With the highest return from cpf being 5%, how can we achieve 10% returns every year to enjoy the compounding interest? - Seedly

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Asked by Anonymous

Asked on 27 Feb 2019

With the highest return from cpf being 5%, how can we achieve 10% returns every year to enjoy the compounding interest?

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To receive such high compounding interest, high yield bonds or P2P lending could be a risky bet.

Another method of course is compounding growth from equities. Though they sound similar, they are actually very different. Compound interest only works if you receive constant return every year without fail.

Equities can go up and they can go down. Any big negative year will wipe all your compounding growth of the previous years. But in the long term while also reinvesting your dividends, you can expect a diversified portfolio to achieve compounding growth.

So start investing in equities and a diversified portfolio.

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