Should we consider CPF SA as a bond component? - Seedly
 

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Asked by CLSY

Asked 5d ago

Should we consider CPF SA as a bond component?

Age: 37

assuming doing a balance of 60/40. 60% in stock, 40% in bonds. Can I consider CPF SA as a bond component?

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You cannot rebalance it, so it's really annoying. Purely from a portfolio rebalancing angle it has to be taken aside.

But we should take it as part of portfolio, else we may have too many bond like holdings. I am holding 65-35 including cpf SA and MA, with whatever I can invest in OA invested.

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C
CLSY
Level 2. Rookie
Answered 4d ago

Thanks for all the responses received so far! I think whether to regards SA as a bond component have too many consideration with the main fact highlighted by Hariz, we cannot rebalance SA.

The whole idea of rebalancing for me is when market is down, increase Bond %, when market is back, get back to Equity.

I will need to think deeper if I should start exposing to Bonds....

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Hariz Arthur Maloy
Hariz Arthur Maloy

4d ago

When markets are down you're buying equity and selling bonds my friend. :) because if you start with a 80 Equity / 20 Bond Portfolio and your equities are taking a beating and your allocation shifts to 70/30, you're selling the overweighted bonds to buy Equities to reset to 80/20.
CLSY

4d ago

Indeed sorry got that mixed and thanks for correction for future readers

Before we decide on using CPF SA as a bond component in your financial portfolio, we will need further information about you, including your investment objectives.

In most cases, I will not consider all the money in my CPF SA as a bond component since I cannot draw all the money out from it.

On the other hand, I may consider a fraction of it to form my portfolio if I am confident to be able to withdraw the money when the needs arise.

Therefore, it will depend on your entire financial planning and how we use each tool to help you achieve your goals.

Here is everything about me and what I do best.

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Wilson Nid A Break
Wilson Nid A Break
Level 8. Wizard
Answered 4d ago

I considered it as a pseduo/proxy to long-term maturing bond, with the interest being automatically re-invested as nil cost. ​​​

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No you shouldn't. CPF is not a bond. It doesn't give you any correlation to your equity portfolio and doesn't behave like a bond. CPF should be treated as a separate resource because you also can't rebalance CPF.​​​

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