Tuesday, March 25, 2014

CPF... Cheating People Fund? Really?

Have been surfing the web and chance upon many post about CPF and how it seems to be taking monies from us and we never see it. Many is complaining about how we will never see our CPF monies. 

It's amazing how many of these information is publicly available but many still choose to rant and rave and not bother to go find out about it themselves. Though I have to agree that CPF seems to handle too many things and they try to put all that information on the website and it's kinda cluttered but still the information is there. So if any of you need information on CPF you can go to www.cpf.gov.sg

Many people has questioned that why is CPF taking our monies? CPF traditionally was formed to help us with our housing, education and retirement needs. Though with the pace of progress and with inflation, CPF cannot fully meet all those needs now. But it will still meet some. Many will have read the article posted on Facebook that there are people at 35 but with no savings... But the article did not mention they have CPF! They may still buy a house even if they have no cash savings. Nothing fancy but it's still a roof over their heads. 

Many is also planning to use their CPF for the education of their children in a local tertiary institution. 

For retirement, many complain that we cannot withdraw our monies at 55 if we do not meet our Minimum Sum Scheme. But let's say we can... What will we do? Splurge on a new car? A new home? Double or quits at one of the casinos? Invest? Leave it in fix deposits drawing 0.75%?

I read with amusement on one of the site that someone actually mentioned: How many investments in the world actually make money? None! He said. What ignorance! If you have invested in MSCI World since 1994 you will have gotten an average return of 7% per year today. Even if you have invested in MSCI World the past 10 years, you could still get about 6% per year today. Many lose money because of much teachings to cut loss. Cut loss? How much loss can you cut before you have practically lose all your money? Anyway that strategy ain't investing. It's speculating. So investing is about having a long term time frame and not let emotions take control of you so that you realize the losses that is on paper, unless you are sure the markets will go down forever and never recover ever again. By the time that happens, money or cash or currencies as we know it is of no value anyway...

Please email me or contact me if you have invested and is not making money in them. Let's have a free no obligations chat. 

So if strategy for investment is to have a long term time frame then isn't that what CPF has? CPF guarantees a minimum 2.5% return on your monies in OA, which other institution guarantees that without risk? All they need is time.

Many have also asked what happens to CPF monies when they die? Once again, publicly available information... Then we have people saying CPF take everything.. It's a ordinary account not savings account... Duh. Then CPF ask us to nominate for what? For fun? So that they can do more work? No lah.. So that they know who they can distribute your CPF to if death was to occur la.. So if I never nominate how? Then it will be distributed according to intestate laws through a notary public lor.. Though the process may take longer so it is always better to nominate your beneficiaries.

If you need help doing that please contact me too, if not the form can be downloaded from the CPF website.

CPF now has CPF life which will pay a monthly income to you till death occurs. Not good meh? So let us assume that you did withdraw your CPF monies at 55 then you are not the spending kind then you leave it in a Fix deposit that gives you 0.75%... Inflation 3% rate of return of your money -2.25%. Which means your money is being eaten up by inflation and value will drop over the long term. Leave it in CPF retirement account, get 4% then get paid a monthly income during retirement, if you so happen to leave a long life CPF will still pay you... So how does CPF cheat people money like that?

But with all that said, we still cannot rely on CPF to be the only source of funding for our retirement or education needs. Some forward planning is still needed. So please contact me if you have not started on your retirement plan or your children's education plan or your medical plan. 

There is still many aspect of CPF that has not been touched on, if I did then this blog will be as long as what CPF website has in pages.