By Chuin Ting Weber, CFP, CFA, CAIA
CEO & Chief Investment Officer, MoneyOwl
I don’t recommend investing CPF-OA for everyone, despite MoneyOwl recently bringing about the lowest cost way of investing CPF into unit trusts with POEMS.
The latest data being highlighted to support an argument why one must invest CPF-OA is that inflation over the past 4 years has been higher than the OA’s rate 2.5% p.a.
I hope people don’t extrapolate from this that a 4-year time horizon is sufficient to safely beat the OA rate.
Almost half (45%) who tried, did not manage to beat 2.5% p.a. over the past 5 years.
That’s a very high failure rate.
There are many considerations one should step through before foregoing that 2.5% p.a. guaranteed by law, to take risk.
Time horizon is one – not the only one, but one of the most important ones.
We recommend you have at least 8 years, even 10 years, in time horizon.
And to be fair to the Government and CPFB: average inflation over 8-10 years was below 2% p.a. – well below the guaranteed 2.5% p.a. of CPF-OA.
My colleague Albert Tan and I are hosting a CPF webinar on 13 Feb 2025 evening. Happy to discuss our rubric for how to think about CPF investing. Link here.
That said, I hope there would be more interest in the core essence and benefit of CPF in its insurance product – the CPF LIFE annuity, sometimes underrated, maybe because there’s no compensation for selling it.
Well, since we have nothing to sell anyway, let us try to bridge that gap with an unbiased, professional view.
Read more on our OwlInvest page.
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While every reasonable care is taken to ensure the accuracy of information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The author and publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.
