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Why Don't We Get 8.4% on Our CPF?

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Read this article from Motley Fool about the Straits Times Index EFTs getting an annualised 8.4% over the past 10 years.

While our CPF ordinary account is getting a miserly 2.5% that is getting beat by inflation.

Although we can invest amounts above $20,000 in the CPF ordinary account into approved stocks and unit trust, this rule puts a damper on everyone's CPF accounts, especially those who are starting to work, or those whose pay is low and those who are not investment inclined.

More important is the fact that just the average dividends given by the STI ETF alone will have beat the 2.5% given by the CPF.

The reply by our government that the interest rate is low because our currency is strong is pure hogwash. If you are using the CPF funds to invest all over the world and boasting that you are getting investment returns that is on par or beat that of Warren Buffett's Berkshire Hathaway, that explanation is laughable.

So why not just put all the CPF funds into STI ETFs, get dividends higher than 2.5%, have a more than even chance of getting capital returns with dividend as high as the 8.4% achieve over the last 10 years?

At one stroke, everyone with CPF account is better off, you don't need to hire all those money managers to try to beat the market, avoid fiascos like buying Citibank, Merrill Lynch and dumping their stocks at a huge multi-billion losses.

This is one example of the nanny state trying to be too clever.

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3 comments:
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Anonymous said...
March 27, 2014 at 6:26 PM  

The Government will be on the losing end if that happens. And of course the Government does not want to lose even at the expense of the people.

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Anonymous said...
March 27, 2014 at 6:27 PM  

CPF offers guaranteed returns so the yield you are proposing is too high for something certain. No investment product in the financial market would have such returns risk-free

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Anonymous said...
April 1, 2014 at 6:39 PM  

So effectively you are also saying that the 2.5% rate of interest returns for the exclusive right to use our CPF Funds already takes into consideration for whatever financial blunders caused by both the CEOs of Temasek & GIC?

In other words, we as CPF members are paying and will continue to pay for their dismal performances as well as any financial mistakes caused by them, whether directly or indirectly?

In that case, shouldn't it be time for the PM's wife to step down for someone more capable to take over?

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