CPF - Investment Scheme

Taken from CPF:

"No one can guarantee that investments under the CPF Investment Scheme will always be profitable. CPF members have to decide for themselves how to invest their savings, and what risks to accept, and exercise prudence and care in investing their CPF savings to ensure their financial well-being after retirement. If they are not confident of investing on their own, they should leave their money in their CPF account which earns interest and is risk-free."

Look at the above bold words before you proceed.

Remember that high returns means higher risk. As I mentioned earlier CPF articles, you can invest with both Ordinary or Special Account saving. The difference is the types of investment you can do, please refer to the table here. As you can see if you are using Special Account for investment, it is limited to some investments most likely low risk as I mentioned earlier.

Now to investment. What you need to know is why you are doing it. Ask yourself, why you want to invest. Most probably you will say you want to be richer than now but do you really ready for it? In order to invest you need spare cash to secure your life and maintain the liquidity of your asset. Think also how much risk can you take because you are spending your "coffin fund" (as Chinese saying) into the investment pool. Below is list of questions to ask yourself:

Question 1: Why you want to invest? Fast multiplying cash? Get some extra cash? How much richer you want to get?

Question 2: Have you secure your life? If your investment failed, how much it will affects your life?

Question 3: What is your risk tolerance? Do you have investment know-how?

Answers: If you want to fast multiplying cash you need to take higher risk and vice-versa. Getting burnt with your CPF funds may not affect your life now but for long-term compound interest you might need to think. If you are near to your retirement, you might need to plan short term investment plan to avoid "tied" by your investment. (resulting you to sell your investments at unattractive price)

After you have decided to invest, you can go to next step. Next step, know types of investment (risk and returns). See you in next article.