How Endowus improved CPF investing in Singapore
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How Endowus improved CPF investing in Singapore

Mar 2023
Apr 2022
cpf investments - endowus
  • Our CPF savings should be worked harder for our retirement and to beat inflation.
  • Endowus is the first digital platform where you can invest your OA money in passive low-cost funds that track the S&P 500 and the MSCI World Index.
  • The majority of those who invested their CPF have made profits greater than the 2.5% OA interest rate.
  • To get started with Endowus, click here.

It is a topic close to the hearts of many Singaporeans: Am I ready for retirement? 

Singaporean's retirement adequacy is often tied to Singapore’s pension scheme, with these savings administered here by the Central Provident Board (CPF).

However, about a third of active CPF members who turned 55 in 2022 had not set aside the Full Retirement Sum in cash, or in cash and property, according to the Ministry of Manpower. And of these members, about 55% are women. That means that a significant number of Singaporeans may not be fully prepared for retirement. Older women also generally have less CPF savings to tap on for their golden years.

Our CPF savings should be worked harder for our retirement needs. Endowus is the first CPF digital advisor in Singapore, and we have been committed to improving the CPF investing journey from day one.

Why managing CPF savings is critical for retirement

From the time Singaporeans start out in their career, to the time they retire, a portion of their monthly salary will be automatically transferred to their CPF account. Employers here will also contribute a percentage of the monthly salary into their employees’ CPF account.

Pie chart: CPF contribution breakdown

For those who are 55 and below, 20% is set aside from their monthly salary. Another 17% is topped up by their employer. The CPF scheme guarantees an interest rate that begins at 2.5% per annum (p.a.), which is attractive relative to savings account or fixed deposit rates. 

These monthly CPF contributions build up to a sizeable amount over time. A $1,000 monthly contribution into the CPF Ordinary Account (OA) builds up to $240,000 in 20 years. Compounded at 2.5% p.a, this sum grows to a sizeable $310,000. 

That said, can you work your CPF Ordinary Account (OA) money harder for your retirement? Here are the statistics — by taking on some risk, that $240,000 can be invested and grow to more than $500,000 after two decades.

Bar chart: Working your OA savings harder for retirement - CPF or CPFIS balances after investing or holding for 20 years, with monthly $1,000 contribution to OA

CPF contribution rates

For monthly wages above $750. CPF contribution rates are effective from 1 Jan 2022.

Employee's age
(% of wage)
By employer
(% of wage)
By employee
(% of wage)
55 and below 37 17 20
55 to 60 28 14 14
60 to 65 18.5 10 8.5
65 to 70 14 8 6
Above 70 12.5 7.5 5

Source: CPF

Some of us depend on our CPF OA savings to pay for our mortgage. With property prices at record levels, our CPF funds are often used to meet our immediate housing needs. 

That’s all the more reason to have our remaining CPF balances work harder for retirement. This can either be achieved through making a CPF OA to Special Account (SA) transfer to take advantage of SA’s higher interest, or through CPF OA investments.

To find out how the CPF changes in Budget 2023 — such as the increase in the CPF monthly salary ceiling to $8,000 — will affect you, check out this article. Plan for your retirement with the Endowus CPF Calculator.

Trailblazer with CPF investing

As a pioneer in this digital advisory space for CPF investments, Endowus has been in the forefront of making the CPF Investment Scheme (CPFIS) a better experience for all CPF members. The aim is to give CPF members a stronger chance of success at growing their pool of money for their retirement needs. 

We take in funds from CPF, SRS, and your cash accounts, giving you a seamless one-stop platform to channel funds from your main funding avenues to investment solutions — be they in advised portfolios, or in more than nearly 250 single funds available on our platform. 

CPF members can easily instruct an automatic monthly contribution to their CPF investment portfolio or single fund (just as they can do with investments funded by SRS monies and/or cash). Today, 1 in 3 customers chooses to start their first investment with us by tapping on their CPF funds.

Infographic on CPF OA and CPF investing with Endowus

Lower costs

As a wealth advisor, we believe that minimising cost, be it through our Endowus Fee or the funds' fund-level fees, is the surest way to better returns.

We started providing our services at a low cost of 0.4% p.a. — we did this before CPF mandated the lowering of wrap fee from 1 Oct 2020. When CPF lowered the wrap fees, it meant no more sales charges imposed by any financial institution, with platform charges cut to a cap of 0.4% p.a. 

But right from the start, we also cracked open a few insider secrets and levelled the playing field for the ordinary investor for all funds, whether you are investing using CPF funds, SRS savings, or cash. We know that several funds are constructed with different tiers or classes. Institutional investors access the funds at lower costs than retail investors, even though these cheaper classes of funds can be sold to retail investors too. If available, Endowus offers those classes of funds to our retail clients. 

If not, then any commission that fund distributors earn from the fund management companies — known as trailer fees — is all fully returned to investors. 

This is our unique commitment to investors to stay independent from conflict of interest; we remain the only digital platform in Singapore to consistently do so. By the end of 2021, we have returned to customers more than $650,000 in commissions on investments made through CPF funds alone.

For clients who want to invest in single funds with exclusive access and 100% Cashback on trailer fees, they can choose their own fund at an even lower cost of 0.3% p.a. 

All of this means that even after the mandated cut in wrap fees in late 2020, we are still the cheapest way to invest your CPF in an advised portfolio. 

Endowus is also the first digital platform where CPF members can invest their CPF OA in passive low-cost funds that track the S&P 500 Index and the MSCI World Index. 

Our existing CPF portfolios are unique to Endowus with funds such as the Infinity US 500 fund. We make recommended portfolio changes, and have partnered with fund managers to give access to the lower-cost Infinity Global Stock index fund

Resilient 2022 performance

Our Flagship Portfolios are created with low-cost, diversified funds. In the final quarter of 2022, the Endowus Flagship CPF Portfolios delivered positive returns despite market uncertainty and volatility. The portfolios also delivered strong relative performance against benchmarks for the full year amid challenging market conditions.

In Q4 2022, the 100% Equity Portfolio outperformed the MSCI All Country World Index (ACWI). In the equity component of the Flagship CPF Portfolios, the best-performing underlying fund for the quarter was the Schroder Global Emerging Markets Opportunities Fund, which invests in emerging markets.

For the full year, the 100% Fixed Income Portfolio outperformed the Bloomberg Global Aggregate Index. The portfolio's more conservative positioning and shorter duration added value and protected better, relative to its benchmark.

Endowus Flagship CPF Portfolio returns

SGD returns, monthly data as of 31 December 2022

Dec 2022 Q4 2022 Q3 2022 Q2 2022 Q1 2022 2022 3Y
Endowus Flagship CPF Portfolios
Very Aggressive (100-0) -5.8% 2.6% -4.1% -12.8% -5.8% -19.2% 3.0%
Aggressive (80-20) -4.7% 2.3% -4.0% -10.9% -5.4% -17.2% 2.3%
Balanced (60-40) -3.6% 1.8% -3.8% -9.0% -5.1% -15.4% 1.5%
Measured (40-60) -2.6% 1.4% -3.7% -7.2% -4.7% -13.6% 0.3%
Conservative (20-80) -1.3% 1.0% -3.5% -5.3% -4.4% -11.8% -0.9%
Very Conservative (0-100) -0.1% 0.7% -3.2% -3.2% -4.0% -9.5% -1.9%
Global market indices
MSCI All Country World Index (equity - global) -6.0% 2.4% -3.7% -13.5% -4.9% -18.9% 3.9%
S&P 500 Index (equity - US) -7.8% 0.3% -1.7% -14.0% -4.1% -18.7% 7.5%
Global 60:40 Index (60% equity, 40% fixed income) -4.1% 1.9% -3.6% -9.9% -4.9% -15.8% 1.4%
Bloomberg Global Aggregate Index (fixed income - global) -1.2% 0.9% -3.5% -4.3% -4.9% -11.4% -2.7%

Source: Endowus Research, Bloomberg. Portfolio returns are net of fund-level fees, while index returns include dividends without fee deduction. For the methodology of representative historical data, please refer here.

We focus on diversified funds with broad-market exposure, suitable for clients planning for retirement over the long term. The portfolios and their underlying funds are positioned to deliver value over the long term, allowing clients to capture market gains and enjoy higher returns for the risk they take.

CPF investments made easy

We have made CPF investments more digitally accessible for our clients. You can find out how much CPF you can invest when you create an account with us. We extract your CPF balances through Singpass; all account creation details are automatically populated.

Critically, with UOB Kay Hian as CPF investment administrator, you can invest in a portfolio of funds with minimal agent bank fees. This will be more cost efficient when compared with investing in single funds or single stocks with CPF monies.

Investment horizon and costs matter

While commentators may have their reservations about CPF investing, and may highlight poor historical outcomes, it is important to remember the context.

It was only in late 2020 that all CPFIS fees for unit trusts were reduced. A recent update by CPF showed that 83% of CPF members who invested their CPF savings have made more than 2.5% p.a. in the financial year that ended on 30 Sep 2021.

Total profits or losses of CPF members who invested their OA savings

It is important to acknowledge that short-term investment returns are highly dependent on how the markets have performed. Markets have reacted to the ongoing Russia-Ukraine war, reflecting concerns over the structural impact that this latest geopolitical crisis will have on global economies for years to come. 

But it is just as important to remember that retirement monies are meant to be invested with a long-term horizon in mind. The savings are worked harder so they have the best chance of reaping good returns by passively tracking the market through low-cost, diversified funds. 

CPF is an important part of our retirement goals, and we should be cautious with managing and investing it. Since our official launch in Q4 2019, Endowus has been an advocate for Singaporeans to manage their CPF better. Invest now for better peace of mind in your retirement years.

Read more:

To get started with Endowus, click here.

Next on the Endowus Fin.Lit Academy

Read the next article in the curriculum: CPF changes in Budget 2023 — all you need to know

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