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CPF versus CASH

Hi billywows,

I'm just wonder if you avoid from unit trust & funds, so how can you utilise the remaining of your CPF-OA beside the stock limit?

so in your opinion is better to let the CPF money sit there and generate 2.5% interest?

 

Hi shplayer,

I'm impress with you way of telling them off, indeed 10k with guarantee 5% returns annually + capital protection can be better of then any financial product in the Mkt =)

My insurance agent also AKA as "Financial Advisors" is trying hard to get me on boat, but I really find most of them just dun have enough knowledge in investment. "indeed I think worst then me" when Mkt go south then they just keep asking you to switch funds... like that kelong tikam tikam I also can be "Financial Advisors" la.... lolx.

Btw I have no choice to buy my insurance with the "Financial Advisors" aft meeting lot of half-pass-six "Financial Advisors" awful experience!!

 

Haahaa!! Good move, Shplayer .......

I just wanna add: Keep away from unit trusts, invest your money yourself. Even if you do get burnt, its not so sore as letting those 'fund managers' screw you up.

Keeping CPF money in the OA generate 2.5% interest, its better to invest it wisely in stocks. But if you are going to buy a home soon, please forget about using CPF to invest until you have spare fund left hor.

Trade with care ya!

 

Whenever I am approached by these so called "Financial Advisors' to invest in unit trusts or other instruments, I will ask them what will the expected returns be. Whatever the figure is.....say they tell me 5% returns....I will then ask them if this is guaranteed. Without exception, they will say there is no guarantee.



I will then tell them, "OK, you place at least 10k with me for 5 years and I will guarantee you 5% returns annually. At the end of 5 years, you will get your capital back."  This has always got them to shut up and drop their sales pitch....

 

hi chipchip66, no mention it, as I am also learning by each day. Wish you all the best in your investing. 

 

Hi tonersweat,

any way I agree with ya that the "FundManager" are real "sucker"

=)

 

ya I also learnt my lesson the hard way too, but didn't cut lost!
bought the Schroder S$ Enhc Return Fund 4 yrs ago where I got no idea abt investment.. the banker just sweet talk their way and really pissed me off this day.

Well at least I still didn't giving up, trying to used fundsupermart as a cheaper platform to investment my un-touchable CPF saving =)

 

I agree with OngHuiH that buying unit trust is loosing money . I paid high price to learn lesson . Imaging putting ur hardearned money in the hand of the "fundManager". I have bought DBS growth protected fund and hold it for 4 years till maturity. Guess , Guess, what  is the return when investing 10000, you only get back 10100 after 4 years.  "FundManager" are so called expertise when come to investment. This is one of the  example. I rather cut lost then wait for maturity which I am holding DBS swing 5.02 , I still loose money after 4 years.  If you tell other "bank" advisor , they will tell you because you buy the wrong product , you are stupid  or no luck. Then they will sweat talk and get you to fall into another trap to loose money.

 

Hi Yong Jiu

Tks alot for the information.

 

Hi whizzer,

Yes you can invest your OA investible savings:
- 10% in Gold
- 35% in Share / Corporate Bonds / Property Funds
   (or real estate investment trusts)
- 55% in professionally managed products. (Unit trust / Bond fund)

PS: Corporate / Government Bonds is different from Bond fund.

below is the list of Unit trust / Bond fund that is included under CPFIA OA: http://www.fundsupermart.com/main/fundinfo/generateTable.svdo

 

Hi, correct me if i'm wrong for i understand that only certain percent of the OA can be used for shares, certain % for "professionally managed products". Is unit trusts/bonds under the "pro managed product?" 

If i use what can be used for shares, then what about the remaining? any suggestions?

 

oh yea,   to quote someone  "" ïgnorance is even more expensive!"  I lost about 50K investing in Unit Trusts. 

Ever since I learnt how to trade in shares using both CPF and cash,  anytime, my gain is better than any fund managers............   I paid for my initial ignorance on the importance of learning how to trade .....

 

Expensive?  It is relative.  Supposed you invest $40K CPF money in SPH at 4.02 which I do,  today, you are sitting on a beautiful gain of about $2,000.   Gain in a short time 5% ..... 

In fact, I am thinking of disposing my CPF unit trust and put them in shares .... of course picking the good counter is important.

And btw, even SMRT at today price ....... juz on Dividend alone, is more than 4% annually .......

So, u can do your own calculation ........

 

I agree it is very expensive to use CPF to buy share.  Anybody can advise which bank offer lowerest commission charge when using CPF to buy share

 

Thank you for all your responses. Good luck to all...

 

Tks roguetrader for the correction!

 

Hi there,

I would like to share this very interesting artical from todayonline.com

High cost of unit trusts
Most CPFIS investors couldn?t even beat Board?s 2.5% interest
Letter from LEONG SZE HIAN

I REFER to the report, ?Rich Singaporeans are Asia?s top shoppers?
(Oct 4), which states that ?a third now own unit trusts, about 20 per cent more than last year?. Considering this, it is time to level the playing field for unit trust investors.

For the first time in the history of the CPF Board, it has just published
on its website, a CPF investment Scheme (CPFIS) Simplified Funds Report, in addition to the usual full quarterly Standard & Poors CPFIS Report.

According to the report, ?quadrant A (funds with above-average
return and below-average risk) might be seen as the most optimal choice where the fund managers had managed to produce relatively higher returns while minimising the funds? volatility?.

In the three years to June 30 this year, only 11.11 per cent of CPFIS-included unit trusts were in quadrant A while the figure
for investment-linked insurance products (ILPs) was 9.33 per cent.
Quadrant D had only 10.61 of unit trusts and 8 per cent of ILPs. This category, for funds with below-average return and above-average risk,
is the least desirable outcome.

Although the actual percentage is not given for quadrant C (below-average return but below-average risk), from the chart given, I estimate the percentage of funds in C to be the majority ? about 50 per cent.

The above is perhaps underscored by the fact that after 11 years of the CPFIS, about 75 per cent of investors did not beat the Ordinary Account?s 2.5 per cent interest on a cumulative basis.

CPF members have invested more than $29 billion of savings in various investments.

The expense ratio for CPFISincluded unit trusts was 15.21, 1 per cent higher than for ILPs in the higher risk, medium-to-highrisk and low-risk categories.  In the low-to-medium-risk category, the expense ratio for unit trusts was 5 per cent lower than ILPs. What is perhaps more telling
is that the highest expense ratio among unit trusts in the higher risk category was 5.57, compared to 3.11 for ILPs.

If a CPF investor is paying 5.57 per cent expense ratio in a year, what is the probability and potential of making money? Instead of just unit trust and  ILP statistics, I suggest that future reports calculate the differences
in expense ratios to help investors make discerning decisions. This
may also help advisers to make recommendations and drive the
industry to give preference to recommending lower-cost options
to consumers.

I understand most studies and research show the most significant
factor in long-term fund investment success is a portfolio?s average expense ratio over time.

There are more unit trusts than ILPs. A search at www.fundsingapore.com, an information service by the Life
Insurance Association and the Investment Management Association
of Singapore, returned 891 unit trusts and 214 ILPs.

I understand that investors  who walk into a financial institution
are generally recommended unit trusts rather than ILPs, despite the former?s relatively higher expense ratio.

Why is this so? On an absolute percentage of fund size basis, the same fund manager?s payout expense to distributors is generally higher
for unit trusts than ILPs. In other words, an adviser recommending a unit  trust is typically paid a trailer fee every year on the total assets managed, compared to an ILP, which pays the intermediary only once in the first year.

To what extent has the above contributed to the generally higher expense ratio of unit trusts, relative to ILP? Unless the playing field is levelled, CPF investors may continue to pay more but may end up with less for their retirement.

 

You may try "fundsupermart" or "DollarDex". Both are CPF-OA investment adminstrator. It charges $2.50 regardless of number of units and number of funds within the same day. Banks charges $2.50 per 1,000 units or part thereof subject to a maximum of $25 per fund. Quarterly charges $2.00 regardless of number of funds, whilst Banks charges $2.00 per funds.

See illustration for fundsupermart:

http://www.fundsupermart.com/main/home/cpfia.svdo

Have not tried "DollarDex". I think it is the same.

 

There a cap on the charges, with a specific range. But not until $100 for 50 lots. Click on the below link and got to Annex D

http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/Investment/INV.htm

 

I am using UOB and they charge me $2 per lot per trade and $2 every quarter. So if you buy BBR now for 50 lots per trade, then the costs would be like $2 x 50 lots = $100 plus you have to pay for brokerage and CDP fees and the price of the BBR. Expensive but during a bull market, should be able to make money using CPF. Any better banks out there with better rates?