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What Are The New Changes?
The Singapore government has announced that the costs of new purchases of CPFIS products will be lowered going forward. These products include investment-linked insurance policies (ILPs) as well as unit trusts, and the cuts to sales charges will be done in two phases.
Starting from 1 October 2018, sales charges will fall from the current 3.0% to 1.5%, and by 1 October 2019, the charge will be entirely removed.
By doing so, the government’s latest decision will help to ensure that investors get more bang for their buck when they deploy their CPF monies. You should take advantage of it. With the power of compounding, your cost savings will make a big difference to your financial net worth over decades!
We Are Already at ZERO
But here’s the news: we have been and are at ZERO.
Since December 2016, we have taken the initiative to completely remove sales charges on all funds on FSMOne. Additionally, we levy no platform fees on CPF-related investments (for both CPF-OA and CPF-SA), giving you the full benefit of growing your CPF monies from the day you start.
At FSMOne, you can purchase CPF-approved unit trusts with your CPF monies, and we do have a wide range!
You may find CPF-approved funds via our Fund Selector tool; be sure to click on the CPF/SRS? box as shown in Chart 1 below, and select the respective relevant choice in its dropdown. You may filter it via CPFIS OA (Ordinary Account), CPFIS SA (Special Account) or SRS (which refers to supplementary retirement scheme).
Chart 1: Fund Selector Tool
You may also adjust the selection criteria depending on what sort of product you would like to invest in. For example, if you are looking for a fund that invests in equity markets worldwide, you will have to choose ‘Equity’ under Main Categories, ‘General’ under Specialist Sectors, and ‘Global’ under Geographical Sectors. Next, click the green ‘Generate Funds Table’ button at the bottom to populate the list of products.
However, if you are unsure which funds to choose, don’t fret.
Our Recommended List prepared by our in-house team of expert fund pickers is a great starting place for you to choose an appropriate fund for purchase using your CPF monies. The List will feature recommendations for equity, fixed income and balanced funds, catering to investors with various risk appetites. CPF-OA approved funds are marked with an ‘O’, while CPFIS-SA approved funds an ‘S’.
To filter out our Recommended Funds that are CPF-approved products via the Fund Selector tool, you just need to simply check the ‘Fundsupermart Recommended Funds only’ at the bottom left before you populate the list.
Take A Long Term Approach
Since your CPF monies are meant to be put away and you can only use them in your later years, it’s best to take a long term approach when investing them.
Asset prices in financial markets tend to fluctuate and could sometimes be very volatile, particularly on a short term basis. This implies that reacting to short term swings in the market may not be optimal and in fact, could even be detrimental to one’s portfolio. You should be focused on underlying fundamentals, as markets are “weighing machines” in the long run.
We also know from financial market history that markets tend to go up over a very long period of time – typically over several decades. By adopting a long term horizon, you will be able to benefit from this structural trend, and position yourself to benefit from the positives of technological advancement and human progress.
Additionally, you will want to be properly diversified across asset classes and geographies. Have an asset mix of both equities and bonds, and invest across various regions as well. As well-known pioneer of global investing Sir John Templeton once said: "diversify – by industry, by risk, and by country."
An adequate amount of diversification will ensure that any unexpected and specific event is unlikely to have a detrimental effect on your portfolio. This also provides you psychological endurance to remain invested for the long term.
However, adopting a long term and diversified approach when investing isn't the only sole important course of action: it's also just as vital to start as soon as possible.
Start ASAP!
Procrastination is an investor's biggest enemy. The wisest investors enlist General Time as their ally to compound their monies. Don't dither any further, get started now!
If you have any more questions, do not fret! Look to our friendly and helpful team of investment advisors for help!
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