Sunday, November 25, 2007

Keep in the Special Account

Hi Mr. Tan,

I was told that CPF Special Account will be 'locked' with effect from 1st Jan 2008. No more investment will be allowed from this account.

I like to make invest $12,000 from this account now to earn a higher return. What is your advice? Where can I get a better return?


My advice is: Keep your money in the Special Account to earn 4% plus 1%, free of risk. This is the best investment available now.


Anonymous said...

4%(guaranteed)plus 1% (up to $40K of SMRA only) is only for the first two years 2008 & 2009. After that the 4% changes to long term bond rate which may be less or more but it will be minimum 2.5% as mandated in the CPF Act. Hope that it will be more. If it is less than 4%, those with more than $40K in SMRA will be worse off than now. Can anyone advise or correct if I'm wrong?

Anonymous said...

It can be worse off . If you look at the 12month yields of the 10yr bond the average is less 3%.After 2009, the first 40K from SMRA might be less 4% and excess less than 3%. OA will remain attractive at 2.5+1 and 2.5%.
What you can do is to seek a qualified adviser to help you out with your investment.
But don't ever get an insurance salesman because the likely products they will sell to you are those single premium endowments which can be worse. Remember the CPF rates are risk free,the endowments are not.
CPF is your nest egg and to ensure that it grows bigger be careful to choose your adviser. You may get a fox disguised as consultants, advisers or planners. Nowadays the insurance salesmen have that kind of fanciful titles. Be careful of those with a lot of logos like MDRT, COT, TOT.The logos only tell you they are superb salesmen;they might even imply how many customers they have ruined.They do not tell how they have helped their clients meeting their needs.

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