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Pillar 5

Investment Access

OA Interest
2.5%
SA/MA Interest
4.0%
Min OA
S$20,000
Min SA
S$40,000

CPFIS strategy, when to invest vs keep in CPF, and low-cost investment options. Only invest CPF when risk-adjusted returns exceed the guaranteed rate.

The Fundamental Question: Should You Invest CPF?

The Uncomfortable Truth

Studies show that majority of CPFIS investors underperform CPF's guaranteed interest rates. Before investing, you must answer:

For OA (2.5% hurdle)

Can you consistently beat 2.5% after fees, year after year, with low volatility? Consider: Many unit trusts charge 1.5% to 2% in fees alone.

For SA (4.0% hurdle)

Can you beat 4% risk-free? That is better than most fixed deposits and many bond funds. Very few investments offer this combination.

Do NOT Invest If...

  • • You do not understand what you are buying
  • • You cannot commit to 10+ year horizon
  • • Your choice is high-fee unit trusts
  • • You panic during market drops
  • • You have not maxed SA (4% guaranteed)

Consider Investing If...

  • • You use low-cost index ETFs (<0.5% fee)
  • • You have 15+ year horizon
  • • You can stomach 30% to 40% drops
  • • SA is maxed or close to FRS
  • • You have investment knowledge

Best Approach

  • • Use only OA for investing (keep SA at 4%)
  • • Choose CPFIS-approved ETFs
  • • Diversify globally, not just STI
  • • Regular DCA, not lump sum
  • • Review annually, not monthly

CPFIS Investment Options

Unit Trusts

Typical fees 1.5% to 2.5% p.a.
Sales charge 0% to 5%
Our view Avoid most

High fees eat into returns. Few consistently beat index after fees.

ETFs (Recommended)

Typical fees 0.2% to 0.5% p.a.
Brokerage S$5 to S$25
Our view Preferred for OA

Low-cost, diversified, transparent. Best for long-term CPF investing.

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CPFIS-Approved ETFs to Consider

Nikko AM STI ETF (local exposure, ~0.3% fee), ABF Singapore Bond ETF (bonds, ~0.26% fee), and various global ETFs. Always check the latest CPFIS inclusion list before investing.

Government Securities: T-Bills & SSB

T-Bills (Treasury Bills)

Maturity 6 or 12 months
Min investment S$1,000
Recent yields 3.0% to 4.0%
CPF usable? Yes (OA only)

Short-term, risk-free. Good for parking cash but may not beat OA after reinvestment hassle.

SSB (Singapore Savings Bonds)

Maturity 10 years (exit anytime)
Min investment S$500
Average yield ~2.5% to 3.5%
CPF usable? No (cash only)

Flexible, no penalty for early exit. Great for emergency fund or cash portion of portfolio.

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Pro Tip: SSB as Emergency Fund

SSB offers better returns than bank savings with no lock-in. Consider allocating 3 to 6 months expenses to SSB instead of a traditional savings account. Redemption takes about 2 to 3 business days.

Need Help with Investment Decisions?

We will help you determine if CPFIS investing makes sense for your situation and guide you toward low-cost options.

Common Assumptions vs Reality

Common Belief

"CPFIS always gives better returns than CPF interest"

Planning Reality

Most CPFIS investors underperform CPF's guaranteed rates after fees. You need to consistently beat 2.5% (OA) or 4% (SA) with low volatility—few achieve this with high-fee unit trusts.

Common Belief

"Investing CPF is always the right choice"

Planning Reality

Investing CPF only makes sense if you use low-cost ETFs, have a 15+ year horizon, can handle 30-40% drops, and have maxed your SA. For most, keeping CPF at guaranteed rates is safer.

How This Fits Your Plan