme (CPFIS), you need to meet certain eligibility criteria.

Here’s a detailed look at who qualifies for CPFIS:

• Age Requirement: You must be at least 18 years of age.

• Ordinary Account (OA) Balance: You must have a minimum balance of S$20,000 in your OA.

• Special Account (SA) Balance: You need to have at least S$40,000 in your SA to invest funds.

• Bankruptcy Status: You must not be an undischarged bankrupt.

These eligibility requirements are designed to safeguard your savings while providing an opportunity to potentially grow your retirement funds through prudent investments.

Type of investments available for your CPF account

Here are the investments available for your CPF accounts:

If you’re unsure, what investible savings are, here’s the formula to help you calculate:

Investible savings = Value of CPFOA + Sum used for housing purchases + Sum used for education

But the question is, should you invest your CPF?

I’m going to divide this into investing your CPF OA and CPF SA, as there are different considerations for each.

For your CPF Ordinary Account

Deciding whether to invest your CPF savings from your CPF-OA is a significant decision that depends on several factors:

• Housing Plans: If you don’t plan to use your OA savings for housing purposes in the next 3-5 years, you might consider investing.

Your OA funds are often used for housing payments, so it’s crucial to ensure that investing won’t interfere with any upcoming property purchases or mortgage repayments.

Keeping your housing needs in mind will help you avoid potential liquidity issues.

• Beating the 2.5% Risk-Free Rate: The OA offers a guaranteed interest rate of 2.5% per annum.

To make investing worthwhile, you should aim to achieve returns that exceed this rate.

If you have a sound investment strategy and are confident that you can outperform this risk-free rate, investing could be a viable option.

However, it’s important to remember that higher returns usually come with higher risks.

Investing your OA savings can potentially offer higher returns, helping to grow your retirement nest egg more effectively.

However, it also introduces risks that need careful consideration.

Assess your financial situation, investment goals, and risk tolerance before making any decisions.

For your CPF Special Account

Investing your CPF savings from your Special Account (SA) requires careful consideration, as these funds are intended for your retirement and typically earn a higher interest rate.

Here are some factors to help you decide if investing your SA savings is right for you:

• Long-Time Horizon: If you have a long investment horizon, it may be worth considering investing your SA savings.

The longer your investment period, the more time you have to ride out market fluctuations and potentially achieve higher returns.

A longer horizon can help mitigate the risks associated with market volatility, allowing your investments to grow and compound over time.

• Beating the 4% Risk-Free Rate: The SA offers a risk-free interest rate of 4% per annum.

To justify investing, you should be confident that your chosen investments can outperform this rate.

Achieving returns higher than 4% can significantly boost your retirement savings, but it’s important to remember that higher returns come with higher risks.

If you have a well-researched investment strategy and a solid understanding of the market, investing your SA funds could be beneficial.

If you’re confident in your ability to outperform the SA’s guaranteed interest rate and have a long time horizon, investing your SA savings might be a good option for you.

Very Important: Make sure you’re confident beating the risk-free interest rate, CONSISTENTLY

The table below shows the current minimum interest rates you’ll earn for each compulsory CPF account under default circumstances.

Even the most confident investors think they can beat the risk-free rates.

But as you’re only limited to selected investment options, you don’t have the same flexibility as investing your own cash.

According to this Straits Times report, only 15% of CPF investors are making profits above 2.5% in their OA, while 40% of investors are making losses.

And I’m sure those who are doing this believe they could beat the risk-free rates.

I’ve tried looking around for reports on CPFIS-SA, but couldn’t find any – if you know where I could take a look, let me know.

But looking at the limited choices available for the CPFIS-SA, it might not be worth taking the risk, especially if you’re not a pro.

If you don’t know what you’re doing or are not willing to risk it, it’s best to let it compound by itself, or engage a professional to help.

Remember, you need to beat this rate consistently, over many many years.

How to invest with CPFIS?

Investing your CPFIS-OA

Here’s a detailed guide on how to get started, specifically for your Ordinary Account.

CPFIS-OA: Opening a CPF Investment Account

To invest your Ordinary Account savings under CPFIS, you need to open a CPF Investment Account (CPFIA) with one of the CPFIS agent banks:

• DBS’s digibot
• OCBC’s website
• UOB’s website

Once you have opened your CPF Investment Account with one of these banks, you can begin investing in a range of approved investment products, including shares, unit trusts, bonds, and more.

Investing your CPFIS-SA

For your Special Account savings, the process is more straightforward as you don’t need to open a separate investment account.

You can directly approach approved product providers to buy or sell your investments.

This means you can invest your SA savings in unit trusts, ETFs, bonds, and other approved products without the need for an intermediary account.

If you’re investing on your own, open a CPFIS-certified brokerage company

If you prefer to take a more hands-on approach to investing – OA or SA – consider opening an account with a CPFIS-certified brokerage company.

Here are your options:

1. POEMS
2. DBS Vickers
3. FSMOne
4. Lim & Tan Securities
5. CGS-CIMB
6. Maybank Kim Eng Securities
7. OCBC Securities
8. UOB Kay-Hian Securities
9. KGI Securities (Singapore)

If you’re investing via a robo advisor, Endowus is your friend

If you prefer a more automated and hassle-free approach to investing, using a robo advisor can be an excellent option.

Endowus is a popular robo advisor that supports CPFIS investments.

Endowus provides a seamless and efficient way to manage your CPF investments, leveraging technology to optimise returns and reduce the complexities involved in managing an investment portfolio.

If you’re engaging a professional, our partners can help

If you prefer personalised advice and professional management of your CPF investments, consider engaging a financial advisor.

At Dollar Bureau, we partner with licensed financial advisors who can provide tailored advice and investment strategies.

Here’s how our partners can assist you:

1. Expert Guidance: Our partners are MAS-licensed advisors with extensive experience in managing CPF investments.

They can help you understand the various investment options and choose the ones that align with your financial goals.

2. Tailored Strategies: Your financial advisor will develop a customised investment plan based on your risk tolerance, time horizon, and retirement objectives.

This ensures that your investments are well-aligned with your long-term goals.

3. Holistic Financial Planning: In addition to CPF investments, our partners can help you with comprehensive financial planning, including insurance, retirement planning, and wealth management.

By engaging a professional, you can benefit from expert advice and tailored strategies, ensuring that your CPF investments are effectively managed and aligned with your financial goals.

Where can I check available OA and SA savings for CPFIS?

To manage your investments effectively under the CPF Investment Scheme (CPFIS), it’s crucial to know the available savings in your Ordinary Account (OA) and Special Account (SA).

Here are the ways you can check your CPFIS-eligible savings:

Online via My CPF Digital Services

The most convenient way to check your available OA and SA savings is through My CPF Digital Services.

By logging into your CPF account online, you can access detailed information about your CPF savings and investments.

Here’s how:

1. Log In to My CPF: Visit the CPF website and log in using your SingPass credentials.
2. View Account Summary: Navigate to the account summary section to see your available OA and SA balances.
3. Investment Eligibility: Check the specific amount eligible for investment under CPFIS – at least $20,000 for OA, and $40,000 for SA.

In-Person at a CPF Service Centre

If you prefer a face-to-face interaction or need assistance with more detailed queries, you can visit a CPF Service Centre.

Here’s what to do:

1. Locate a Service Centre: Find the nearest CPF Service Centre using the CPF website’s locator tool.
2. Make an Appointment: Schedule an appointment if required, to ensure you get timely assistance.
3. Account Inquiry: Speak with a CPF officer who can provide you with your OA and SA balances and answer any questions about CPFIS.

CPF Mobile App

The CPF Mobile App offers a convenient solution for those who prefer checking their CPF savings on the go.

Here’s how to use it:

1. Download the App: Get the CPF Mobile App from the App Store or Google Play.
2. Log In with SingPass: Access the app using your SingPass credentials.
3. Check Balances: Navigate to the sections for OA and SA to view your available savings eligible for CPFIS investments.

Withdrawing your CPFIS investments upon reaching 55 age

Before you can withdraw your CPFIS investments, you must ensure that you have set aside the Full Retirement Sum in your Retirement Account.

The FRS is a key component of CPF’s retirement planning framework, ensuring that you have a secure income stream during your retirement years.

Once you have allocated the FRS to your RA, you can proceed to withdraw your investments

This includes the investments made through your CPFIS-OA and CPFIS-SA.

Here’s how to Withdraw Your CPFIS Investments:

1. Submit Withdrawal Request: Contact your CPFIS agent bank or the financial institutions managing your CPFIS investments to initiate the withdrawal process. They will guide you through the necessary steps and documentation required.
2. Transfer Funds: Once your withdrawal request is processed, the funds from your CPFIS investments and cash balance will be transferred to your designated bank account.
3. Review and Plan: After withdrawing your investments, it’s important to review your overall financial situation and plan for your retirement needs. Consider seeking advice from a financial advisor to optimise your retirement strategy.

By following these steps, you can access your CPFIS investments upon reaching 55, ensuring that you have the necessary funds to support your retirement while adhering to CPF guidelines.

Do I have to pay any accrued interest if my investment falls below the CPF risk-free rate?

When investing through the CPF Investment Scheme (CPFIS), it is important to understand the implications of your investment returns, especially in relation to the CPF risk-free rate.

The CPF risk-free rate is the interest rate that your CPF savings would have earned if they were not invested.

These rates are guaranteed and accrue interest on your CPF savings if you choose not to invest them.

When you invest your CPF savings through CPFIS, your investment returns can vary based on market performance.

If the returns from your CPFIS investments are lower than the CPF risk-free rate, you do not need to make up the difference or pay any accrued interest to CPF.

The performance of your investments, whether gains or losses, is solely borne by you. 

This is unlike using your CPF funds to purchase a house, where you have to repay the accrued interest that you owe.

This is why it’s really important to only invest it if you’re confident in consistently outperforming this rate – if you don’t outperform it, your retirement funds are going to be negatively affected.

Conclusion

Investing your CPF savings through the CPF Investment Scheme (CPFIS) can be a smart way to grow your retirement funds, provided you make informed decisions.

We’ve covered the essentials: from understanding what CPFIS is, to the eligibility criteria for investing your OA and SA savings, and even how to check your available savings and withdraw your investments upon reaching 55.

We also discussed the steps for investing on your own, using a robo advisor like Endowus, or engaging a professional for personalised advice.

Remember, while CPFIS offers the potential for higher returns, it also comes with risks.

It’s crucial to weigh these risks against the CPF risk-free rate and consider your long-term financial goals.

If you’re feeling a bit lost or unsure about how to navigate CPFIS, don’t worry.

Our partners are here to help.

Feel free to reach out for a free consultation with one of our experienced financial advisors who can provide personalised guidance and help you make the best choices for your financial future.

References

• https://www.cpf.gov.sg/member/infohub/educational-resources/cpf-investment-scheme-what-you-need-to-know-about-cpfis
• https://www.cpf.gov.sg/service/article/how-can-i-check-my-cpf-investment-scheme-cpfis-details
• https://sso.agc.gov.sg/SL/CPFA1953-RG9?DocDate=20161220&ProvIds=P1II-
• https://www.cpf.gov.sg/content/dam/web/member/growing-your-savings/documents/CPFISInvestmentProducts.pdf