Asked on 13 Apr 2019
Great question about CPF as part of investment portfolio. Let's talk about the CPF Ordinary Account (OA). Note that the OA is a risk-free way to net up to 3.5% interest (2.5% plus additional 1% on combined OA, SA & MA balance up to $60,000).
The CPF OA is a good way to earn a little interest, but why not make it work harder for you?
I use my CPF OA to invest in relatively stable and "safer" stocks on the SIngapore Exchange. Here are a few criteria I look for in stocks when using my CPF OA:
Dividend yield above 4% (My OA balance only gets excited to leave CPF if it can reap more than 3.5%)
Low dividend payout ratio - this is to ensure that the company can continue to pay out and even raise dividends sustainably.
Solid balance sheet
Strong track record
I also deployed my OA funds like an "opportunity fund". This means that the OA monies were only triggered on rare occasions to invest in stocks on my watch list that were depressed or under-valued for whatever reasons.
With this method, I invested in ST Engineering and OCBC Bank successfully and reaped returns higher than the promised 3.5%.
16 Apr 2019
It really depends on you. I consider my CPF as a long-term bond.