I would like to put 20k into my 23 yr old son CPF. Will I be able to get better returns in other investment over 30 plus years than CPF? - Seedly

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Asked by Ng Kwok Fei

Asked on 05 Dec 2018

I would like to put 20k into my 23 yr old son CPF. Will I be able to get better returns in other investment over 30 plus years than CPF?

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Definitely. In fact you're locking up that 20k for 32 years and is irreversible.

A balanced portfolio over 30 years can give you a 5-6% compounded return, a moderately aggressive portfolio can give you 7-8% returns plus gives you full liquidity.

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Teo See Hwa
Teo See Hwa, MArketing Associate at Propnex
Level 3. Wonderkid
Answered on 10 Dec 2018

Nobody know which is better only Time know.

I put 20% deposit $108,000 in 2006 and 4 years later property appreciate by 1 million.

If I use your question what will be your answer.

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Yixiong Chang
Yixiong Chang
Level 5. Genius
Updated on 07 Jun 2019

Why don't you topup your own CPF special account instead. Yes, u might not earn the extra 1% but u are able to receive tax relief. Eg, your taxable income is $40k, for every dollar u earn above 40k is taxed at 7%. Therefore, if u topped up $1000 into your special account, u get $1000 tax relief, u saved 7% of $1000 = $70 tax money. Effectively have gotten 7% return on your money. If u are earning more than $80k, u will be in the 11.5% tax bracket.

Topping up your son's CPF although is able to earn the extra 1%, u will not be able to use the funds for yourself.

There are definitely plenty of investments that can potentially produce better returns, but it comes with higher risk as well. CPF provides superior risk adjusted return.

It really depends what purpose u intend your 20k for. You cannot use CPF monies except for its allowed purposes only. Not to mention it is your son's CPF.

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Ng Kwok Fei
Ng Kwok Fei

07 Dec 2018

Thanks and appreciated your suggestion. 20K strictly for son and do not expect to touch but grow it. Am age 55 and already set aside the FRS sum. Only possible to top up further to the enhancement retirement sum. And such top ups do not qualify for tax reliefs. Thus am currently looking how best to get returns of the 20K am having.Your suggestions welcome
Loh Tat Tian
Loh Tat Tian

11 Dec 2018

1 possible place is to get absolute assignment on endowment plans. It has some chance to outperform CPF.