Should you 🫵🏻 top up CPF WILLINGLY? I would

And I do🙂‍↕️

But why even consider CPF as a means of investment in the first place? I know it’s super common to hear that CPF is a waste of our money, taking our hard earned profits etc So why is topping up even within the realm of possibility ?? 🤨🤨🤨

Just because I do🙋🏽‍♂️doesn’t mean you should. But here’s why I would recommend doing so:

I’d say there are 3 main groups of people that this question concerns:

1. People (mainly students) who haven’t entered the work force => no CPF

2. Self-employed => no CPF deductions from their salary

3. Employees => receive CPF deductions & 17% from employers

In my opinion, people who fall into the third branch may not find this post as applicable. But especially for students like myself, the first group, I’d say it’s definitely worth it to start topping up our CPF accounts. Here are my reasons:

1️⃣ High returns at low to no risk

In comparison to the current t-bill rate of ~3%, 4.14% (as of today) is notably higher.

2️⃣ Starting early is an advantage

Refer to pic 3 for this part.

Using the Full Retirement Sum (FRS) of $205,800* by age 55,

Scenario 1: If I start now, I have to contribute $2.9k a year

Scenario 2: But if I start only when I enter the work force, I have to contribute $3.4k every year

This means that in the long run, starting earlier actually saves more money as it provides a longer run way for you to accumulate compounding interest🤩

To sum up,

CPF is a great investment tool IF your objective for it is to build up your retirement funds 👵👴🧓

• It’s a great low to no risk investment tool

• It guarantees growth that balances your investment portfolio, allowing you to dedicate other portions of your investment capital towards riskier, more aggressive opportunities

Ultimately, the earlier you start adding money to the account, the faster it is to hit your retirement goal🤑🤑

*This amount is based on 2024 FRS

** This is NOT financial advice. Please do your own due diligence before making any financial decision!

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