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Investing with Your CPF Savings: A Quick Guide to Get Started

This post appeared first on the BankBazaar blog.

With the kind of lifestyle we have, it is hard for us Singaporeans to save. Even if we do manage to save, our savings fit better in a piggy bank than in an investment scheme. But did you know that you can actually invest your CPF savings and make money out of it? It is true!

Instead of earning normal interest rates on your CPF account (Ordinary and Special account), you can actually earn better rates of interest on the CPF account through investment schemes. Not many people know that they can invest with their CPF savings to grow their money. If you are one of these people, you should definitely continue reading!

Who is it for?

CPF is for anyone who wants to make money from their CPF savings. Before we start learning more about investing with CPF, let us look into who is eligible to invest with CPF. We want to make sure you are eligible before we get your hopes up. Given below is the eligibility criteria to invest with CPF:

  • You need to be at least 18 years.
  • You should have enough money in your CPF account.
  • You should have a minimum amount of S$20,000 for ordinary accounts and S$40,000 for special account.
  • It is important to have the minimum amount in both accounts if you are planning on investing from both accounts.
What you need to know about CPF investment schemes

CPF investment schemes allow you to invest your CPF savings in a wide range of financial instruments. Investing with CPF is more like building a retirement fund for your future rather than making quick cash. The returns earned from the CPF investment scheme will be deposited in your CPF account which you can withdraw only after you retire.

The investment schemes available under CPF ordinary account are different from the schemes available under CPF special accounts. You can only invest in an instrument if it is under your type of account. For instance, an individual who has an ordinary account cannot invest in a scheme available under special account. While you cannot combine your funds from the accounts to invest in a product, you can transfer funds from the Ordinary Account to the Special Account to invest in a scheme that offers higher returns.

What can you invest in using your CPF savings?

You can invest your CPF savings in a valid investment scheme depending on your risk appetite and account type. Given below is a list of products that you can invest in based on the type of account:

  • CPFIS Ordinary account
    • Fixed deposits
    • Singapore government bonds
    • Singapore government Treasury Bills
    • Statutory Board Bonds
    • Annuities
    • Endowment Insurance Policies
    • Unit Trusts
    • Exchange Traded Funds
    • Bonds guaranteed by Singapore Government
    • Investment linked insurance products
    • Fund management accounts
  • CPFIS Special account
    • Fixed deposits
    • Singapore government bonds
    • Singapore government Treasury Bills
    • Statutory Board Bonds (Secondary Market only)
    • Bonds guaranteed by Singapore Government
    • Annuities
    • Selected Unit Trusts
    • Selected Exchange Traded Funds
    • Endowment Insurance Policies
    • Selected Investment linked insurance products

Returns from the investment

The returns from your investment depends on the scheme you have invested in. Instruments with low risk usually offer low returns. The risk free interest rate for CPF Ordinary and Special account is 2.5% and 4% respectively. Your main aim with a CPFIS should be to earn returns of at least 5% every year.

How do you invest your CPF savings?

The procedure to invest is different for Ordinary and Special account. Read on to know more about how to invest your CPF savings for each of the accounts:

Ordinary account
Given below is a list of steps on how to invest your CPF savings if you have an Ordinary Account:

  • Open a CPF Investment Scheme account with one of these CPFIS agent banks- DBS Bank, OCBC, and UOB.
  • Only UOB offers gold products excluding gold ETFs.
  • You need to submit your identity card along with your CPF statement for the bank to verify your CPF account number.
  • Your agent bank will connect with the board and product providers to settle your purchase and sale of investment. It also keeps track of your investment holdings and transactions in your CPF Investment Account.
  • You can only maintain one CPFIS at a time.

Special account
Given below is a list of steps on how to invest your CPF savings if you have an Special Account:

  • There is no CPF Investment account required in this case.
  • You can approach the product providers directly.
  • You need to submit your identity card along with your CPF statement for the bank to verify your CPF account number.
  • CPF will connect with product providers to settle your purchase and sale of investment. It also keeps track of your investment holdings and transactions in your CPF Investment Account.

We are sure by now you know everything that there is to know about investing with CPF. What are you waiting for then? Go and invest now!

BankBazaar.sg is a leading online marketplace in Singapore that helps consumers compare and apply for the best offers across all financial products: personal loans, home loans, credit cards & investments. Like BankBazaar Singapore on Facebook to discover tips, clever hacks, and deals to save and earn you more money.

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