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Used to read articles that say like majority of CPFIS funds do not outperform CPF OA. If so how will you recommend people to make our CPF work harder? What success stories can you share on using CPFIS to earn more interest?
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It depends on what you're planning to invest into.
2.5% for CPF OA is pretty decent. However, if you're using it to invest in an ILP or 'typical fund', you might even make a loss. SA has 4% interest (up to 5%) rate risk-free. This deal is very very very hard to beat and you should defintely not use the money there for investment.
Index fund can normally outperform 2.5% annually, but you still have to look at
the fund's past performance.
Edit (Clarification): Funds in CPFIS have the potential to beat the minimum 2.5% interest given by CPF. However it is better to use cash since realistic interest rate achiveable by the high interest savings account is about 2.4%. Also, the bonus interest rate has cap limit and SDIC only protects up to $75,000.
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Luke Ho
13 Jun 2019
Founder and Director at CFX Money Maverick Pte Ltd
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Try to stick anyway to SGX listed passive indexing stock ETFs, like SPDR
do avoid the ETFs of XTrackers, their indexes are fine, but they build their ETFs via
SWAPs that theoretically are prone to complete losses given the counterparty default risk