This article was contributed to us by Endowus.
Goal-based investing (GBI), or saving money for specific future goals, is the gold standard in personal finance today.
It is supplemented by other sophisticated terms like asset liability management (ALM), meaning how much you have or save up should be matched against how much you need to spend through your lifetime. There are many ways to cut your personal finance journey but it all leads to one final destination: retirement planning.
Preparing Well For Retirement Is Key
To reach this holy grail of all GBI or ALM or saving in personal finance, the ultimate questions we must answer are: When we stop working and enter retirement, do we have enough saved to live a quality of life that we desire into our old age? Will we be able to provide for our loved ones and not worry about whether we will outlive your savings?
Endowus is about advancing the human experience of money – our experience of money should be one that makes us feel good, and one that leads us towards a life (both working and in retirement) that is full of hope, security and comfort.
Retirement Planning In Singapore Inevitably Lead To The CPF System
CPF is a wonderful thing. It helps Singaporeans buy a house for the family, pay for medical needs, and prepare for retirement. It is a comprehensive social security system. When a Singaporean or PR investor plans for long-term investments and retirement, they must consider not only their private investments but also how they manage their CPF accounts. This holistic approach is necessary to accurately gauge whether you have enough saved up for your retirement.
Should We Be Investing Our CPF Monies?
The CPF system is one of the most robust pension systems in the world. However, everybody’s circumstances are different, and how we use our CPF accounts should also be different. The lower threshold of 2.5% for your Ordinary Account (OA) may not be enough to meet the needs of your retirement. Capital markets have traditionally rewarded long-term investors and it may be appropriate to take some risk to expose yourself to the possibility of higher market returns through cycles.
You have 30 years until retirement and you invest your money in a globally diversified balanced portfolio. The annualised return historically has been around 6% over the period. A $100,000 investment would become $574,349 after 30 years compared to $209,757 if you left it in your Ordinary Account at 2.5%.
CPF Investing Is Core To Endowus’ Mission
Helping Singapore-based investors better prepare for retirement was the key reason why we started Endowus. A financially secure retirement is the most important thing you can do for you and your loved ones. We aim to provide a holistic retirement solution, which will be all-encompassing, including your CPF, SRS and private pension savings.
This is why we are really excited to share that you will soon be able to invest your CPF seamlessly through the Endowus platform into globally diversified, low-cost portfolios. Our waitlist is now open, and if you join prior to launch, you will get $10,000 of your CPF funds advised for free for 6 months.*
We’ve been working hard with our partners, UOB, UOB Kay Hian and global fund management companies to bring you the first fully digital end-to-end CPF investment experience, ever. This means that you can create your CPF Investment Account (CPF-IA) and set up your Endowus account online in under 10 minutes. The new Endowus CPF service is fully integrated with the CPF Board’s Investment Scheme (CPF-IS). You will be able to start investing your CPF Ordinary Account funds right away after your account is set up, all online on the Endowus platform.
Endowus is a MAS-licensed financial advisor that leverages technology to make investing accessible to all. If you enjoyed reading this article from Endowus Insights, you can subscribe to our weekly memo. Follow us on LinkedIn or connect with us on Facebook as we bring you financial insights from Endowus.
* For “Qualifying New Accounts” (as defined below) Endowus will award fee credits which will be used to waive a given amount of its fees applicable to your Endowus account. The advertised amount of assets advised for free is calculated based on an Access Fee of 0.40% per annum. The actual assets advised for free may vary based on your fee rate given your assets under advice with Endowus. For the avoidance of doubt, this does not affect your fund-level fees due to the fund manager. Subject to the limitations above, a “Qualifying New Account” is a new individual Endowus account opened by an email address used to join the waitlist during the period when the waitlist is accepting sign-ups. Endowus is not responsible for incorrect entry of email address onto the waitlist or when creating an account. Please send invites only to people you know personally who will be glad to get them. This promotion is not valid with any other offers and is not transferrable, may not be transferred to another person or exchanged for cash. You are responsible for any tax consequences, if any, that may result from your redemption or use of fee credits.