The Ultimate Guide to CPF-OA Investing

CPF-OA investing guide

Most of us know that a portion of our salaries go into our CPF accounts. Some even know the exact percentages in which the contribution is deposited into each of our many accounts, the Ordinary, Special and Medisave (and Retirement, if you’ve unlocked it!) Accounts.

But have you ever wondered what you could do to maximise your CPF account values, especially if you still have a hefty sum in your account even after accounting for housing payments?

Well, guess what, you’re not the only one!

Today, we’ll be delving into the CPF-OA and ways to increase your CPF balances and to make your money, as they like to say, ‘work harder for you’!

Today’s post was kindly requested by one of our dear readers, Max! For anyone else with a topic that they’re interested in, do feel free to contact me and I’ll do my best to meet your requests, cheers!

What is the CPF-OA Anyways?

The CPF Ordinary Account (CPF-OA), is the one of three main accounts in your CPF. This account, for most Singaporeans, is the account that will pay off most of your housing payments. However, the OA can also be used for certain education needs and also, investments!

But first, where does the CPF-OA money come from?

For all salaried employees in Singapore, a portion of your salary, plus an employer contribution, will be deposited into your CPF account every month. This contribution varies based on your age:

CPF-OA Contributions

These contributions are then allocated to each account and the percentage allocated will also vary based on your age as seen in the table below:

CPF-OA SA allocations

Take an example of Jonathan, a 25 year old fresh graduate making a gross salary of $3,000 a month. Every month, he will receive $2,400 in his bank account ((1 – 0.2) x 3,000). His CPF will see a deposit of $1,110, which comprises $600 from his own salary and $510 from the employer contribution (0.17 x 3,000).

This $1,110 will be broken up into $690 for his OA, $180 for his SA and $240 for his MA.

CPF-OA Benefits

So luckily for us, while our money is locked up, it does come with certain benefits! CPF-OA gives us an interest rate of 2.5% per annum on our balance, and an additional 1% on top of that for the first combined balance of $60,000 in your CPF (capped at $20,000 in OA).

CPF-OA Interest

For those above 55, there’s also one more tier of additional interest of 1% for the first $30,000 in combined balances (capped at $20,000 from OA).

CPF-OA Investing Option #1: Voluntary Transfer to CPF-SA

This is a simple ‘trick’ that many risk averse people use to increase the returns on their CPF balances to increase their quality of life in their golden years.

The ‘trick’ mainly involves transferring money from your CPF-OA to your CPF-SA. This increases the returns from 2.5% to 4% in your CPF-SA which can lead to quite significant difference in the long run. In fact, this is part of the 1M65 strategy which popularises maximising the risk-free returns from the CPF scheme.

However, I use the term ‘trick’ because I feel that such a strategy does come with certain large limitations.

For one, transferring money from your CPF-OA to CPF-SA is irreversible. This means that if you ever face the need for your money to be used for housing, your transferred money cannot be taken back to be used for housing payments.

Moreover, this also caps your returns at 4% a year, which is not too shabby for a risk-free investment. But, we can definitely do better.

Enter: CPF-Investment Scheme.

CPF-OA Investing Option #2: CPF-Investment Scheme

The CPF Investment Scheme (CPF-IS) is a scheme which, as the name implies, allows CPF members to invest the money from their CPF-OA and CPF-SA accounts. (Stay tuned for CPF-SA next week!)

To be eligible for CPFIS, you must be:

  • at least 18 years old;
  • are not an undischarged bankrupt;
  • have more than $20,000 in your OA; and/or
  • have more than $40,000 in your SA.

From 1 October 2018, as a new CPFIS investor, you will need to take the Self- Awareness Questionnaire (SAQ) before you can start investing under CPFIS.

So, the rest question we’re all here for is what can you invest in and how much?

Well, the full list is here. But to break it down:

Product Type How Much Can We Invest?
Unit Trust
All after setting aside the first $20,000
Investment Linked Policies (ILPs)
All after setting aside the first $20,000
All after setting aside the first $20,000
Endowment Policies
All after setting aside the first $20,000
Singapore Government Bonds (SGBs)
All after setting aside the first $20,000
All after setting aside the first $20,000
ETFs *
All after setting aside the first $20,000
Fund Management Accounts
All after setting aside the first $20,000

*Before you get too excited, the ETFs are limited to STI ETFs, Bond ETFs and Gold ETFs

Product Type How Much Can We Invest?
Individual Stocks *
35% of Investible Savings
Property Funds
35% of Investible Savings
Corporate Bonds
35% of Investible Savings

* Before you get too excited again, these are limited to this list here! That said, many of the SGX favourites are here, including DBS, Yangzijiang and Wilmar.

Product Type How Much Can We Invest?
Gold ETFs
10% of Investible Savings
Gold Products
10% of Investible Savings

Wait, What Does Investible Savings Refer To?

Investible Savings refer to the money in your CPF-OA plus any amount that has been used for Education or Investments. If you have not taken out any amounts for investments or education, the investible savings amount will simply be your CPF-OA balance. A more detailed illustration is done here!

Another way to find your investible savings would be to login to your CPF account and to look under My Statement > Section C.

How to Start?

To invest under the CPF-IS, after completing the SAQ discussed above, you will need a CPF-Investment Account (CPF-IA) AND a broker that is compatible.

You can open a CPF-IA at any of our 3 local banks, DBS, OCBC or UOB. I don’t think you’ll try but you can only have one CPF-IA account at any time. Do also note that this is not your brokerage account and it is purely to transfer the funds from your CPF-OA to your broker when the transactions are made.

Once done, you can set up a brokerage account with any of the approved brokers here. If you already have an account with them, you can simply link it to your CPF-IA.

CPF-OA Investing Option #2.1: Endowus

A new option that has been made available not so long ago, Endowus became the first and still the only robo-advisor in Singapore to allow the use of CPF funds to be invested with them!

CPF-OA Investing with Endowus

Endowus offers a portfolio catered to your risk appetite, including global market exposure such as S&P 500 funds, emerging market funds and global index funds.

More than just that, the fees are kept low at only 0.4% per annum.

Do also note that you will be able to invest all but the initial $20,000 from your CPF-OA with Endowus if you so desire.

Another good thing with Endowus is also that everything can be handled from within their platform as they are in a partnership with UOB KayHian at the moment. As such, you don’t even need a CPF-IA to start investing with them.

Risks and Considerations

Now with every investment comes risk, and CPF-OA is no exception.

When thinking about investing your CPF-OA money, do consider if you’re likely to beat the risk-free 2.5% that CPF-OA provides. In 2019, only 60% of CPF-OA investors beat the 2.5% returns over a 5 year period.

CPF-OA Investing Risks
Photo by Rob Schreckhise on Unsplash

Moreover, do consider setting aside additional funds in your CPF-OA for short term needs. For example, if you’re currently paying off your housing loans, it would be prudent to set aside around 1 year worth of loan payments in your CPF-OA to ensure you have enough even if times get tough.

Lastly, do also remember that all profits are returned to your CPF-OA account so stop imagining all the things you’ll buy with the profits from your CPF-OA hehe.

Know anyone who is keen on making the most out of their CPF funds? Share this article with them!

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2 thoughts on “The Ultimate Guide to CPF-OA Investing”

  1. Hey man, nice blog. I found it via Seedly and looks like we’re related eh? (tortoise vs turtle)

    Are you aggregating your blog on and Don’t think I’ve seen yours on them. Will definitely boost the traffic on your blog!

    Oh yes – Endowus for CPF OA is amazing!

    1. Hey Kevin, thanks for dropping by and thank you for the kind words, nice site you’ve got there too!

      Ah, I didn’t know I could do that 😮 thanks for sharing, I’ll take a look into it, cheers!

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