2018 : CPF-IS and Interest Income Update
Right after 31st Dec 2018 , I guess everyone was busy logging in to their CPF account to check what is the latest balance they have in their CPF account. Yes , CPF interest will be credited on that day and one will be able to see how much he/she got on interest income for the year of 2018.
STE doesn’t have the opportunity to feel the joy of getting year- end bonus since 2014 but instead, receiving the interest income from CPF on first week of each year make me happy same as getting the bonus. ( Not from employer but from “Ah Gong” ). We normally work hard to get bonus but in this case, we let our money work hard to generate the interest income. :D
Total $29,348.70 been credited to our CPF accounts ( for both STE and Mrs. ).
Total amount in our CPF (all accounts ) reduced to $956K as we are suffering more paper loss in our current CPF- IS holding. ( -$24,447 as of 31st Dec 2018).
As I blogged about it before, I am treating these CPF balance amount as AAA bond in my portfolio , in case anything happen to stock market when I need some drawdown. Instead of “fire sale” of my stocks’ holding, I may consider to withdraw some money from CPF.
CPF Is Not a “ Super Hero”
Allow me to just quote what I have written before.
“As mentioned , although CPF’s mission is trying to assist us in retirement / housing and health care planning , but in view of limitation or fund to fulfill these 3 objectives , we will need to make a “choice “ whether we want to give more priority to big “R”retirement or “H” housing or to find a balance that choose a house type that is within our mean , let the balance of $$ compound in our CPF ( especially SA account which earn higher interest ).
Topping up or transferring from OA to SA account also subject to much debates and have pro & cons , it depends on your own situation. 4% interest and Tax rebate may be tempting for someone to do the transfer or topping up , but some may also think that locking up our money for such long period may not be wise (especially the younger one ) as transfer is irreversible.”
My previous blog on CPF :
CPF IS : Update
My last update on CPF-IS return was in Jul 2017 where I still have around 12% XIRR (including dividend ,since 2009) , but it has since dropped to just 6% as of 31st Dec 2018.
This was mainly due to huge paper loss incurred in 2018, amounting to -$24,447 and I have done a quick calculation that my XIRR will become 0% if the portfolio value would have to down by another -23% , which is definitely possible if we are going to have crisis.
Investing using CPF money is really tough as we have opportunity cost of 2.5% interest rate if we just simply leave our money in CPF and also, we don't have “luxury” of doing the dollar cost averaging due to limited fund. As such , perfect timing is the key and most important issue under such situation and of course the best timing to invest will be during crisis.
I have blogged about it ( here ) : CPF-Investment Scheme – My Experience
But how many of us can really have that acute investment sense and knowledge like Uncle CW888 , who managed to made
$300K+ $500+K in CPF-IS and to have $ 1 MIL in
his OA account.
You may find his story here ( Link : How I accumulate $1 Mil in CPF OA )
Different strokes for different folks , everyone will have their own way to accumulate wealth and no one size fits all policy or strategy on how to make use of our CPF money. Eventually, a choice would have to make by your own self base on your needs and circumstances.
I still have $30+ K as war-chest could be utilized under CPF-IS , will have to use it carefully in order to improve my XIRR on CPF-IS.
How about you? Are you using your CPF money to invest and what is the investment returns for your CPF-IS?
Appendix : TTL Return on CPF-IS (including dividend and unrealized profit or loss )