Changes to CPF Investment Scheme

Dear Mr. Tan,

From 1 April 2008, there are some restrictions on investing CPF money in financial products. My insurance agent advise me to invest before the deadline. Is this a good move?

REPLY

If you keep your money in CPF, you can earn 2.5% + 1% bonus on ordinary account or 4% + 1% on special account. This is a good rate of return.

Most life insurance products offer a lower return, in spite of a slightly higher risk. This is due to the high charges taken away by the insurance company to pay agent's commision and for their profit margin.

If you wish to invest your ordinary account, you should select a low cost investment fund. Read this FAQ:
http://www.tankinlian.com/faq/savings.html

If you are not sure, it is better to keep your money in the CPF and enjoy a fairly attractive interest rate, with the bonus.

Read this article from Dr Money:
http://newpaper.asia1.com.sg/columnists/story/0,4136,153456,00.html

More articles:
http://www.tankinlian.com/drmoney/