The CPF Investment Scheme (CPFIS) allows CPF members to invest their CPF monies into various types of investments in Singapore.
While CPF already gives risk-free interest rate of 2.5% per annum for funds in your Ordinary Account (OA), and 4% for funds in your Special Account (SA), CPFIS members who think they can earn a higher return from the market can choose to invest in a wide range of investments in Singapore.
These include unit trusts, endowment plans, Singapore government bonds, exchanged traded funds (ETFs) as well as stocks. You can take a look at the full list of eligible products from the CPF website.
How To Invest My CPF Monies?
Any amount above the first $20,000 in your CPF Ordinary Account can be invested through the CPF Investment Scheme – Ordinary Account (CPFIS-OA).
Likewise, amount above the first $40,000 in your CPF Special Account can be invested through the CPF Investment Scheme – Special Account (CPFIS – SA).
Investing In Stocks
Along side properties, stocks, also known as shares in Singapore, is a perennial favourite among many retail investors in Singapore. People invest (or speculate) in stocks hoping to earn higher returns through dividend payout or price appreciation.
Based on current CPF guidelines, up to 35% of investible savings can be used to invest in stocks.
For example, a CPF member who has investible savings of $60,000 will only be able to invest $40,000, since the first $20,000 cannot be invested. Of that, $21,000 (35% of $60,000) can be used to buy stocks.
What Stocks Can I Buy?
There are certain criteria that have to be met for stocks to be eligible under the CPFIS.
#1 Company To Be Incorporated In Singapore
To be eligible for the CPFIS, the listed company has to be incorporated in Singapore. Hence companies like Alibaba Pictures (incorporated in China), Thai Beverage (Thailand) and Hutchison Port (Hong Kong) do not qualify.
#2 Companies Have To Be Listed On SGX Mainboard
Companies need to be listed on the SGX Mainboard. New listings on Catalist do not qualify. However, former SESDAQ shares that are now listed on the Catalist are included under CPFIS.
#3 Stock Must Be Traded In Singapore Dollar
Listed companies need to have their stocks traded in Singapore Dollar. Hence companies like Hong Kong Land Holdings (traded in US Dollar) will not qualify.
#4 The Company must allow Agent Banks to appoint all CPF shareholders of the company as proxies to attend and vote at meetings
What this means is that the company has to allow CPF investors to attend and vote at meetings.
#5 Not On SGX Watchlist
Companies that are listed on the SGX watchlist are automatically excluded from the CPFIS. This acts as a layer of safeguard to ensure that CPF funds are being invested prudently.
You can read up more about the criteria on the CPF website.
Should I Invest My CPF Monies?
It’s important to note that unlike cash on hand, which do not generate a return unless invested, monies in your CPF accounts will already be generate a risk-free return for you. Hence, that’s a return that you immediately forgo when you choose to invest your CPF funds.
Read Also: Why Investing Your CPF Money Is A Bad Idea
Hence unless you are convinced that you will be able to beat the interest rates return for CPF, it might be wiser to leave your CPF money untouched, and to invest excess savings that you have instead.
Can Your Investments Survive 2021 And Beyond?
While most of us have survived the year, how has your portfolio fared? The financial markets took us and our emotions on a wild roller coaster ride in 2020, leading to some poor decisions like panic selling or missing out on opportunities as fear and uncertainty held them back.
As we step into 2021 amidst a “New Normal”, join the FSM’s flagship event – “What and Where to Invest” held virtually from 9 to 26 January 2021. Be equipped with the right knowledge and skills that will help you invest globally and profitably.
Prepare yourself for the investing years ahead and register now for “What and Where to Invest” virtual conference!