Investing in 2.96% p.a AAA Bond

Ops !! sorry, clickbait ... :D 

Not investing in any corporates or government issued Bond but Mrs. STE and I just doing the voluntary contribution to our CPF accounts recently. We can't do the RSTU( Retirement Sum Top Up) since our SA (special account) already exceeded the FRS ( and BHS for MA already above $63K) but we still can do the VC3C ( Voluntary Contribution to 3 accounts ). The amount will be split into SA and OA with average interest rate of around 2.96%. For us, this is like 4 years bond with 2.96% coupon rate p.a since we still have 4 years to reach 55 years old.

This might not be a good option for those who are still young and have many years to reach 55 since the top up is "irreversible” not like investing in bond where you still can sell it in secondary market when you need the money.  Alternatively, you may consider to top up your SA or MA if both account still not reaching the FRS or BHS since you can enjoy the higher interest rate (4% for MA/SA) and also having tax relief from IRAS.


 CPF Cash Top-up Relief <source:>

6ways to optimize your CPF for retirement <source : DBS FinancialPlanning NAV>


 Market had gone up much after hitting Mar 2020 low level with improving economy situation and progress of vaccination. Of course, not all country is doing well in controlling the spread of virus, new cases keep increasing in country like India / Brazil or even Japan. 

The road for economic recovery will not be even for all country, depending on the progress of vaccination and how soon they could open up the economy after achieving herd immunity like the case of Israel. 

"JERUSALEM — Israel is partying like it's 2019. With most adults now vaccinated against the coronavirus and restrictions falling away — including the lifting this week of outdoor mask requirements — Israelis are joyously resuming routines that were disrupted more than a year ago and providing a glimpse of what the future could hold for other countries.

Restaurants are booming outside and in. Concerts, bars and hotels are open to those who can flash their vaccine certificates. Classrooms are back to pre-covid capacity.

The rate of new infections has plummeted — from a peak of almost 10,000 a day to about 140 — and the number of serious coronavirus cases in many hospitals is down to single digits. The emergency covid-19 ward at Sheba Medical Center near Tel Aviv resumed duty as a parking garage, and waiting rooms are suddenly flooded with non-covid patients coming for long-deferred treatments." Source:  The


Since market had gone up much and the probability of wining the market no longer as high as investing during March 2020, instead of keeping the cash in bank with super low interest rate, topping up your CPF to enhance your retirement fund might be a good idea, of course depending on your investment horizon and stage of wealth accumulation.

Topping up CPF is a tricky issue especially for younger generation since the money would be “locking up” for awfully long time if you are at 20 or 30+ years old. As I mentioned before, I treat the CPF as long-term AAA bond with 3+% of coupon rate p.a. Since most of my fund is invested in equity market with extremely high volatility, having higher CPF balance allow me to “sleep better” regardless of what happen to equity market.


Asset-Rich , Cash CPF-Poor


As I blogged about it before, CPF is not a “ Super-Hero “ , we have to strike a balance between housing and retirement requirement in using CPF to buy property. I know many are using CPF up to max to upgrade to bigger house or landed property and some might think to monetize their property and downgrade it to smaller house once they need the money for retirement.

*Regrossed balances include amounts withdrawn under Investment, Education, Residential Properties, Non-Residential Properties and Public Housing Schemes as at end of year.


Based on above data, still we have around 47% of CPF members in 45-60 years old are having less than $200K in their CPF “regrossed balance” *. Since this group is approaching retirement or already in retirement like those in 60 years old, having such low CPF balance is quite worrisome as I would assume that $200K is bare minimum to cover the basic expenses if we would have to take the CPF life payout as benchmark.

Hench, under current super-low interest rate environment, doing the RSTU to enjoy the 4% interest rate at least up to the FRS for those above 45 years old could be a good option.


More detail can be found from the annual report from CPF Board : here

Do We Need $4.3 Mil To Retire In Singapore ?

‘Financial freedom’ costs US$4 million in Hong Kong, second only to London, data from property portal Juwai shows <source:>


Ok, $200 K may be is just a bare minimum for retirement, but do we really need $4.3 Mil to achieve financial freedom in Singapore?

Well, it depend on your desired lifestyle for retirement or so called Fat F.I.R.E “ or “Lean F.I.R.E “.

Our friend (Kyith from <>) had a great article about this and done some calculation base on different circumstances and assumptions.


Does Your Desired Financial Freedom Lifestyle Cost SG$4.3 million? I break down the numbers realistically. <>



As I mentioned earlier, topping up CPF is a very tricky issue and CPF is like “durian”, either you like it (believe in the system) or hate it (Return My CPF Money @ Hong Lim Park ) and by the way , retirement planning is also very personal, up to individual to choose which path to follow.

For us ( Mrs STE and I )  , we choose to “believe” and enjoy the ‘8th wonder of the world “ , getting close to $30K p.a of  interest and dividend (CPFIS) from CPF and we will continue to “believe “ the system by doing the VC to our CPF in next 4 years until we reach 55 years old.


Do you like to eat durian ?

<Image credit to :>

Do let me know.


Cheers ! :D






Please take note that % CPF Contribution allocation ( to each accounts) differ by age group.

The average 2.96% only apply to my age group < 50-55 Years Old> , you may refer to below table from CPF board to calculate the average interest rate base on your age.


CPFContribution and Allocation Rates <source: CPF Board>




  1. We will begin to like CPF when we enter into our 50s; especially under current low interest rate environment.

    1. Yes !! Indeed... the bond maturity is also getting shorter! :D

  2. Just curious, how do age 20-30 reach half a million dollars in CPF.
    May be start working since 13 and max out each years CPF limit plus insane returns on investments ?

    1. Hi PPPP,
      Yah, this is the "talking points" among bloggers and investment community now !
      The "magical #10" , I think could be contribution from "parents" since young ( or born) . Parents can do the SA or MA top up for their child ( to get higher interest rate ) or doing the voluntary contribution to 3 accounts (VC3ACs ), is doable if they put in $25K /per year with compounding interest of say 3.5% average, their kid's account would have close to $1 mil by age of 25.
      But I think is a "tricky issue ", highly controversial and not advisable and that's why not many people will do that.
      Please do let me know if anyone have better explanation on this.
      Cheers ! :D

  3. I know people who don't invest put everything in there. No diversification. Trying to recall if I got 5%+ SA and 3% OA long ago. 😇 a good tool but use moderately.

    1. Hi Henry,
      Yes, although let $ compounding in CPF is good in the long run but as you said , is better to have some diversification, not "all in" into CPF , same like building a portfolio.
      Cheers ! :D


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