Dear Mr. Tan,
I recently got approached by a friend working in an investment company to invest my CPF ordinary account into equities and fixed income plans and my CPF special account in endowment insurance.
As the government plans to cap the amount in 1st April, she advises that I invest 90% of what I have so far in both accounts and leave enough to pay off fees incurred. Is this advisable?
REPLY
It is better to leave your money in the CPF to earn the attractive interest rate and bonus paid by the government. After 1 April, you can consider investing the excess (above the caps eligible for bonus interest) in low cost investment funds.
Do not take the advice of your friend as you will be incurring high sales charges, and will get a poor return on the investments (after the charges).
Read this FAQ:
http://www.tankinlian.com/faq/savings.html
Beware of insurance agents eyeing your CPF, especially those who ask you to invest your specail account in single endowment. I have been approached few times by ntuc agents to invest in single premium endowment growth plan.The growth plan give about 4% and not guaranteed whereas CPF give 5% and thereafter 4% guaranteed. The agent said CPF no insurance but growth got insurance.
ReplyDeleteWho cares about insurance.i have enough at my age but she said extra never mind. I think the agent is desperate or she didn't care about peoples money. The next time i will tell her off and ask her to vissit Mr. Tan blog