Each year when I received my CPF statement, I was always amazed at the amount of interest earned on my CPF balances.
Central Provident Fund (CPF) helped me own an apartment I currently stay in. This apartment had been fully paid for. On retirement, I continue to keep a substantial portion in CPF. I knew that I could not invest this sum of money and yet beat the CPF interest rate without the risk of investments.
To give a sense of quantum, I received about $100,000 in the form of interest income over 8 years from 2008. The average return on this CPF balances was 3.2% per year.
This 3.2% return is way above the current 10-year Singapore Government Bonds coupon rate of 2.125%. It is also above 30-year Government Bonds coupon rate of 2.750%. Don’t start me to talk about the savings rates of banks!
It does make sense to keep money in CPF to earn interest.
Copyright © 2016, limkimtong for Living Investment
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