Would you use your CPF OA to invest in Unit Trust? Any views on this ? - Seedly
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Anonymous

Asked 2w ago

Would you use your CPF OA to invest in Unit Trust? Any views on this ?

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Kim Hwee
Kim Hwee
Level 4. Prodigy
Answered 2w ago

Hello, personally started investing CPFOA monies with Endowus and am very happy with the progress so far.

Endowus mainly uses very cost efficient unit trusts managed managed by some of the best and largest fund managers in the world and they have a full trailer fee rebate for their clients which help in reducing overall cost of investing.

The Endowus CPF portfolio is well globally diversified and it fits well with a Long term strategy for our CPFOA monies for eventual retirement. You can choose your percentage of equities to bonds according to your risk appetite.

Hope this helps!

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👍 3

Yes I would. In fact, I did.

Since 23 Jun, I parked a lump sum from CPF-OA (no DCA) with Endowus. 60% stocks, 40% bonds. I'm happy with them so far. At least, I saw my money grew almost from the get-go.

One of the guys in a Facebook group I'm in, posted his results. You can take a look if you like:

https://www.risknreturns.com/2020/08/01/portfolio-july-2020/

He placed it since Jan 2020 and his "portfolio is up 8.34% for the year, which given the current climate is a decent set of results." He also used CPF-OA, but I think his portfolio is 100% equity. You can also read his detailed review here.

Meanwhile, for myself, my portfolio is up 3.82% (1 month-ish result).

Do check them out at https://endowus.com

If you happen to like what they do and their insights, please let me know. I can send a referral link your way. You can get a $20 in Access Fee credit (equivalent to $10,000 advised free, assuming Access Fee of 0.40%). It can be used to offset your Access Fee. (How much will I pay in fees? - In your case, cash: 0.6%; If CPF, 0.4% flat regardless of amount)

Endowus is a game-changer, since traditional unit trusts have high fees.

2 comments

👍 3
Wei Qiang Kwang
Wei Qiang Kwang

5d ago

Hi can share with me the referral link? Thanks
Sharon
Sharon

5d ago

Hi Wei Qiang, Here it is: https://endowus.com/invite?code=IFFE0 Do note that 0.4% is the Access Fee. Depends on what is the profile of your portfolio, the Total Expense Ratio is from 0.86% (very conservative) to 1.04% (very aggressive). As mine is Balanced portfolio (60% stocks 40% bonds), TER is 0.97%. Also, in order to be awarded with $20 in Access Fee credit, you need to fund with an initial investment of at least SGD 10,000, provided that the initial investment is not withdrawn for 90 days. Hope this helps!
Shengshi Chiam, CFA
Shengshi Chiam, CFA, Personal Finance Lead at Endowus
Level 7. Grand Master
Answered 2w ago

Hi,

Based on your reply to Nicholas, it seems like your finances are quite tight because you will be using CPF to pay for your HDB loan, with no excess CPF monies to invest in CPFIS (you need to have more than 20k).

Rather than trying to chase short term returns where there is a higher chance of you being worse off than getting the risk free 2.5%, you may want to consider taking a bank loan instead of a HDB loan, where you save up on interest costs.

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👍 1
NW
Nicholas Wong
Level 3. Wonderkid
Answered 2w ago

Personally I would not put a single cent of my CPF money into investments as it is hard to find a 100 % safe investment that returns you a guarentee 2.5%,4% and 6%. Do not forget that the whole purpose of the CPF is for your future retirement money so you might want to keep it safe and risk free.

If you are thinking of investing a portion of your retirement money into any form of investment, you might want to consider opening a SRS account with any of the 3 main banks in Singapore (DBS, UOB, OCBC) put money in them and use the money there to buy into Unit Trusts instead. By doing this, not only do you invest for your retirement, you also keep your CPF protected and you can reduce the amount of income tax you pay since money that is contributed to a SRS account, like the cpf contributions, are not taxable.

1 comment

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Question Poster

2w ago

Thanks for ur take ! Just trying to find ways to increase OA bfore my BTO is ready. Becos abit sayang to let it be wipe out and left w 20K only upon key collection if we were to take on HDB loan. But ya after doing much reading and discussion and my hubby, I guess not touching this money is a much sounder decision.
Anna Wong
Anna Wong
Level 4. Prodigy
Answered 2w ago

I did invest my CPF OA in unit trust, but I did it in my twenties, knowing that I would get a flat someday. After a decade, I surrender the policy so that the returns will go back to my CPF for my housing. The returns were not bad though. I chose to fund all the returns for my housing so that I would take lesser housing loan.

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👍 0

Hi! I have invested my CPF-OA in Unit Trusts & ILP.

100% equity position as I'm looking at a 5 - 6 year runway for my OA to grow.

Current unit trust portfolio = +30% since invested in March (Lucky to have bought into the dip)

Current ILP portfolio = +0.45% since invested in the last week.

Do note that I'm just aiming for above 2.5%p.a. return. My personal expectation is actually 8% yoy. Anything beyond is a bonus to me. (Personally I am expecting my returns to even out in the longer run due to volatility)

The general considerations would be your risk appetite, time horizon and also fees & charges. Do note that your CPF Investment Scheme account will also have a quarterly charge for your holdings.

Personally, I plan to adjust my holdings if I feel a certain fund has hit it's resistance (in my view). It's necessary to get a fund update every 6 months/ a year or even every 3 months. so that at least you can make sure you are on track to your goals. Would be happy to share more but it would make this answer too long 😂 Hope that helps!​​​

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Bang Hong
Bang Hong
Level 6. Master
Answered 2w ago

Depends, but typically no.

  1. Reserving OA for stable small returns (2.5%) to form the "imaginary bond segment". You will see the beauty of withdrawing OA at 55 years old, when you are confident to have the CPF FRS @ your 55 years old mark, where CPF-SA alone is above the FRS @ your 55 years old. Then you play the shielding game and tadahhh, that monies in CPF-OA will sit in your CPF-RA , and you can withdraw anytime , payment via PayNow. Need to learn the dynamics of this wonderful game, where interests is withdraw first.

  2. Reserved for housing repayment. This is when I have enough for housing repayment for the next 12-24 months, I will use the excess to invest. Else security on hosuing comes first. In case when you are tired you want a career break, or say jobless, housing repayment is no biggie, no big concerns.

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It depends on your risk appetite and your objective. Personally, yes, I will invest my CPF monies. Professionally, I have been helping over 300 clients set up their investment portfolio as part of their wealth accumulation journey.

As for whether to invest into Unit Trust, at the end of the day, all my clients want to invest through a reputable platform with proper track records. Additionally, they only care about net returns.

I share quality content on estate planning and financial planning here.

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Hi there,

You can consider AIA Investeasy. There is a portfolio of managed unit trust that you can invest in it and currently due to the economy, the fund prices are relatively low. You are able to do fund switch without any charge as well. The expected return should be good for the next few years. I have personally invested $60k of my SA into this fund and it has grown 1% over 2 weeks.

Hope the above clarifies.

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Samuel Tay
Samuel Tay
Level 3. Wonderkid
Answered 2w ago

Hi, in my opinion I would not invest in Unit Trusts due to the higher costs involved. (e.g. 1 - 2% more overall) You may want to consider any of the local banks even though a dividend cut is very possible in the near future but I believe that in the long run things will get better and you can actually buy in at a good price now.

1 comment

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Question Poster

2w ago

Thanks Samuel! Done that too!