Why I’ve determined to take a position my CPF-OA now
Ever since our authorities introduced that the CPF Particular Account (SA) can be closed, I’ve been considering onerous about the right way to make investments my CPF funds for greater returns.
It now makes little sense to proceed transferring funds from my Atypical Account (OA) to my SA; now that the closure (from age 55) will see all SA financial savings transferred to the Retirement Account (RA) as much as the Full Retirement Sum (FRS), and any remaining financial savings returned to the OA.
And at that age, my remaining funding horizon and threat urge for food will likely be considerably decrease.
Having my cash earn simply 2.5% every year – barely beating inflation – doesn’t sound like plan to me. Therefore, I began investing my CPF-OA monies this yr.
This text paperwork my thought course of and reasoning, and I hope it helps any of you who’re questioning in case you ought to begin to make investments your CPF too.
Shopping for the S&P 500 with my CPF-OA
Since my CPF-OA funds are illiquid and can’t be withdrawn till I flip 55, this implies I’ve a protracted funding runway forward of me.
Contemplating how my CPF-OA investible cash is just not practically as vital as my very own money investments, I made a decision that the easiest way ahead can be to put money into a diversified fund, and ideally one requiring minimal effort. I wished an funding that I can simply “purchase and overlook” , quite than risky shares that I have to preserve monitoring in case the markets flip risky.
So I made a decision to put money into the Amundi Prime USA Fund.
When you’ve by no means heard of it earlier than, it’s basically the lowest price unit belief that gives entry to S&P 500 returns. As retail traders, we will use our CPF-OA and/or SRS monies to put money into it, simply beating the two.5% and 0.05% p.a. respective returns we’d in any other case earn.
Concerning the Amundi Prime USA FundThe fund is managed by Amundi, recognised globally as one of many largest passive managers within the business.
It tracks the Solactive GBS United States Massive & Mid Cap Index, which has traditionally exhibited excessive correlation to the S&P 500 Index. The fund has additionally proven that it is ready to observe the index intently and precisely ever since its inception in January 2020.
Amundi costs an extremely low expense ratio of simply 0.05% p.a. for this fund. That is considerably decrease than many different unit trusts and mutual funds, and is even decrease than the favored S&P 500 ETF CSPX favoured by non-US traders.
Relating to investing one’s CPF, most individuals in the present day both use a robo platform or undergo their financial institution. This specific Amundi fund can solely be discovered on restricted platforms, which means you received’t have the ability to purchase it by means of your ordinary fintech brokerage or some other native robo-advisory platform both.
But, I used to be not eager on both methodology, as a result of they’d imply having to simply accept greater charges. With robo-advisory platforms, particularly, there are recurring charges to be paid as your portfolio measurement grows larger and even in years of inactivity.
As a substitute, I wished a method to make investments that would supply me with:
- Low charges
- No recurring platform charges
- No incremental charges as my portfolio grows
- No costs for merely holding my investments with out transactions
- Entry to an area helpline or help desk aware of CPF investing
So when a fellow investor pal informed me that she was switching to POEMS for her CPF investments, I realised my needs have lastly been answered.
Think about my shock once I noticed that I might purchase the Amundi Prime USA Fund on POEMS with no platform costs, no gross sales charges, and no further prices past what’s already within the fund’s Internet Asset Worth (NAV)… let’s simply say I practically fell off my chair.
That’s once I determined to swoop in throughout April’s Liberation Day crash and deployed the vast majority of my investible CPF-OA funds into shopping for the Amundi Prime USA Fund in SGD, to reap the benefits of the dip within the S&P 500.
What’s extra, for the reason that unit belief is traded in SGD, I don’t have to fret about foreign exchange spreads attributable to trade price fluctuations every time I purchase or promote. My total portfolio monitoring and calculation is predicated in SGD, quite than having to transform a number of occasions on the level of buy and sale.
Why POEMS is one of the best, low-cost dealer for CPF investments
When you’re seeking to make investments your CPF or SRS into the S&P 500 or globally diversified funds, then it’s possible you’ll need to try the Amundi Prime USA Fund and Amundi Index MSCI World Fund, which affords the most cost effective and most diversified publicity in its class.
And since POEMS doesn’t cost any charges for unit trusts investments, this could translate into vital price financial savings over an investor’s lifetime.
When you’re like me, and intend to take a position your CPF (or SRS) monies over 10 years or extra, then saving on these charges actually ought to matter to you.
It’d sound too good to be true, and maybe you’re similar to me, questioning…what’s the catch?
I reached out to POEMS’ administration to ask them, and right here’s their reply:
Zero charges? What’s the catch?
POEMS: "We’ve been serving traders in Singapore for a few years, and our mission stays to make investing accessible to as many individuals as attainable. We determined to supply this at no cost as a result of we would like extra customers to expertise the POEMS Cell 3 platform — a major improve from the legacy techniques that the older technology was aware of."
Except for zero charges on all unit trusts, POEMS additionally gives quick access to quite a lot of worldwide markets (see listing right here), together with the favored Eire-domiciled ETFs that many non-US traders desire.
When you’re opening a POEMS account for the primary time, you possibly can obtain the POEMS Cell 3 App and register along with your SingPass.
Step 1: Choose your account kind
- I like to recommend opening each accounts so that you’ve got entry to each low-cost buying and selling in addition to CDP linkage.
- In any other case, choose the Money Plus Account in case you solely need to make investments your CPF and are pleased not proudly owning any of your Singapore shares in your personal CDP account.
Step 2: Select your required amenities
Ensure you tick the entire beneath checkboxes if you wish to get your welcome bonuses! (Psst, having entry doesn’t imply it’s important to use all of them)
Step 3: Switch no less than $3,000 into your Money Plus Account to qualify for the welcome items right here.
Use PayNow to switch virtually instantaneously with no charges.
Present promotion: You possibly can obtain $50 to $150 value of Amazon / Microsoft shares when you fulfil the (simple) standards!
Observe: When you’re shopping for a CPF funding like me, the funds will likely be deducted out of your CPF-IA agent financial institution quite than your money funds. Nonetheless, you'll nonetheless have to pre-fund the account, in any other case you run the danger of a failed transaction within the occasion that your stability is inadequate.As for any unused money, it is going to proceed to earn POEMS’ Sensible Park charges until you need to withdraw it by way of PayNow, through which case you’ll obtain it inside 0–1 working days.
Professional Tip: Examine and guarantee your CPA-OA has sufficient funds (in extra of $20,000) for the deduction, in any other case, the transaction will fail and you’ll nonetheless be charged processing charges by your financial institution!
Step 4: Faucet on Commerce > UT > Seek for your required fund
Right here’s a screenshot of the way it seems on my POEMS Cell 3 app when I attempt to purchase extra models of Amundi Prime USA or Amundi MSCI World Fund.
Click on Purchase/Promote, enter your quantity, and select CPF in your fund supply.
When you’re shopping for in your desktop internet login as an alternative, click on on Commerce > Unit Belief > kind “Amundi” within the search bar and you need to discover it.
Step 5: Sit again and let POEMS deal with the remainder!
With that, you’ve efficiently transacted your CPF funding and POEMS will liaise along with your financial institution for the remainder.
Q: How a lot charges can I anticipate to be charged?
Whereas POEMS doesn’t cost something for CPF investments in unit trusts, you’ll nonetheless have to pay agent financial institution charges for executing the service.
I’ve consolidated the relevant charges beneath – word that these apply no matter your selection of brokerage.
| Financial institution | Utility price per transaction for 1,000 models of Shares / ETFs / Unit Trusts / Authorities Bonds | Service cost (per counter, per quarter) | Minimal service price |
| DBS | $2.73 (max $27.25) | $2.18 | $5.45 |
| OCBC | $2.73 (max $27.25) | $2.18 | $0 |
| UOB | $2.18 (max $21.80) | $2.18 | $0 |
Q: Why open each account varieties?
The POEMS Money Plus account is a pre-funded custodian account. This implies you will have to make sure you have the money prepared earlier than executing the trades, and possession is managed in your behalf.
- As all international property are held in custody (this is applicable throughout all brokers in Singapore), custody charges for international market counters apply; e.g. $2 per counter per 30 days for CSPX.
- Get this waived off in case your complete property invested by way of POEMS exceed $250,000.
As a result of POEMS Money Plus costs decrease fee charges for entry to each Singapore and abroad markets, you’ll positively need to have this account able to strike when market alternatives come up.
That’s how I managed to catch April’s backside – a feat that wouldn’t have been attainable if I had waited for the crash to return earlier than opening my account.
Professional Tip: Keep away from custodian charges by making no less than 6 trades per quarter.
The POEMS Money Administration account lets you purchase first and pay later, whereas additionally having fun with direct CDP possession.
When you’re a Singapore investor, I strongly suggest opening the Money Administration Account as properly as a result of it is useful for native investments that you simply’d need to preserve below your personal identify within the CDP. This additionally means you don’t pay CDP charges even throughout inactive quarters, similar to me!
For first-time CPF traders:
Earlier than you possibly can make investments your CPF monies by means of POEMS, you’ll first have to:
- Open a CPF Funding Account (CPF-IA) with an authorised agent financial institution (i.e. DBS/OCBC/UOB).
- Full the Self-Consciousness Questionnaire (SAQ) on the CPF web site.
- Hyperlink your CPF-IA to your chosen brokerage account (e.g. POEMS) for funds deduction.
- Execute your commerce in your brokerage and choose CPF because the supply of funds deduction.
To acquire your CPF-IA quantity, log in to your CPF portal and click on on my CPF > Funding.
The pink block beneath is the place you possibly can retrieve your CPF Funding Account quantity along with your chosen agent financial institution. That is the quantity you hyperlink into POEMS.
You’ll need to login to your POEMS account and click on on My Settings > My Account > Financial institution A/C Data, the place you possibly can key in your particulars to finish the hyperlink.
For knowledgeable CPF traders:
When you’ve already invested your CPF with one other brokerage, the excellent news is that you simply’re not restricted to utilizing only one dealer. You possibly can change or rotate between a number of brokerages relying on platform entry and costs.
To take pleasure in zero charges when investing your CPF funds by means of POEMS (like I did), you possibly can bounce straight to Step 3 and hyperlink your CPF-IA earlier than executing your buy order.
Past the primary commerce, in case you desire to automate your CPF-OA purchases and apply dollar-cost averaging, you possibly can arrange a Common Financial savings Plan (RSP) on POEMS. This can mechanically buy fund models on the 7th of every month in your behalf.
When you desire to have POEMS make investments in your behalf frequently, you possibly can arrange a recurring CPF funding on POEMS in two methods.
Both click on on “RSP” (as an alternative of the “Purchase” icon) in your most well-liked fund web page itself, or head again to the Homepage, click on on RSP, and set your most well-liked quantity, frequency and fund supply.
Ensure you test that your CPF has sufficient charges to keep away from failed transaction processing prices charged by your financial institution!
At the present time, retail traders like us are spoilt for selection, as varied brokerages compete for our consideration and enterprise.
I’ll admit that though I’ve had a POEMS account for years, I ended utilizing it once I switched to the new-age digital fintech brokerages in recent times. Nonetheless, through the years, the restrictions of those platforms grew to become clearer to me:
- Restricted market entry – often solely the US, Hong Kong and Singapore included
- No CDP linkage – you possibly can’t maintain your Singapore investments below your personal CDP account
In response, POEMS has stepped up their recreation, turning into a brokerage that may compete head-to-head with these newer gamers, providing options that lots of them nonetheless don’t.
To prime it off, on the subject of investing my CPF, POEMS is hands-down the BEST choice I’ve discovered.
No different brokerage (or robo-advisors) comes shut by way of charges.
Extra importantly, apart from its low buying and selling charges, I additionally do not need to fret about paying any recurring platform charges or dividend dealing with charges.
Relating to a long-term funding like CPF, retaining your charges low is essential; that’s the place POEMS really shines.
A few of it’s possible you’ll discover that the platform interface takes a little bit of getting used to, which is why I’ve included the step-by-step screenshots above to assist information you. The primary time I executed my commerce, it felt unfamiliar, however from the second commerce onwards, it was a lot simpler as I might navigate my approach round now.
Because the pioneer of on-line share buying and selling in Singapore, POEMS additionally gives the advantage of native help centres throughout Singapore in addition to responsive contact helplines. No different dealer affords such customer-centric help, the place you possibly can merely name in or stroll in for help.
POEMS could also be extra widespread among the many older technology of traders, however haven’t been as aggressive in advertising and marketing themselves to the youthful crowd. With this text, I hope that begins to vary as you uncover what makes POEMS one of the best for you.
Need assistance signing up in your POEMS account and ensuring you get your sign-up reward bonuses?
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Disclosure: This text was written in partnership with POEMS to make sure accuracy, whom I reached out to after efficiently making my first CPF funding by way of their brokerage. All opinions are that of my very own, primarily based on my tradng expertise with POEMS. Please be at liberty to click on on my affiliate hyperlinks in case you’ll like to enroll in an account! T&Cs apply.Nothing on this article is supposed to be taken as monetary recommendation, nor a purchase/promote suggestion of the Amundi funds talked about. Funding includes threat. All knowledge is correct at time of publishing.
Disclaimer: This commercial has not been reviewed by the Financial Authority of Singapore.
