If you are unaware… the CPF Board has just increased the Minimum Sum amount for 2012 which means that if you are in that particular eligible group – you have to ensure that your retirement account must be at least at the stated amount.
And if you are sighing and complaining that this is unfair… this trend is here to stay and I have also shared in my previous post on the rationale behind this annual increment.
So What Can You Do To Help Grow Your CPF Account And Better Prepare For Retirement?
For a start, at this point of writing, the economy is not in a good state and there’s a recent report that almost majority of CPF monies that have been taken out to invest (in plans like Unit Trust or other form of Equities) have yet to make profit (means these people are losing money) – which is a dangerous sign!
Why You Should Not Invest In Unit Trust With Your CPF Monies If You Are Not Too Sure Of The Future?
If you are currently served by a Financial Planner who is very keen to sell you some Unit Trusts using your CPF Monies -do you know that he/she gets to earn a one-time commission fee (certain percentage from the initial amount) and a trailer fee (certain percentage from the onset value, e.g. the amount after every 3 months period). And these fees are deducted regularly (until you decide to terminate) regardless of the economy. Therefore if your Unit Trust Fund is not performing and fees are deducted… it will just get harder for you to break even and make a profit!
Unless your Financial Planner has a good track record of managing investment portfolios for CPF monies during the good and bad times (preferably at an average rate of more than 4% per annum after all the necessary fees)… my suggestion is that you are better off not investing away your CPF monies. Do not even be persuaded that you get the benefit of terminating the plan as and when you need the CPF monies back to the Account (unless the Financial Planner can prove to you that at the point of you terminating the plan, you will still get some profit).
So What Can You Do With Your CPF Monies If You Want It To Grow?
As far as I know, the safest way to invest (even when you have your own spare cash) is to invest in your CPF Ordinary Account and CPF Special Account which have been enjoying 2.5% per annum and 4% per annum respectively. And if you have set aside enough in your Ordinary Account (after taking into account of having to set aside for new house/monthly house loan repayment and/or for children’s university education)… you can always transfer the rest to the Special Account to enjoy the extra percentage!
If you have concerns that you may lose your job in times of uncertainty and you need your Ordinary Account to remain as it is… this is a common concern for most people but this can still be taken care of if you can do some planning for it. For instance, do up a contingency plan like how long you will give yourself to find a new job if things go awry to resume contribution to your CPF accounts. And if you need to pay a certain $X amount for loan repayment and lump sum of $Y for Children’s Education, you can calculate all these out to get the certain amount you need to have at all times. Any amount beyond that can be transferred to the Special Account to grow the money!
And if the amount is far from it, you can always top it up when you are still working.
Do Not Be Misled…
If you have been told by others that you will not see your money once you have it in your CPF Accounts… these people are just not concerned about their Retirement Planning. If you are truly concerned and looking forward to having some level of retirement lifestyle… making sure that your CPF Monies grow internally is a factor that you must consider and you will definitely see your money when you are retired…