2018 : CPF-IS and Interest Income Update

image credit to todayonline.com

Right after 31^st 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 the first week of each year make me happy same as getting the bonus. ( Not from the employer but from “Ah Gong” ). We normally work hard to get a 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. ).

The 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 31^st Dec 2018).

As I blogged about it before,  I am treating these CPF balance amount as AAA bond in my portfolio, in case anything happens to the stock market when I need some drawdown. Instead of “fire sale” of my stocks’ holding, I may consider withdrawing 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 fulfil 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 chooses a house type that is within our mean, let the balance of $$ compound in our CPF ( especially SA account which earns higher interest ).

image credit to cpfboard.com

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 the long period may not be wise (especially the younger one ) as the transfer is irreversible.”

My previous blog on CPF :

HDB , Condominium or CPF ( for Retirement )?

CPF Interest 2017

CPF IS: Update

My last update on CPF-IS return was in Jul 2017 where I still have around 12% XIRR (including the 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 a 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 a 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 CW8888, 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?

Cheers !!

Appendix: TTL Return on CPF-IS (including dividend and unrealized profit or loss )