Should You Invest Your CPF Ordinary Account (OA) Money?

With the money in our CPF Ordinary Account (OA) earning 2.5% p.a., should you be investing the money instead to reap higher returns? Here’s what you need to know before channeling your CPF OA money into investments.

Here in Singapore, just 80% of our monthly salary appears in our bank accounts, with 20% going into our CPF. Our CPF OA is one of the three (or four, if we’re at retirement age) CPF accounts we have. It is also the account that gets allocated the largest proportion of our salary each month, at least until we reach 60 years old. 

With so much money being channeled into our CPF OA over the years, some may choose to is to invest it to grow their wealth. But before we weigh the factors to consider, we first need to understand the purpose of our CPF OA.

What is your CPF Ordinary Account (OA) for?

Each of our CPF accounts have a different purpose. The money in our CPF OA is meant for housing, insurance and investments.

More specifically, you can use the money in your CPF OA to pay for your home loan as well as the downpayment of your property purchase, including the stamp duty and legal fees. For HDB flat owners, you can also use your CPF OA money for Housing Protection Scheme premiums.

CPF Ordinary Account (OA) for investments in Singapore

What is the CPF Investment Scheme (CPFIS) for OA?

The CPF Investment Scheme (CPFIS) lets you invest a portion of your CPF savings, potentially earning higher returns than default interest rates. 

With CPFIS-OA, you can use your OA funds to invest in approved products like stocks, bonds and unit trusts. While this can help grow your retirement nest egg faster, remember that all investments come with risks.

What is the Self-Awareness Questionnaire (SAQ)?

Before using your CPF OA funds to invest, you must first complete the Self-Awareness Questionnaire (SAQ). This mandatory requirement by the CPF Board assesses your investment knowledge and ensures you understand the risks involved. 

The SAQ includes learning modules and a quiz on investment concepts and CPFIS. You can access and complete the SAQ on the CPF website using your Singpass.

What investment products can I invest in using my CPF Ordinary Account (OA) money?

The CPFIS lets you invest your OA funds in a variety of products, including:

Shares

Shares represent ownership in a company. When you buy shares, you become a shareholder and can potentially benefit from the company's growth through dividends and capital appreciation.

With CPFIS-OA, you can invest in a wide range of stocks listed on the Singapore Exchange (SGX). However, it's important to research thoroughly and understand the risks before investing in shares.

Fees and charges of share investment with CPFIS

When you invest in shares through CPFIS-OA, you'll incur various fees and charges. These typically include a broker's commission, which is a percentage of the trade amount with a minimum charge of S$25.

You'll also need to pay SGX fees, which includes a clearing fee, a trading access fee and a settlement fee. Additionally, your agent bank may charge transaction fees, which can be up to S$2.50 per 1,000 shares, and custody fees, which are charged quarterly. 

Gold products

Gold is often considered a safe haven asset, holding its value during economic uncertainty. With CPFIS-OA, you can invest in gold ETFs, gold certificates, physical gold and gold savings accounts. Each option has different features and risks.

Gold ETFs track the price of gold and are traded on the stock exchange, while gold certificates represent ownership of gold held in a vault. Physical gold requires secure storage, and gold savings accounts allow you to accumulate gold gradually.

Fees and charges of gold investment with CPFIS 

Investing in gold through CPFIS-OA incurs agent bank charges, typically for transactions and quarterly maintenance.

Gold providers also have charges varying by product, including annual fees based on the value of gold held, minimum monthly charges or per-certificate fees. You might also face storage fees for physical gold or fabrication charges for gold bars.

Unit trusts

Unit trusts pool money from many investors to invest in a diversified portfolio of assets managed by a professional fund manager. This offers a convenient way to diversify your CPF OA investments across different asset classes, such as stocks, bonds and real estate.

Unit trusts come in various types with different risk levels and investment objectives, so choose one that aligns with your financial goals and risk tolerance.

Fees and charges for unit trusts investment with CPFIS

Investing in unit trusts through CPFIS-OA involves certain fees. While sales charges have been removed since 1 October 2020, you'll still encounter a Total Expense Ratio (TER), which covers the fund's operating expenses.

TER caps are in place based on the risk category of the unit trust. If you invest through a wrap account, there might be an annual wrap fee. Agent banks also may also charge transaction and maintenance fees.

Investment-linked Insurance Products (ILPs)

ILPs combine life insurance coverage with investment components. Your CPF OA premiums are used to buy units in sub-funds, which are invested in assets like stocks and bonds.

This allows you to potentially grow your wealth while having insurance protection. However, ILPs come with various fees and charges, and investment returns are not guaranteed. It's essential to understand the product structure and associated risks before investing.

Fees and charges for Investment-linked Insurance Products (ILPs) under CPFIS

ILPs under CPFIS have several costs. Although sales charges were removed from 1 October 2020, there's a TER to cover fund management and other expenses, with caps based on the risk category.

There might also be charges for policy administration, fund switching and surrender. Agent banks also charge fees for transactions and account maintenance. Carefully review the policy documents and consult your financial advisor for a complete understanding of these charges.

Annuities

Annuities provide a regular stream of income — typically for life — in exchange for a lump sum payment. With CPFIS-OA, you can use your OA savings to purchase an annuity plan.

This can be a suitable option for those seeking a guaranteed income stream during retirement to supplement their CPF LIFE payouts. However, it's essential to compare different annuity plans and understand their terms and conditions before investing.

Fees and charges for annuities investments under CPFIS

Purchasing annuities through CPFIS-OA involves certain fees and charges. These typically include agent bank charges for transactions and account maintenance.

The annuity provider might also have charges, such as a total distribution cost, which is a percentage of the premium paid, and a possible surrender fee if you discontinue the plan early.

Endowment policies

Endowment policies are a type of life insurance that pays out a lump sum upon maturity or death. With CPFIS-OA, you can use your OA savings to pay for an endowment plan.

This can help you save for a specific goal, such as your child's education or retirement, while providing insurance coverage. However, endowment policies typically have a fixed tenure, and you might incur losses if you surrender the policy early.

Fees and charges for purchasing endowment policies under CPFIS

Buying endowment policies through CPFIS-OA incurs fees and charges. These usually include agent bank charges for transactions and the maintenance of your account.

Similar to annuities, the insurer may also have charges like the total distribution cost, which is a percentage of the premium paid, and a surrender fee if you discontinue the policy early. 

Singapore government bonds

Singapore Government Bonds (SGBs) are bonds issued by the Singapore government. They are considered a low-risk investment option with a fixed interest rate and maturity date.

Investing in SGBs through CPFIS-OA offers a relatively safe way to earn a steady income while supporting nation-building. However, remember that your investment is locked in until maturity, and you might incur losses if you sell them on the secondary market before maturity.

Fees and charges for investing in Singapore government bonds under CPFIS

Investing in Singapore Government Bonds (SGBs) through CPFIS-OA involves certain fees, whether you trade through bond dealers or on the secondary market. When using a bond dealer, you'll typically incur a bond dealer's charge of 0.1% of the trade amount.

You'll also have to pay agent bank charges, which include up to S$2.50 per transaction and a quarterly custody fee of S$2 per counter. If you buy or sell SGBs on the secondary market through an agent bank, the fees are similar to those for other exchange-traded products.

This means you'll incur a broker's commission, which is a percentage of the trade amount, as well as SGX fees like clearing fees, trading access fees and settlement fees.

Treasury bills (T-bills)

Treasury bills (T-bills) are short-term debt securities issued by the Singapore government. They are considered very low-risk investments with a maturity of one year or less. You can invest in T-bills through CPFIS-OA to earn a fixed interest rate while keeping your funds relatively liquid.

However, the returns on T-bills are generally lower than other investment options, and you might face reinvestment risk when they mature.

Fees and charges for investing in T-bills under CPFIS

If you buy or sell T-bills on the secondary market through your agent bank, you'll likely incur similar fees to those for other exchange-traded products. These typically include a broker's commission, which is a percentage of the trade amount, as well as SGX fees like clearing fees, trading access fees and settlement fees.

Your agent bank may also charge transaction fees, which are up to S$2.50 per transaction, and custody fees of S$2 per counter per quarter.

Real Estate Investment Trusts (REITs) or property funds

REITs are like a basket of properties (e.g., shopping malls, offices) that generate rental income. Investing in REITs through CPFIS-OA can provide regular income through dividends and potential capital appreciation.

However, REITs can be affected by economic conditions and fluctuations in the property market, so it's important to diversify and understand the risks involved.

Fees and charges for investing in REITs or property funds under CPFIS

Investing in REITs and property funds through CPFIS-OA incurs various fees, much like other exchange-traded products. You'll typically pay a broker's commission, which is a percentage of the trade amount, subject to a minimum charge.

In addition, there are SGX fees to consider, including clearing fees, trading access fees and a settlement fee. Your agent bank may also charge transaction fees, which can be up to S$2.50 per 1,000 shares/units, and custody fees, charged on a quarterly basis.

Corporate bonds

Corporate bonds are debt securities issued by companies to raise capital. Investing in corporate bonds through CPFIS-OA can provide a fixed income stream and potential capital appreciation.

However, corporate bonds carry credit risk, meaning the issuer might default on their payments. It's essential to assess the creditworthiness of the issuer and understand the risks involved before investing.

Fees and charges for investing in corporate bonds under CPFIS

When you invest in corporate bonds through CPFIS-OA, you'll face various fees and charges, similar to those for other exchange-traded products. These typically include a broker's commission, which is calculated as a percentage of the trade amount, subject to a minimum charge.

You'll also incur SGX fees, such as clearing fees, trading access fees and a settlement fee. Additionally, your agent bank will charge transaction fees, which can be up to S$2.50 per 1,000 shares/units, and custody fees, which are charged quarterly.

Before making any investment decisions, remember to check with your agent bank and product provider for the latest and most accurate fee information. For the full list of charges above, please click here.

Are there any investment limits when Investing with my CPF OA money?

Yes, there are limits to consider when investing your CPF OA savings under the CPFIS. Before you can start investing, you need to maintain a minimum balance of S$20,000 in your OA and/or S$40,000 in your SA.

Once you meet these minimums, you can invest up to 35% of your investible savings in shares, property funds and corporate bonds. Additionally, you can invest up to 10% of your investible savings in Gold ETFs and other gold products like gold certificates, gold savings accounts and physical gold.

Eligibility to invest under CPFIS using my CPF OA funds

You can invest under CPFIS if you:

• Are at least 18 years old;
• Are not an undischarged bankrupt;
• Have more than S$20,000 in your OA; and/or 
• Have more than S$40,000 in your SA; and
• Have completed the CPFIS Self-Awareness Questionnaire (SAQ) (applicable to new investors with effect from 1 October 2018)

How to use your CPF OA to invest through CPFIS

Complete the Self-Awareness Questionnaire (SAQ)

Before you begin your CPF investment journey, it's essential to complete the SAQ. This mandatory step, implemented by the CPF Board, is designed to equip you with the knowledge and understanding needed for informed investment decisions.

The SAQ covers key investment concepts, potential risks and the specifics of the CPFIS programme. By completing the SAQ, you demonstrate your awareness of the investment landscape, and confirm that CPFIS aligns with your financial goals and risk appetite.

Open a CPF Investment Account (CPFIA) online with agent banks 

Next, you'll need to open a CPF Investment Account (CPFIA) with one of the three CPFIS agent banks: DBS, OCBC or UOB.

You can easily do this online through the respective bank's website or mobile app. Each bank provides a straightforward online application process that guides you on how to open an investment account to invest your CPF OA funds.

Invest in the desired investment products of your choice

With your CPFIA set up, you can now explore the various investment products available under CPFIS-OA. Remember that you can invest up to 35% of your investible savings in shares, property funds, and corporate bonds and up to 10% in gold ETFs and other gold products. 

It’s also essential to research each product carefully, considering your risk tolerance and financial goals.

The money will be automatically deducted from your CPF OA account

Once you've chosen your desired investment product and placed an order, the necessary funds will be automatically deducted from your CPF OA account. This happens seamlessly through your CPFIA.

You don't need to manually transfer funds or make separate payments. The automated deduction process ensures a smooth and hassle-free investment experience.

Yes: Pros of investing your CPF OA money

Diversification of portfolio

Investing your CPF OA money allows you to diversify your investment portfolio beyond traditional assets like stocks and bonds.

You can explore a wider range of options, such as REITs, gold and even insurance products like annuities and endowment policies. This diversification helps spread your risk and potentially enhances your overall returns.

Tailored investment strategies

CPFIS offers flexibility in tailoring your investment strategy according to your risk appetite and financial goals. You can choose from a variety of investment products with different risk-return profiles.

Whether you prefer a conservative approach with lower-risk options like bonds or a more aggressive strategy with higher-risk assets like stocks, CPFIS allows you to customise your portfolio to suit your needs.

Potential for higher return

While your CPF OA savings earn a decent risk-free interest rate, investing your OA money through CPFIS offers the potential for higher returns. By carefully selecting and managing your investments, you can potentially grow your retirement nest egg at a faster rate than the default CPF interest rate.

For further context, your CPF OA money earns 2.5% p.a. The first S$60,000 of combined CPF balances (up to S$20,000 from the CPF OA), earns an extra 1% p.a. This means your CPF OA money earns up to 3.5% p.a., absolutely risk-free.

While 2.5% p.a. looks reasonable when compared to the likes of fixed deposits, Singapore Savings Bonds and savings accounts, it might not cut it when it comes to truly growing our wealth. This is the main reason why savvy Singaporeans might choose to invest their CPF OA money.

Due to the higher returns, be it 5%, 10%, 15% or more, some may choose to invest these funds. This could be for the purpose of a comfortable retirement, or simply to make the most of your CPF OA savings.

For a more detailed breakdown of these investment products, read this article. 

Recently, Endowus, a robo-advisor, has gotten the green light from CPF to allow customers to fund their portfolios with their CPF OA money. Read our in-depth review of Endowus here.

In September 2021, Endowus even launched a feature that projects your CPF account balances across different life stages. Dubbed the Endowus CPF Calculator, all you need to do is key in your current age, salary and CPF balances. Then, input your desired retirement age and retirement income.

From there, the projections will be displayed and you'll be sent a personalised CPF Prepared Report. The report contains recommendations to help users better plan for home purchases and how to grow their CPF accounts through investing or existing CPF schemes.

No: Cons of investing your CPF OA money

#1 If you have plans to use the CPF OA money in the near future 

You can use your CPF OA money for various purposes, such as paying for your house downpayment, stamp duty, legal fees as well as your home loan. However, this means you might need to access those funds relatively soon.

Therefore, it's important to consider the risk of needing your CPF OA money unexpectedly, perhaps for a medical emergency or a sudden job loss. If this happens when the market is down, you might be forced to sell your investments at a loss to cover those immediate needs, which could derail your long-term financial goals.

Before investing, do a quick calculation of the amount you’ll need to have in your CPF OA. Also keep in mind that you always have the option to pay for these costs in cash, if you have the cash on hand.

#2 If you’re not sure how to invest your CPF OA

All investments come with risk. If you’re not confident of investing on your own, leaving your money in your CPF OA means at least 2.5% p.a. in interest is secured.

It's important to remember that investing involves the possibility of losing some or even all of your principal amount. This risk is amplified if you lack the financial knowledge or experience to make informed investment decisions.

There are a significant number of people (one in two, in fact) whose investments fail to outperform the CPF OA interest rates.

So before making any investment decisions with your CPF OA funds, carefully assess your risk tolerance and consider seeking advice from a qualified financial advisor if needed. 

Alternatively, you can also consider transferring your CPF OA into your CPF Special Account that earns 4% p.a. (up to 5% p.a.). However, this is a one-way transaction that cannot be reversed. To find out more about this, click here.

Things to note before you invest your CPF OA money

Your CPF money can only be withdrawn from age 55 years old onwards

This means that your investment gains and dividends (if any) cannot be 'cashed' out just yet. However, you can withdraw at least S$5,000 from your CPF OA and/or SA savings (including investment gains) when you turn 55, even if you haven't met the Full Retirement Sum (FRS). You can also withdraw any amount above the FRS if you have already set it aside in your Retirement Account (RA).

You can’t invest all your CPF money

You can only invest CPF OA balances above S$20,000 and/or CPF SA balances above S$40,000.

The CPF money you use for investments under CPFIS OA does not incur accrued interest

When you use your CPF OA money to pay for your property, you’ll need to return the principal amount plus accrued interest back into your CPF OA when you sell the house. However, this is not the case for CPF money used for investment purposes.

Latest policy changes on CPF account

From early 2025, the Special Account (SA) will be closed for members aged 55 and above. This means your SA savings will be moved to your Retirement Account (RA), which is used for your monthly payouts during your golden years.

But here's the key change: Previously, any extra money in your SA above the amount needed for your basic retirement payouts stayed in your SA and earned higher interest. Now, any extra money will be moved to your Ordinary Account (OA), where it earns lower interest.

So, while your basic retirement needs are still covered, you might earn less interest on any extra savings that you had in your SA. This is something to consider when planning your investment or retirement finances.

Current market conditions

Before making any investment decisions with your CPF OA funds, it's crucial to consider the current market conditions. Economic factors like interest rates, inflation and global events can significantly impact investment performance.

For example, rising inflation may erode the real returns of fixed-income investments, while a strong economic outlook could boost stock market performance. Staying informed about market trends and seeking professional financial advice can help you make informed investment choices.

Other additional fees

Besides agent bank charges, there might be other fees associated with investing your CPF OA funds. These can include:

• Brokerage fees: If you buy or sell stocks, bonds or ETFs through a brokerage, you'll typically incur brokerage fees.
• Platform fees: Some investment platforms might charge fees for account maintenance or access to research and tools.
• Fund management fees: Unit trusts and ILPs have fund management fees embedded in their Total Expense Ratio (TER).
• Sales charges: While sales charges for unit trusts and ILPs under CPFIS have been removed, some products might still have them.
• Switching fees: Switching between funds within a unit trust or ILP might incur fees.
• Surrender fees: If you surrender an insurance policy (like an annuity or endowment policy) early, you might incur surrender fees.

It's crucial to understand all the fees involved before you invest your CPF OA funds. Carefully review the fee schedule provided by your agent bank, brokerage or product provider.

Finally, to make CPF investing worthwhile, you should aim to earn more than the 2.5% per year interest that your OA savings would earn if you simply left them untouched. A longer investment horizon will allow your investments to ride out the volatility in the markets and steadily compound your returns over time

Alternatively, if you’re still undecided, you can instead start to beef up your investment experience by investing the spare cash that you have. One way to get started is to invest in the portfolios offered by robo-advisors, or pick stocks by using a brokerage account.

Frequently asked questions about CPF Ordinary Account (OA) for investment

How much can I invest from my CPF OA?

You can invest up to 35% of your investible savings for stocks, property funds and corporate bonds, and 10% for gold ETFs and other gold products.

However, keep in mind that you can only start investing once you have a minimum of S$20,000 in your OA, and/or a minimum of S$40,000 in your SA. 

Can I continue to invest under the CPFIS for my OA beyond age 55?

Yes, you can generally continue to invest your OA savings under CPFIS after age 55.

Can I close my CPFIS account?

Yes, you can close your CPFIS account if you no longer wish to invest your CPF savings. You can submit a closure request through your CPFIS agent bank. Any remaining funds in your CPFIA will be transferred back to your CPF OA.

However, keep in mind that you'll need to open a new CPFIS account if you want to invest your CPF savings again in the future.

Read these next:
CPF Investment Scheme (CPFIS): Guide To Investing With Your CPF
7 Investments You Can Make Under The CPF Investment Scheme (CPFIS)
Uniquely Singaporean Things We Do To Accumulate Wealth
CPF Special Account (SA) Shielding: How You Can Perform This Retirement ‘Cheat Code’
Pros And Cons Of Keeping Your Savings In Your CPF Special Account