2018 : CPF-IS and Interest Income Update
image credit to todayonline.com |
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 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 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 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 :
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 )
Hi STE, good to see you post again.
ReplyDeleteHi Henry,
DeleteThanks for the comment, yah, slow down a bit as compared to last year , more reading and exercise + pokemon catching nowadays.. :D
Cheers!!
More and more people are attending financial and investment events judging by speed of tickets being sold out
ReplyDeleteCongrats ! Uncle CW8888, just saw your blog on your interest and CPF-IS returned , edited my blog's figure to $500+K ,,, :D
DeleteCheers !!
Have prepared quite a sum in CPF-OA if STI ever goes down to $2.75 (which was my previous buy) or lower. I thought the end of last year would have a chance but alas, it was not meant to be.
ReplyDeleteMany people only write about how good it is to transfer from OA to SA or cash top-up (tax relief, higher interest etc), but hardly anyone touches on the cons. I like and agree with your more balance take on CPF.
Kevin
Hi Kevin,
DeleteThanks for the comments .Yup, precise market timing is hard , hope you will find good timing to enter the market by using your CPF-IS. Yes! find a balance is important on how to utilize our money in CPF...
Cheers !! :D