What Can You Do With Your CPF?

With so much attention revolving around Central Provident Fund (CPF), let's us take a look at what you can do with your CPF money besides using it for housing loan.

Just a quick note below on the current CPF interest rates.

• Ordinary Account - 2.5%
• Special & Mediasave Account - 4%
• Additional Interest - 1.00% (Up to $60,000 - $20,000 from OA & $40,000)

As you know the interest rates given by the government are not exactly high and on top of that most people not able make or save enough to meet the CPF minimum sum of $155,000. So what can you do with your CPF money then receiving 2.5% or 4%? Well you can use your CPF money for investment.

First of you will need to meet the prerequisites.

•  18 years and above
• Above $20,000 in your Ordinary Account (OA) for CPFIS-OA investments
• Above $40,000 in your Special Account (SA) for CPFIS-SA investments

Then for investment using your OA for CPFIS-OA investments, you will need to open a CPF Investment Account at one of the three CPFIS agent banks in Singapore.

• DBS
• OCBC
• UOB

Here are some of the product you can invest in.

• Shares
• Bonds
• Exchange Traded Funds (ETFs)
• Unit Trust
• Gold & Silver

It is worth noting that any gains you make in your CPFIS are not subjected to capital gains taxes however dividends are taxed base on your individual tax-rate. There will also be special charges apply when you invest under the CPFIS-OA and CPFIS-SA schemes while the amount and type of charges depend on the type of investment you make.

Withdrawals are subject to the same withdrawal rules from your CPF accounts. In other words, you can only take the money out after you are 55 years old but you can buy and sell your investments as often as you like provided you have held them for at least one day. However i doubt you should do that as I strongly believe that buying and holding shares with good long-term prospects are the best way to build wealth over the long haul.

For more info http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/CPFInvestmentSchemes.htm.