The Ultimate Guide to Investing With Your CPF-SA

CPF-SA Investing Guide

Now, after discussing investing options for our CPF-OA, it is only right that we discuss our options with our OA’s other half, our CPF-SA!

What Is the CPF-SA and What Is It For?

Like the CPF-OA, the CPF Special Account (CPF-SA) is one of three accounts in our CPF accounts. And like all accounts in our CPF, the CPF-SA serves its own purpose as well!

The main purpose of the CPF-SA is to provide for the retirement of Singaporeans, in their later years. This is also why the CPF-SA cannot be used to pay off housing payments or educational needs!

Remembering last week’s table, the percentage of your wage that is deposited into your CPF-SA are as follows:

CPF-OA SA allocations

CPF-SA Benefits

To help us achieve our retirement needs, the CPF-SA does provide quite a significant interest rate (risk-free no less). CPF-SA provides a base rate of 4% interest per annum on your balances. Like the CPF-OA, CPF-SA balances are also subjected to additional interest of 1% on the first $60,000 combined balance (capped at $20,000 from CPF-OA).

Moreover, for those above 55, there is an additional 1% on top of it all for the first $30,000 combined balance held in CPF (capped at $20,000 from CPF-OA). This brings the total interest rate on your first $30,000 to a whooping 6%!

Not too shabby eh?

CPF-SA Investing Options

Just like the CPF-OA, the CPF Investment Scheme (CPF-IS) also extends to the CPF-SA! This allows us to use our CPF-SA to invest in a variety of products to compound our wealth over time for our retirement needs.

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.
As with investing with CPF-OA, 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. 

However, because the CPF-SA is solely to provide for retirement, it is restricted in specific ways to reduce the risk that our CPF-SA money can be exposed to, so as to prevent us from blowing it all in the stock market.

After setting aside the initial $40,000 in your SA, the products you can set your money to work to are:

Product Type Any Limitations?
Unit Trust
Yes, only lower risk Unit Trusts allowed *
Investment Linked Policies (ILPs)
Yes, only policies investing in lower risk Unit Trusts allowed
All after setting aside the first $40,000
Endowment Policies
All after setting aside the first $40,000
Singapore Government Bonds (SGBs)
All after setting aside the first $40,000
All after setting aside the first $40,000
ETFs *
Yes, only lower risk ETFs allowed

*The full list of Unit Trusts can be found here

And that’s the whole list!

So Where Do I Sign Up?

Well, you don’t have to!

One ‘good’ thing about CPF-SA investing is that you don’t need another account to invest with your CPF-SA, unlike the CPF-OA where you need a CPF-IA to administer your funds.

cpf-sa fund administrator
cpf-sa fund administrator

Instead, you can just approach the investment fund providers directly. Personally, I think going through one of the fund administrators (like FSMOne) is the easiest way if you’re looking for a Unit Trust to jump into as they consolidate funds from several Fund Management Companies. This also makes it much easier to compare the funds in terms of costs, performance and holdings.

Risks and Considerations

Now, although this whole process may have sounded quite similar to investing with your CPF-OA, it does come with slightly different considerations.

Do remember that your CPF-SA provides you with 4% (5-6% if bonus) interest, which is much higher than your CPF-OA. This also makes it much harder for investors to beat these ‘risk-free’ returns. It sure doesn’t help that the options you have are lower risk options (which generally return less as well). As such, do carefully consider your aims in investing your CPF-SA funds.

Lastly of course, just like your CPF-OA, all profits return to your CPF-SA anyways, so unless you’re closing in to 55, you still won’t see that money for a loooong time haha.

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

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