Should we invest our funds in cpf SA

Hi Kok Seng,

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SA gives 4% risk free. If you are able to deploy your SA to get, say 5% returns, the question is, what risk do you take on to achieve that return? And is it worth it?

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Suffice to say, very few investments are SA approved, and certainly none of them are risk free. While there are some SA approved investments that can potentially provide more than 4% p.a., you won't likely want to invest in those.

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The sole exception is during a crisis, which may represent opportunity. I know someone who invested his SA from March through till this year and exited with a nice ~10% profit, but it takes a lot of guts and conviction to do so.

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So in summary, the majority of people shouldn't invest their SA. Only if exceptional market circumstances present themselves, then one can see if there is a window of opportunity to capture profit.

Would invest using CPF-SA unless one could "assure" the investment returns are much higher than 4%. SA 4% is considered risk-free that allows you to sleep through the night.

While I can understand the size and the relative illiquidity of the fund (CPF SA) hence the urge to invest. The inherent 4% interest to beat in excess of fees paid to invest is quite difficult to attain even thou the potential returns made are not capped at the FRS (Full Retirement Sum).

In a balanced portfolio, we normally includes bonds and gold besides stocks. The percentage may vary depends on your risk profile.

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For Singaporean and PR, we have a wonderful instrument which can replace bond. And that is our CPF, especially SA.

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Therefore, you may consider CPF as your bond investment component. So, unless you feel that your income-instrument portfolio is too overweight, I would not suggest you utise the SA portion.

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