Chitchat CPF Investment Scheme fails for 30 years - "not fit for purpose"

[scroobal]

Good post and accurate. I remember even as late as last week someone in the forum wanted to invest in REIT - !!!!!

They were allowing the CPF investors take their money to invest, was like those fishermen in China, fishing with the cormorants. Every time, the investors caught a 'big fish' they 'fisherman' will take the "fish" & give the investors " a few IKAN BILIS". They charge you, interest on your money, in which you have to pay back from the profits, plus costs....isn't that 'fishing with a cormorants"...

Not only that, they created a parallel market in Malaysian CLOB shares, that made KLSE livid, Dr. M. & company was studying ways to "pull the plug" for a long time, & they were blowing "smoke & fire coming out of their nostrils' for sometime. They did issue warning time & time again...are they going to say they were 'prepared like the zika virus'?....when KLSE pull the plug...a lot of CPF investors..lost their pants. Didn't mee siam mai hum, say, he will bring them to ICJ?? International Court Of Justice?....this was Dr.M. masterstroke...

The ignorant did not kill themselves....they will killed by the 'cormorants fishermen"...THEY KILLED THE "CORMORANTS"...surprisingly those who didn't 'die' but bot scalded went on to vote for the "cormorants fishermen"...their threshold of pain is really amazing...

 

[mojito]

So 29 years fit, this year not fit? Let me brag a little bit. Mine CPF invest account up 50% before dividends. But of course not fully vested if not maybe more. Problem with singapore now is FD not as good as last time and sinkies are hopeless at profiting from risk. Must i suffer with the rest of you lot?

 

[johnny333]

So 29 years fit, this year not fit? Let me brag a little bit. Mine CPF invest account up 50% before dividends. But of course not fully vested if not maybe more. Problem with singapore now is FD not as good as last time and sinkies are hopeless at profiting from risk. Must i suffer with the rest of you lot?

I've been investing in Malaysia & USA & I get dividends from my investments. In fact I am getting more $ then I need and am thinking of investing the balance of the $ into more shares. In other words I am not touching my principal & re-investing the surplus.

Have you ever heard the saying "A bird in the hand is worth 2 in the bush"
Even if you are making money in your CPF, can you actually touch it Will the PAP allow you to use the $$$ or will they change the goal posts again.

 

[halsey02]

Good post and accurate. I remember even as late as last week someone in the forum wanted to invest in REIT - !!!!!

Thanks...I did make some money from REIT some while back, say 2 years ago...but now the going is not so good, dividends yield had shrunk...& bad news more than good ones, unless you are listening to PAP Radio...then, what can I say?

REIT now...thread very carefully...

 

[halsey02]

I've been investing in Malaysia & USA & I get dividends from my investments. In fact I am getting more $ then I need and am thinking of investing the balance of the $ into more shares. In other words I am not touching my principal & re-investing the surplus.

Have you ever heard the saying "A bird in the hand is worth 2 in the bush"
Even if you are making money in your CPF, can you actually touch it Will the PAP allow you to use the $$$ or will they change the goal posts again.

Even up to recent months....toothpick thief lim is selling "snake oil" again with the CPF Investments choices.....it is like playing soccer with an ever moving goal posts , each time you are near them....they move again & when you try to score....there are 1001 goal keepers there.....so it is a futile exercise...

But once in while, you get some lucky draw coupons to buy some thing of your choice...like when you retire...every month...but the rules is, you must play the game , in order to get that small reward...like SISYPHUS!.

That is why CPF is to the 100% Sinkingporeans.....play the CPF game like SISYPHUS! you got it, but never GET IT! ha ha ha

 

[maxsanic]

The biggest problem with the CPF investment scheme is tha management fee you have to pay the bank e.g. DBS
That is why mutual trust(unit trust someone) is going out of fashion. The management fees eat into your profit & the banks don't contribute anything.

Disadvantage of unit trust is that you do not get any of the dividends if any are issued by the company.

I use my own money to buy shares that are giving me dividends. So if the CPF is suppose to be for our retirement, why are they forcing Sporeans to buy an instruments that don't benefit them?

First off, nobody is forcing Singaporeans to buy any financial instruments, so it isn't correct to characterize the situation this way.

As for fund management fees causing lousy returns, it's true to a small extent. I am no big fan of mutual funds myself, but most active fund management fee ratios range from 0.5-2.0% p.a. This is not anywhere enough to account for the horrible track record compared to long term returns from equities and fixed income.

Rough market annual returns over long term:

1. Money Markets: 1-3%
2. High Grade Fixed Income: 3-5%
3. Non-Investment Grade Fixed Income: 4-8%
4. Developed Markets Equities: 6-8%
5. Developing Markets Equities: 6-12%

Even if you knock off the 1.5% expense ratio from a/m numbers, that is nowhere near to account for the CPFIS record so far where a whopping 3/4 of the investors are actually on negative returns. The more likely reason from my observations are:

1. Lack of diversification and banking too much allocation on some specific sector or geography. Usually it's some trendy stuff a.k.a buying in when it's in a bubble.

2. Switching in and out of funds, generating significant frictional costs. Sometimes this is due to being misadvised by sales agents, other times it's just individual smugness thinking they can catch hot funds one after another like a surfer catching waves.

3. Market timing by selling funds when it hits a 'target price', then sitting out in cash hoping to buy when it drops below a 'floor price'. Sounds good in theory, but more likely outcome is missing out on the run when it matters.

4. Getting too emotional. When times are good, start to take excessive risks thinking they are the next Warren Buffet or George Soros. Similarly, when times are bad, get angry and find excuses like market is being manipulated by institutions, unfriendly government policies, exchange regulations, lousy financial adviser etc. instead of approaching the situation rationally. Sometimes they get so angry they liquidate everything in a huff and swear never to touch investments again only to have the markets rush afterwards.

 

[JohnTan]

What's wrong with just maxing out your SA early and collecting a guaranteed compounded return of 4% per annum for the next 15-20 years? Very few funds can match that kind of returns. I maxed out my SA by my 30s and now, I have a large amount of money in my CPF. It's large enough that I don't have to bother about buying any annuities. I make enough money from the compounded interest.

 

[johnny333]

First off, nobody is forcing Singaporeans to buy any financial instruments, so it isn't correct to characterize the situation this way...

Most people will try to maximise the amount they withdraw from their CPF whether it is for property or the investment scheme because of the poor returns of 2.5 to 3 %
Remember that for many, many,... years banks in Malaysia, Thailand, .... were paying 2 to 3 times what the CPF was paying Sporeans.

I have invested in the same mutual funds since the start of the investment schemes i.e. I have never switch around between the different funds. Despite this I have made losses. Often I have to pay the management fee because the investments are not even making enough to cover the management fees

If they were really serious about helping Sporeans invest for retirement they would let them invest in equities & not mutual funds(unit trusts). When you invest in shares you do not incur admin fees & if a company pays out dividends, you get to to keep these dividends. One could easily accumulate a lot of a dividend paying shares over 20 + years. I have done that with my malaysian shares. Used the dividend to accumulate even more shares which pay me dividends.

The fact that they are restricting people to mutual funds(unit trusts) tells me that they are using the scheme to generate fees for the banks. To help the local banks. They are actually using the CPF to prop up the local banks & not trying to help the "lesser mortals"

I have come to the conclusion that the only way to put a stop to the losses of my CPF is to vote for the opposition who will open the cupboards to see what is going on. It may be ugly but I rather know the truth than be told a pack of lies.

 

[Hans168]

Started in 1986, under a different name, it allowed CPF members to invest in stock and shares, unit trusts and gold. The Govt knew that less than 20% of members actually cleared 2.5% in returns yet allowed it to continue year after year. It saw changes over the years where even more products were made available.

Now Tharman concedes that it is not "fit for purpose" (his own words) and is now under review.

You already can see the "talent" that we have in this forum discussing stock and shares and various investments.

after so many pple losing so much money over so many years, you muttafarkers now telling us the truth!!!!!!!

 

[scroobal]

Actually over the years, both the press and during parliamentary questions, the poor investing returns by CPF members have been flashed out. Even the press wrote about it in 2015 and Lina Chiam asked about it in 2012 in parliament.

The mystery is why did the Govt let people continuous make losses on a scheme that failed and not once showed a positive trend.

after so many pple losing so much money over so many years, you muttafarkers now telling us the truth!!!!!!!

 

[nayr69sg]

Got positives lah. Freeing up all that cash for investment into blue chips like govt linked GLCs gave Temasek more cash legally. Also helps to give stock brokers some income and give a boost to the financial industry as a whole.

In fact I am surprised they want to end it. Maybe here is why. All the CPF money is not there anymore. It may never have been there.

By ending the scheme it forces investors to sell their cpf investment stocks at a cheap given the low prices now. That way CPF saves money. They buy back cheap. Think of it more as a stock buy back.

CPF is close to bankrupt. This is why there are all these tweaks to the CPF. And also why it is so important that the next elected president will not be somebody who will go and find out all this shit. Best that the public dunno and keep the music playing.

 

[bodycells]

CPF investment wahahahhah!!!!

if i wanna invest, why need to go through a social security fund called CPF.

i invest in my own way and style, and earn my own dividends. I believe johnny agrees with me.

 

[halsey02]

Got positives lah. Freeing up all that cash for investment into blue chips like govt linked GLCs gave Temasek more cash legally. Also helps to give stock brokers some income and give a boost to the financial industry as a whole.

In fact I am surprised they want to end it. Maybe here is why. All the CPF money is not there anymore. It may never have been there.

By ending the scheme it forces investors to sell their cpf investment stocks at a cheap given the low prices now. That way CPF saves money. They buy back cheap. Think of it more as a stock buy back.

CPF is close to bankrupt. This is why there are all these tweaks to the CPF. And also why it is so important that the next elected president will not be somebody who will go and find out all this shit. Best that the public dunno and keep the music playing.

They have hung signs in all their offices that said " DO NOT PANIC".....& at CPF:

KEEP
CALM
USE
KAR KI LANG

 

[winnipegjets]

The restrictions stopped highly volatile investments and those that do not have a decent track record to be excluded and save the ignorant from killing themselves. Yet it did not help.

There are lots of good etf in the US that could have been made available for investment. The Board wouldn't because their returns are higher than that offered by the CPF.

 

[winnipegjets]

What's wrong with just maxing out your SA early and collecting a guaranteed compounded return of 4% per annum for the next 15-20 years? Very few funds can match that kind of returns. I maxed out my SA by my 30s and now, I have a large amount of money in my CPF. It's large enough that I don't have to bother about buying any annuities. I make enough money from the compounded interest.

You sure that the CPF has the money to pay you?

 

[frenchbriefs]

CPF is the mechanism that has been feeding the PAP and their GLCs and the ministries budgets for decades,are u sure its wise to take it away or change it?without CPF where would PAP get the money to pay their salaries, fund their bloated oversized budgets,pay for expensive government contracts to their glcs and build expensive white elephants?

if they want to modify the cpf,there is only one simple modification they need to do.return the interests thats rightfully ours and stop using our precious cpf to fund the HDB ponzi.

 

[johnny333]

Got positives lah. Freeing up all that cash for investment into blue chips like govt linked GLCs gave Temasek more cash legally. Also helps to give stock brokers some income and give a boost to the financial industry as a whole.

In fact I am surprised they want to end it. Maybe here is why. All the CPF money is not there anymore. It may never have been there.

By ending the scheme it forces investors to sell their cpf investment stocks at a cheap given the low prices now. That way CPF saves money. They buy back cheap. Think of it more as a stock buy back.

CPF is close to bankrupt. This is why there are all these tweaks to the CPF. And also why it is so important that the next elected president will not be somebody who will go and find out all this shit. Best that the public dunno and keep the music playing.

Some of the mutual fund companies I invested under the CPF investment scheme have informed me that they are no longer under the umbrella of the of CPF investment scheme. However my original investments is still there. If I decide to liquidate my investment they will return the funds to my CPF.

So far I haven't done anything about it since they are just paper loses until I redeem. However I wonder what is going on? Why are these funds no longer under the CPF scheme?

 

[halsey02]

You sure that the CPF has the money to pay you?

Like the Official Assignee , they have the money, for every dollar you get ten cents.....or the those ponzi scheme, the lucky early ones get paid more returns...the later ones almost nothing....

 

[maxsanic]

Most people will try to maximise the amount they withdraw from their CPF whether it is for property or the investment scheme because of the poor returns of 2.5 to 3 %
Remember that for many, many,... years banks in Malaysia, Thailand, .... were paying 2 to 3 times what the CPF was paying Sporeans.

I have invested in the same mutual funds since the start of the investment schemes i.e. I have never switch around between the different funds. Despite this I have made losses. Often I have to pay the management fee because the investments are not even making enough to cover the management fees

If they were really serious about helping Sporeans invest for retirement they would let them invest in equities & not mutual funds(unit trusts). When you invest in shares you do not incur admin fees & if a company pays out dividends, you get to to keep these dividends. One could easily accumulate a lot of a dividend paying shares over 20 + years. I have done that with my malaysian shares. Used the dividend to accumulate even more shares which pay me dividends.

The fact that they are restricting people to mutual funds(unit trusts) tells me that they are using the scheme to generate fees for the banks. To help the local banks. They are actually using the CPF to prop up the local banks & not trying to help the "lesser mortals"

I have come to the conclusion that the only way to put a stop to the losses of my CPF is to vote for the opposition who will open the cupboards to see what is going on. It may be ugly but I rather know the truth than be told a pack of lies.

First off, 2.5-3% considering the credit risk involved is anything but poor. This is a prime example of how expectations of returns have been warped by a combination of financial hard selling and individual misunderstanding.

Secondly, interest rates cannot be compared across board on different currencies sitting on different pension arrangements. Malaysia EPF paying 2x CPF returns means absolutely nothing in the financial sense. It is hard for me to explain in detail here, but this is definitely not the way to do benchmarking.

On your mutual funds I can't comment without further details, but I suspect it is a combination of too much timing and instrument concentration and perhaps some bad luck in getting a lousy fund manager as well.

On your suggestion to allow Singaporeans to invest directly in equities using CPF:

1. You can already do that for up to 1/3 of your OA on a large selection of Singapore stocks.

2. If you mean unbridled full access of all CPF funds to all counters on all markets, this is a VERY BAD idea. Mutual funds might underperform and cause loses, but having everyone own time own target is going to cause massive wipe outs on a significant proportion of CPF participants.

3. I do not want to comment on your Malaysian track record without understanding the details, but bear in mind even if you are very good, a national pension policy must be formulated to be net beneficial to the population at large even if it means sacrificing flexibility for a minority of good investors.

 

[johnny333]

First off, 2.5-3% considering the credit risk involved is anything but poor. This is a prime example of how expectations of returns have been warped by a combination of financial hard selling and individual misunderstanding.

Secondly, interest rates cannot be compared across board on different currencies sitting on different pension arrangements. Malaysia EPF paying 2x CPF returns means absolutely nothing in the financial sense. It is hard for me to explain in detail here, but this is definitely not the way to do benchmarking.

On your mutual funds I can't comment without further details, but I suspect it is a combination of too much timing and instrument concentration and perhaps some bad luck in getting a lousy fund manager as well.

On your suggestion to allow Singaporeans to invest directly in equities using CPF:

1. You can already do that for up to 1/3 of your OA on a large selection of Singapore stocks.

2. If you mean unbridled full access of all CPF funds to all counters on all markets, this is a VERY BAD idea. Mutual funds might underperform and cause loses, but having everyone own time own target is going to cause massive wipe outs on a significant proportion of CPF participants.

3. I do not want to comment on your Malaysian track record without understanding the details, but bear in mind even if you are very good, a national pension policy must be formulated to be net beneficial to the population at large even if it means sacrificing flexibility for a minority of good investors.

All the DIY financial solutions that the PAP has provided expect Sporeans to have some financial background which most lack. In my opinion these plans are designed to benefit the financial industry more than the "lesser mortals". We the CPF holders are not only losing out on the pathetically low interest rates but also in the case of the CPF investment scheme, poor performance . You have to wonder what the real purpose of the CPF board is?

When I started my investment career I did not have any experience. So I adopted a multi prong approach . I divided my portfolio into 3 segments.
1) Spore. - Where I invested in a basket of mostly mutual funds because banks were pushing mutual funds
2)US - invested in blue chip stocks
3)Malaysia - The big names like Sime Darby, Public Bank, commodities like rubber...

After 5 years I noticed that my Spore investments in mutual fund did not go anywhere. My Malaysian stocks did better because they gave dividends. My US investments gave the best returns. Although some under performed like Dell. Others did well e.g. Apple, CISCO, IBM,....

If a newbie like me can make $ in stocks why can't full time experts like those working for the CPF? If the PAP had provided a decent rate of return on our CPF Sporeans wouldn't need to find DIY solutions. The reality is that the PAP has been short changing Sporeans.

Regarding the difference in foreign exchange, one has to learn how to manage it. I'm a long term investor & looking at years rather than weeks. With the the ringgit being so low, I simply re-invest in Malaysian stocks or use ringgit when I visit Malaysia. Now that the US$ is high I repatriate US$ into my SGD$ dollar account & use it for my daily expenses. I even have enough to re-invest in the US market.

The facts are out there. People are losing $ in their CPF. I still have a six figure amount in my CPF & want to get it before I die.