Investing is very important in business. In fact, it is not only businessmen who can invest. The act of investing in primarily to get profit. This profit might come in form of housing, funds for some critical surgery among other things. Every person who invests does so with the sole purpose of getting profit. However, as good as investing might be or seem, it is suicidal to invest in any business or venture that will be unprofitable. After citing this premise, it adds up to the fact that investing is good but investing right is much more important.
Without roaming around in circles, let us then proceed to the subject of this discourse; What is CPF?
Primarily, CPF is an acronym for Central Provident Fund, a mandatory program for all citizens of Singapore, who are working. The fund is directed to securing the future of working Singaporeans so that when they want to acquire basic and essential things such as housing, healthcare among other things they will not be stranded.
It has been discovered that in Singapore, it is only a small number of citizens who know how to invest their CPF in shares. It has also been discovered that those who leave their CPF alone over the last twelve years have raked in more profit.
In spite of the attendant benefits of CPF, a lot of Singaporeans have continually complained that they never see the money which they’re keeping. Also, they have also lamented that in the face of inflation, the interest rates that CPF yields are too low.
After citing the premises above, it is pivotal for us to look at the current interest rates of CPF. The CPF accounts vary in names and interest rates. For the ordinary account, the yearly interest rate is 2.5 percent which can rise up to 3.5 percent. Also, it has a bonus rate of +1 percent; for the special account it is 4 percent, Mediasave is also 4 percent which can rise up to 5 percent while the retirement account also has a rate of 4 to 5 percent.
You are probably asking yourself, how do I use CPF to invest, right? Sit back; here are some tips on investing
How to Invest with CPF
In order to invest with CPF, there are some ways and modalities that must be adhered to in order to get the best out of it. These ways and modalities are;
- In order to invest in CPF, you have to be eligible
Before investing in CPF, you must first have a Central Provident Fund investment account. In addition to that, anyone seeking to invest in CPF must be eighteen years of age, must not be corrupt nor bankrupt among other things. Also, for those who are opening an ordinary account, they must have an account balance of twenty thousand U.S dollars while the Special account must have a balance of forty-thousand U.S dollars.
Although eighteen is the required age to invest under CPF, it has been discovered that at eighteen, a lot of teenagers who still have raging hormones rather waste a lot of the money they are supposed to invest on dating. Therefore, by the time they approach the age for retirement, they have little or no money left in their CPF account. This is why it is important that at a young age, people, especially teenagers begin to invest right.
- Things you can invest CPF in
It is possible that anyone reading this article is probably of the notion that since they have a CPF account and have savings therein, they can just withdraw funds from the account and do as they wish. Sadly, this is not so as very specific products have been listed and stipulated in which you can invest CPF funds. Some are listed below;
- For the ordinary account, you can invest in Singaporean government bonds. This is also applicable to the special account
- Under the ordinary CPF account you can invest in ETF’s. This is also applicable under the special account but not higher risk ETF’s
Also you can invest in Unit Trusts under the ordinary account. Under the special account, you can invest in Unit trusts but not the higher risk Unit trusts
- Returns of CPF
While discussing about the returns of CPF investments it, it can be very difficult to ascertain as the range of products which one can invest in vary. An instance is that of unit trusts, which bring higher returns and higher risk while the Singapore government bonds yield lower returns and lower risk.
In addition to this, it is important to invest in the right thing, company or product at the right time. For instance, by ordinarily leaving your money in your CPF account, you are guaranteed an interest of 2.5 percent per annum in the ordinary and 4 percent in the special account
In conclusion, it is important that one invests under CPF because it is a guarantee for the future. Also, it helps one in times of critical need as the interest and returns that accrue to the investment, when done rightly are juicy