Saturday, 13 October 2007

1% increase for our CPF-OA Account

Our government is giving us an additional 1% for our CPF-OA account with effect from next year.

This came as a good news for many but ..... as per what people always say, its not easy to get the government money and true enough there is a catch to this 1%.

The first S$20,000 in our CPF Ordinary Account, and S$40,000 in our CPF Special Account and Medisave is 'untouchable'.

I felt that if this could be an option, something like our old Medishield, whereby you can opt-in or opt-out from, will be even better. This is especially so for the younger people. These are people who can and are most likely to be able to take risk. They may wish to invest it elsewhere rather than putting it into the CPF.

I, for one is one of them. I invested my CPF money into both independent broker and insurance company. My unit trust made near to 40% in two years... that is 20% per year. My funds with an insurance company made 30% in 11 months.... I had just invested my entire SA too. Well, I don't have much in that account. However, I also don't know when can I take money out from that account and hence I decided to just 'hump tum' everything in to maximise it. Anyway I have nothing but time for this account which I cannot do anything with.

Initially, I thought I was just lucky to be able to have this fabulous returns.... the other day, on Wed, 10th Oct, a client called up to ask the Secretary on the performance of his funds? He invested $100, 000 (CPF-OA) in 2005 and the records shows that he has a whooping $400, 000 now!!!! He was so over-joyed that he came down to the office immediately and insisted on giving us a treat. Over lunch, I could not help but ask him this question," Mr. Y, may I know how young are you?"

He looked pretty young that was what triggered me to ask this question.

"53", he replied....followed by "any problem?"

I heaved a sigh of relief....."Wow, lucky you!" At least you can get to take out your money very soon. if those money were mine :)

Besides Mr. Y, a lot of other clients made money. The age range is between mid-thirties to late-fifties. Yes! Late-fifties.

However, clients must also understand that all investment comes with a risk. Hence, it will be better if the holding back of the CPF money can be made an option. For account holders to make their own choice, after all these are our money, isn't?

The very reason why I invested my CPF money in was to be able to hit the min. sum required when I retire in order to take my CPF money out. Because I know that the possibility of me hitting that sum which is as of now $120, 000 for my age (min. sum varies with age band), is quite low. I guess its gradually going up.


Because I will need to pay for housing loan, provide education for children, etc... I seriously have no idea if I can hit $120, 000 and so I invested, knowing that the previous CPF returns of 2.5% will definitely not get me there.

Friday's Straits Times, last page, shows a very positive graph of funds performance. The best performance was by Duetsche Bank, over 60% in returns.

I believe that funds, especially China and India funds will continue to do well, at least up to the 2008 Olympics. Therefore, being so Singaporean, my 'kiasuism' spirit came over me and I threw my entire SA into it :)

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