Guide: Investing with CPF

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investormonkey-cpflogoCentral Provident Fund (CPF) is a compulsory savings plan imposed by the Singapore Government in July 1955 on working Singaporeans and permanent residences in assisting them primarily for their retirement, healthcare and housing needs. Every CPF member who are below the age of 55 will make monthly contributions to three accounts, namely Ordinary Account (OA), Special Account (SA) and Medisave Account (MA).

In 1977, the Singapore Government recognised the wants of a group of investment-savvy members to higher returns on their CPF savings, set up the CPF Investment Scheme (CPFIS). This allow the members to invest their CPF savings in a wide range of investment options. Though investment of CPF savings for the members were allowed, the CPF Board has always reminded members that they should always exercise prudent when it comes to investing with CPF money under the CPFIS.

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A CPF member has to fulfill the following criteria before they are allowed to use their CPF savings for investments:

  • Is at least 18 years old
  • Is not an undischarged bankrupt
  • Minimum balance of S$20,000 in OA account for investments under CPFIS-OA
  • Minimum balance of S$40,000 in SA account for investments under CPFIS-SA

How to start
First, you have to ensure that you meet the minimum balance requirement and the amount of CPF savings you have for investments. You could refer to this post on how to check the amount of CPF savings available for investment.

Do remember to take into consideration of any financial obligations like monthly housing payments that require outflow from your CPF account. Do set aside enough for the outflow from your CPF account before making any investments.

If you intend to invest using your CPF OA account, you are required to open a CPF Investment Account with any one of the three CPFIS agent banks:

Please read here on the CPF Investment Account details of the three CPFIS agent banks.

If you intend to invest using your CPF SA account, there is no need to open a CPF Investment Account.

Once you have opened your CPF Investment Account, you could link the account to your broker(s) and you will be ready to invest using your CPF savings.

Like what the CPF Board would advise all their members, Investor Monkey will like to say:

You should exercise prudence when you invest your CPF savings under the CPF Investment Scheme. There is no guarantee that investments will always be profitable or that investment products included under CPFIS will always earn profit. You need to decide for yourself how to invest your savings, what are the risks that you can accept and how long do you want to stay invested.

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