How to be a CPF multi-millionaire in uncertain times

With economic damage and financial market volatility, people in Singapore are still worried about their job security and their future more than ever.

With so much uncertainty in the current environment, how can anyone even begin to think about planning for retirement? Is building millions in your nest egg a pipe dream or a real possibility?

In this session co-hosted by Loo Cheng Chuan (Founder of 1M65 & entrepreneur) and Sam Rhee (Chairman & CIO of Endowus), they discussed:

0:00 Introductions

8:16 Endowus offering as a fee-only, independent digital wealth advisor

14:00 Importance of Financial Safety Net/ Iron Dome

20:35 The power of compounding leading to 1m65

27:03 Being a CPF multi-millionaire

31:15 Tips on how to be a CPF multi-millionaire

37:55 QnA Part 1

41:10 How property investment stops us from being a CPF millionaire

45:30 Diversifying out of Singapore investments

57:40 Why timing the market is impossible

1:00:36 QnA Part 2

Should I buy a freehold property with my CPF Ordinary Account (OA) when the mortgage payment is less than the property rental income? (1:08:50)

Loo: What many Singaporeans like to do is to buy a freehold condominium and have the mortgage payments covered by rental income. It is a sound strategy but there are some assumptions behind.

One of the assumptions is whether there will be a good property value appreciation moving forward. I doubt that the property appreciation of a freehold property will be higher than the S&P 500 over the long term, but there may be cases that it does.

The second assumption is that rental income in Singapore can be higher or match mortgage payment. Currently the rental market is really poor.

With the exodus of foreign workers and professionals due to CoVID-19, there is a lot of uncertainty around rental income. I have my doubts on this strategy in the long run.

Can I invest my CPF Special Account (SA) monies with Endowus (1:09:55)(1:29:10)

Loo: No, you cannot. There are very few funds that are allowed to tap on CPF SA monies that can consistently beat the 4 per cent returns of CPF SA, at low risk. It does not mean that some funds have beaten the 4 per cent returns before equate to it being a worthwhile investment.

Sam: We have come across investors who are willing to take that risk. We encourage our clients to look at CPF SA as a bond-like investment.

Some investors who have an excess of SA monies will tend to look at First State (First Sentier) Bridge Fund, Schroders Revolution Fund for CPF SA investments.

These funds have beaten the 4 per cent returns over longer investment horizon, but we do not believe it is a good risk returns trade-off. We rather you invest more aggressively with your CPF OA and to treat your CPF SA as a bond holding.

Is it too late for me to start on my 1M65, CPF multi-millionaire journey (1:18:03)

Loo: Most of us have started building our wealth with CPF, the difference is whether we start earlier on maximising our CPF SA holdings. If you started late, you may not reach 1M65, but you can still reach a higher number at the age of 65.

Also, do not be fixated on the age 65. Presidents are elected at an older age, people are working and living healthily at a later age. We can grow our CPF more if we choose to work later and keep ourselves engaged.

We can look to taking our CPF later so that the money compounds at a greater amount in our later years.