Learning Resources

11 FAQs on CPF Account Investing

19 Nov 2021

CPF Account Investing FAQs | VI
(c) Sadie Xiao

Curious about investing using your CPF? You’ve probably heard about it from your friends or relatives and want to explore the same path.

While we highly suggest you don’t touch your CPF money to invest when you don’t have adequate knowledge about investments, we want to support you by answering the most frequently asked questions from people like yourself interested to invest their CPF account.

These are 11 questions on CPF investing that you might find yourself asking:

1. Is it good to invest CPF?

Investing your CPF is good provided you are confident you’ll make money from it. Your CPF, even if you don’t invest it in stocks, bonds, or gold, earns an interest of at least 2.5 to at most 4 per cent per annum. This is risk-free. Hence, it’s best to leave it where it is if you don’t have enough knowledge of investing.

But if you know how to invest and are confident you’ll make higher returns, then by all means you can touch your CPF money. It’s all yours anyway.

What attracts most people to invest their CPF money is the potential returns they can get – returns higher than what their CPF can give.

Again, your top consideration before you invest your CPF should be your knowledge. Do you know well enough what you’ll be investing in? Are you confident you can make higher returns in investing than leaving your money in your account?

In answering the above, remember the fact that your CPF is the foundation of your nest egg. Whether you retire comfortably or otherwise will depend on what you decide to do with your CPF.

Don’t take it, however, as though we are discouraging you from investing your CPF. We only want you to remember that investing has its risks. Like we always tell our VI College graduates, only invest in something if you know how to do it properly.

Another point you need to consider is the fact that whatever gains you have from investing your CPF will need to go back to your account. You can only withdraw the money when you’re at least 55 years old.

The same applies even if you decide to invest in dividend stocks (or stocks that give you dividend payouts). Whatever dividend you receive from stocks you invested in using your CPF will be deposited in your CPF account.

Ergo, it’s always good to be reminded that CPF investing is best for long-term investing and not to finance your present lifestyle.

2. Which CPF account can be used for investment?

You can invest your CPF under the CPF Investment Scheme (CPFIS) or the Special Discounted Shares (SDS) Scheme. We’ll focus on the CPFIS which allows you to invest two of your CPF accounts: OA (Ordinary Account) and SA (Special Account).

3. How much can I invest using CPF OA?

You can invest any excess amount you have in your CPF OA after setting aside $20,000. Hence, if you have $50,000 in your OA, you can invest up to $30,000. However, this $30,000 cannot be 100% invested in every possible investment option there is.

To illustrate, you can only invest up to 35% of your investible savings in stocks, corporate bonds, and property funds, and up to 10% in gold ETFs and gold products.

You can, however, invest 100% of your CPF OA in other investment options, i.e., unit trusts, Treasury bills, Singapore Government Bonds, investment-linked products, annuities, endowment policies, fund management accounts, and ETFs.

You can also download this document from the CPF Board to get more clarity on this.

4. How can I get CPF Investment Account?

Your CPF Investment Account (CPFIA) is needed before you can start investing your CPF, for example in stocks and bonds. You only need to open a CPFIA if you’re using your CPF OA to invest. If you’re using your CPF SA, you don’t need a CPFIA.

You can open a CPF investment account with your bank in Singapore. Currently, the CPF Board has approved three banks to facilitate opening a CPFIA. These are DBS, UOB, and OCBC. You can apply to open a CPF investment account in any of these banks via an online transaction or through visiting any of their branches.

See also: Opening Your CPF Investment Account

5. Can CPF invest in ETFs?

Yes, you can invest your CPF in exchange-traded funds or ETFs. Under the CPFIS, you’re allowed to invest your OA in ETFs. As of date of writing, the ETFs you can invest in using your CPF are the following:

  • ABF Singapore Bond Index Fund
  • Nikko AM SGD Investment Grade Corporate Bond ETF
  • Nikko AM Singapore STI ETF
  • NikkoAM-StraitsTrading Asia ex Japan REIT ETF
  • SPDR Gold Shares
  • SPDR Straits Times Index ETF

To check how the CPF Board determines which ETFs will be included in the CPFIS, go to this link.

6. Can I use CPF to buy gold?

You can use your CPF to buy gold provided you fulfil the criteria stipulated by the CPF Board. One criterion is you can only invest a maximum of 10% of your investible savings (your CPF account balance plus any amount you’ve withdrawn for education or investment) in gold ETFs and other gold products, including gold certificates, physical gold, and gold savings accounts.

For gold ETFs, only the SPDR Gold Shares is included. For gold products, you would need to check with UOB.

7. Can I invest in S&P500 using CPF?

Previously, you cannot invest in the S&P500 using your CPF. Recently, however, a few robo advisors in Singapore have opened up the possibility to invest your CPF into the S&P500.

8. Can I use CPF to buy US stocks?

The CPF Board determines which shares can be included in the CPFIS list. Some benchmarks it has put in place are: 1) the stock must be traded in Singapore dollars, and 2) the stock must be offered by a company incorporated in Singapore.

Should you wish to invest in US stocks, you can explore investing using your own cash. Here’s where you can find CPF-included stocks.

9. Can I invest my CPF on my own?

Investing your CPF has several criteria:

  • You must be at least 18 years old
  • You are not an undischarged bankrupt
  • You have more than $20,000 in your CPF OA and/or more than $40,000 in your CPF SA
  • You must complete the Self-Awareness Questionnaire

If you meet all the above criteria, the next step is to open a CPFIA (if investing using your CPF OA). After doing so, you can open a brokerage account and start investing.

10. How do I top up my CPF Investment Account?

You can’t top up your CPF investment account if you don’t have enough CPF savings to invest. You can only do top-ups when taking up entitlements or conversion of entitlements, in which case you can liaise with your bank.

11. Can I close my CPF Investment Account?

You can close your CPF investment account after you’ve sold all your investments. After doing so, you can instruct your bank to close your CPFIA. Should you have any remaining cash balance in your CPFIA, it will be refunded to your CPF OA.

We hope we have covered all your questions on CPF Account Investing. Remember to equip yourself first with relevant knowledge before you proceed to touch your CPF money.

Interested to learn the basics of stock investment? Join us for a free two-hour masterclass.

DISCLAIMER

No income guarantee or promises of any type are being made in this article. Know that your results will vary due to circumstances that are outside of our control. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. The reader, thus, agrees that the author and the company are not responsible for the success or failure of readers’ investment and business decisions relating to any information provided herewith.