Interest income on CPF balances

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

 

The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.

Advertisements
This entry was posted in Retirement Planning. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s