draft (subject to change)
1. How can I get a better return on my CPF savings?
Your savings in the CPF earns for you an interest rate of 2.5% per annum (ordinary account) or 4% per annum (special account).
If you invest your savings in our Combined Fund (which is allowed by CPF), you are likely to get a higher return. This will give more money for your retirement.
2. How much more can I earn?
The following table shows the amount at the end of 10 and 20 years, if you invest $100,000 of your savings:
Annual return over the term ..........
Term 2.5% 4% 6% 9%
10 years $128,000 $148,000 $179,000 $237,000
20 years $164,000 $219.000 $320,000 $560,000
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $128,000 at the end of 10 years. If you invest this sum to earn 6% per annum, it will grow to $179,000. You can get $51,000 more, by investing to earn a higher return.
If you keep $100,000 in the CPF to earn 2.5% per annum., you will get $164,000 at the end of 20 years. If you invest this sum to earn 6% per annum, it will grow to $320,000. You can get $156,000 more, by investing to earn a higher return.
If you can earn 9% per annum, the difference is $109,000 for 10 years and $396,000 for 20 years. It is staggering.
I have shown the figure above for the special account (which earns 4% per annum). You will find it attractive to invest your special account to earn a higher rate of return.
The return of 6% and 9% are used for illustration only. We want to encourage you to find out more about other ways to invest your CPF savings to earn a higher rate of return. It is worth exploring.
3. Do I have to invest in risky investments?
There is some risk in investing in equities (i.e. shares of companies) and in bonds (i.e. issued by companies or governments).
You can reduce the risk in the following ways:
* invest in a large, well diversified fund - reduce the impact of some investments performing badly
* invest for the long term - to average out the good and bad years
* invest only in quality shares and bonds - the return is still attractive, and the risk is low
If you choose this investment strategy, you are likely to get the market rate of return. Here are the returns for the past years:
10yr 20yr 30yr
Global Equity MSCI World (USD) 6.4% 8.7% 9.1%
Singapore Equity STI (SGD) 5.4% 10.1% N.A.
Global Bond LBAG(hedged to SGD)3.1% N.A. N.A.
Over the past 10 years, global equities earned an average yearly return of 6.4% and Singapore equity earned 5.4%. The return over 20 years and 30 years are better.
4. Do I have to incur high charges?
The investment funds offered by NTUC Income have lower charges, compared to similar funds in the market.
Our initial charge is 3.5%, compared to an average of 5% charged by other funds. Our annual charge is about 1% per annum, compared to an average of 2% charged by other funds. Other funds may have hidden charges that are not disclosed in the reported charges.
Over 10 years, our lower charges can earn for you about 10% to 20% more than similar funds.
If your investment in our funds earn $200,000 for you, another fund may pay you $20,000 to $40,000 LESS, due to their higher charges! This is a lot of money.
It is better for you to invest your CPF savings with NTUC Income. We will take care of your interest and give you a better return.
5. What fund should I invest in?
We recommend that you invest in our Combined Fund. Here are its key features:
* the Combined Fund is invested in $3,800 million of underlying assets
* the fund is invested in over 900 quality assets (ie equities and bonds)
* the assets are managed by 9 top fund managers based around the world
* the annual charge is among the lowest in the market, i.e. about 1% per annum
* the fund (growth) earned an average of xx.x% per annum during its first three years (2003 to 2005)
Note: Past performance is not indicative of future performance. This investments are subject to risk. The returns are not guaranteed.
6. Can I withdraw my investments at a later date?
You can withdraw your investment at any time.
We advise you to invest for at least 10 year, so that you can benefit from the higher return, and average out the good years and bad years. It also allow you to spread the initial front-end charge over a longer period.
If you decide to withdraw, wait for a good time, when the investment have appreciated in value and produce a good profit to you. Do not withdraw at a bad time, and make a loss.
If you invest using your CPF savings, the withdrawal have to be credited back to the CPF account.
Some people wish to withdraw their investment to pay for a property. They should consider taking a bigger loan for the property. If the interest on the loan may be lower than the return from their investments in our Combined Fund, it is better to keep your investment in the Combined Fund.
7. How can I find out more, before I invest?
You have these options:
* visit our website, www.income.coop/xxxxxxx
* visit our business center and talk to a consultant (call 6877 3366 to make an appointment)
* contact your insurance adviser to visit you at home
* attend our weekly eduational talk (call 6877 3366 to register)
8. Can I invest my cash savings?
You can invest your cash savings as well. It is better for you to take your savings out of fixed deposit and invest in our Combined Fund.
If you have invested in other funds that levy a high charge, or give you a lower than average return, you can withdraw from that find and re-invest in our Combined Fund.
9. Is this a good time to invest?
The stockmarket has corrected during the past two months. Many of the funds are now cheaper by 5% to 10%.
This is a good time to invest, for the long term. The investments are likely to recover in value over the next 6 to 12 months. (This is just an opinion, and is not a guarantee). You should act now, to take advantage of the lower price.
10. Is there a promotion offer?
We have a promotion offer for a limited period. If you come to our business center or our branch (to see your adviser), you can get a bonus unit of 1% or 2% depending on the amount that you invest.
For example, if you invest $100,000, the bonus unit of 2% will give you an additional $2,000 of investment.
11. How do I invest?
You can call your insurance adviser or visit our business center (call 6877 3366 to make an appointment). You can call the CPF to get a statement of the amount that you can invest.
Act now. Do not miss this attractive offer.