WEBVTT - Maximising your CPF: Strategies for your 20s and 30s 0:00:00.009 --> 0:00:02.339 You're listening to a CNA podcast. 0:00:05.349 --> 0:00:09.109 It's Andrea Heng. And I am back with another episode 0:00:09.119 --> 0:00:12.890 of Money Talks, the podcast where we discuss all things 0:00:12.898 --> 0:00:16.559 to do with personal finance, how to save better, invest 0:00:16.569 --> 0:00:20.159 better and plan for our retirement better. Can't forget about 0:00:20.170 --> 0:00:22.889 that one. Now, in the last episode, I explored the 0:00:22.899 --> 0:00:27.649 risks and rewards of investment linked insurance policies that I 0:00:27.659 --> 0:00:30.200 LP S for those of you who don't know. And 0:00:30.209 --> 0:00:30.430 if it's 0:00:30.506 --> 0:00:33.816 good idea to terminate an I LP, if it's not 0:00:33.826 --> 0:00:37.534 working for you, if that's something you've been thinking about, 0:00:37.555 --> 0:00:40.495 you want to check it out. Well, today, however, I 0:00:40.506 --> 0:00:43.425 want to talk about something that we probably don't think 0:00:43.436 --> 0:00:48.236 about often enough and that is investing your CPF money, 0:00:48.245 --> 0:00:53.085 especially when you are younger. I'll tell you how much younger. Ok. 0:00:53.296 --> 0:00:55.654 Now we all know what CPF is it 0:00:55.731 --> 0:00:58.902 a portion of your monthly salary that's set aside that 0:00:58.911 --> 0:01:01.742 you can use for housing your medical needs. I know 0:01:01.751 --> 0:01:05.501 I've done that before. Now, whatever is left behind, accumulates 0:01:05.512 --> 0:01:09.861 interest over time and just form a tidy nest egg. Now, 0:01:09.872 --> 0:01:13.521 if you are in your twenties or thirties and that's 0:01:13.531 --> 0:01:16.912 the age group we're talking about today. Chances are you 0:01:16.921 --> 0:01:19.902 might have already tapped into your CPF to pay for 0:01:19.912 --> 0:01:20.882 your first home 0:01:21.169 --> 0:01:24.019 and then ignore what's happening in your ordinary account or 0:01:24.029 --> 0:01:26.800 your O A because you're thinking, you know what? I 0:01:26.809 --> 0:01:30.019 have to wait till I'm 55 to cash it out. Anyway. Well, 0:01:30.029 --> 0:01:34.319 this episode might change your mind here to offer strategies 0:01:34.330 --> 0:01:38.569 for maximizing your CPF. Money. Is Lawrence Tan. It's the 0:01:38.580 --> 0:01:39.599 training and content 0:01:39.675 --> 0:01:43.714 team lead at the Institute for Financial Literacy and we 0:01:43.724 --> 0:01:46.724 welcome him to money talks. Hey, Lawrence. Hi, Andrea. Pleasure 0:01:46.735 --> 0:01:48.745 to be here. It is our pleasure to have you, Lawrence. 0:01:48.754 --> 0:01:52.385 Let's start with a personal anecdote. When did you start 0:01:52.394 --> 0:01:57.035 investing your CPF money? Were you already investing actively elsewhere 0:01:57.044 --> 0:01:59.875 and thought, ah, it's time for me to maximize my 0:01:59.885 --> 0:02:00.434 CPF money. 0:02:01.419 --> 0:02:03.830 So, just like most people who started work and after 0:02:03.839 --> 0:02:06.379 you see some CPF balances accumulate, you sort of feel 0:02:06.389 --> 0:02:08.850 that it's something that I can see, but I cannot touch. 0:02:08.860 --> 0:02:11.059 And then of course, you have all sorts of anecdotes 0:02:11.070 --> 0:02:13.619 coming your way that this money is too far for 0:02:13.630 --> 0:02:16.649 you to use and useless. So that's why I started 0:02:16.660 --> 0:02:20.199 to invest without really having I would say on hindsight, 0:02:20.210 --> 0:02:24.380 fully understanding the risk reward equation. So, yeah, probably around 0:02:24.389 --> 0:02:27.579 mid twenties, mid twenties. That's pretty healthy. I think I 0:02:27.589 --> 0:02:28.770 did about the same too. 0:02:28.990 --> 0:02:32.100 But it took me a how do I say this 0:02:32.110 --> 0:02:36.008 a milestone in my life to realize, hey, I can 0:02:36.020 --> 0:02:38.839 actually invest this money even though I can't touch it. 0:02:38.850 --> 0:02:42.309 So before we get into the nitty gritty, I wanted 0:02:42.320 --> 0:02:46.160 to ask you, could you explain what investing using this, 0:02:46.169 --> 0:02:50.669 using your CPF moneys and tails versus cash? Are there 0:02:50.679 --> 0:02:53.929 specific kinds of instruments, vehicles, products that you can use 0:02:53.940 --> 0:02:55.830 versus what we normally invest in? 0:02:56.410 --> 0:03:00.050 So the CPF investment scheme or CPFIS for short is 0:03:00.059 --> 0:03:05.259 specifically tailored to give savers an opportunity to invest in 0:03:05.270 --> 0:03:07.550 a selected basket of products. So it's not open to 0:03:07.559 --> 0:03:10.649 every product that is available out there. Generally, it's a 0:03:10.660 --> 0:03:13.660 bit more conservative from a risk perspective and that's a 0:03:13.669 --> 0:03:16.649 good reason for it because this is your hard earned money. 0:03:16.660 --> 0:03:19.970 And CPF as you mentioned in the introduction, is really 0:03:19.979 --> 0:03:23.220 for three pillars, right? One for medical needs, of course, 0:03:23.229 --> 0:03:24.020 we have your ma 0:03:24.229 --> 0:03:27.239 your ordinary account, which is for your home. Most people 0:03:27.250 --> 0:03:29.600 use it for home and also your S A for 0:03:29.610 --> 0:03:32.779 your retirement, which is a very critical component and sometimes 0:03:32.788 --> 0:03:35.509 when you're younger, you don't think about it. So you 0:03:35.520 --> 0:03:37.809 have to make sure that you do not lose too 0:03:37.820 --> 0:03:40.740 much of your capital through improper investment. So the risk 0:03:40.750 --> 0:03:46.050 basket for products under the CPFIS scheme is calibrated. So generally, 0:03:46.059 --> 0:03:49.119 they are very conservative products having said that you have 0:03:49.205 --> 0:03:51.634 to then look at the fact that there is risk 0:03:51.675 --> 0:03:55.705 free return from your CPF. So you want to obviously 0:03:55.714 --> 0:04:00.255 invest in something that can outperform a risk free return 0:04:00.324 --> 0:04:04.994 with a relatively logical risk reward trade off, right? Because 0:04:05.005 --> 0:04:07.324 if it's paying you 2.5% and you think you can 0:04:07.335 --> 0:04:10.065 only get about 3% question is whether it makes sense 0:04:10.565 --> 0:04:14.115 given the higher risk. So these are some of the considerations, right? 0:04:14.309 --> 0:04:17.399 And of course, recently, you can also invest your CPF 0:04:17.410 --> 0:04:20.559 into things like Singapore government bonds or Singapore savings bonds. 0:04:20.570 --> 0:04:23.779 So there's a little bit more products available. And if 0:04:23.790 --> 0:04:27.160 you don't like 2.5% you think SSB is giving you 3% 0:04:27.170 --> 0:04:28.729 or you know, you can go for that and you 0:04:28.738 --> 0:04:30.640 have the same level of risk. So that's how you 0:04:30.649 --> 0:04:34.920 should think about investing your CPFIS, right? Ok. That's cool. 0:04:34.928 --> 0:04:38.178 Is there a minimum amount that we need to have 0:04:38.190 --> 0:04:40.738 in that O A for us to even invest in 0:04:40.820 --> 0:04:42.220 or to make it even worse? 0:04:42.299 --> 0:04:45.428 Thinking about investing? Well, actually at the end of the day, 0:04:45.440 --> 0:04:47.229 you take a look at how much you are prepared 0:04:47.238 --> 0:04:49.919 to put your capital. The money that you don't need 0:04:49.928 --> 0:04:52.219 investing is always about, you know, the money that you 0:04:52.230 --> 0:04:54.709 can put aside for the long term. I like to 0:04:54.720 --> 0:04:58.149 use that analogy of, you know, investing, you invest your 0:04:58.160 --> 0:05:02.200 beer money, not your milk powder money that straight away 0:05:02.209 --> 0:05:04.269 drives from the point of the kind of money that 0:05:04.279 --> 0:05:08.140 you should be using, right? You immediately know what you mean, 0:05:08.149 --> 0:05:10.079 the money is fungible. But you know, 0:05:10.290 --> 0:05:12.869 if you think about it, your money is money. Yeah, 0:05:12.880 --> 0:05:15.209 you don't have to feed somebody. So that's the kind 0:05:15.220 --> 0:05:17.469 of thinking that you sort of have in mind. But 0:05:17.480 --> 0:05:19.829 having said that again, CPF like I said, is cost 0:05:19.839 --> 0:05:22.220 savings because whatever you build up in your O A 0:05:22.230 --> 0:05:25.850 eventually when you reach obviously my age or closer to that, 0:05:26.010 --> 0:05:29.440 it all forms part of your S A for So 0:05:29.450 --> 0:05:31.779 O A plus S A becomes your retirement account. So 0:05:31.790 --> 0:05:35.380 you don't want to be too about it. That's not 0:05:35.390 --> 0:05:37.909 to say though that you talked about how some of 0:05:37.920 --> 0:05:38.079 the 0:05:38.279 --> 0:05:42.808 pfis instruments tend to be quite conservative. It gives you 0:05:42.820 --> 0:05:45.488 quite a bit of room in terms of your risk 0:05:45.500 --> 0:05:48.480 reward capabilities, but that's not to say that you can't 0:05:48.488 --> 0:05:52.130 lose on your CPF investments, can you? Of course, I 0:05:52.140 --> 0:05:54.630 think the last time I looked at data from CPF, 0:05:54.640 --> 0:05:57.959 at least 50% of people who have invested within the 0:05:57.970 --> 0:06:03.890 CPFIS investments don't outperform the 2.5%. So in other words, 0:06:03.899 --> 0:06:05.868 you would have been better off just leaving the money 0:06:05.880 --> 0:06:06.190 there 0:06:06.459 --> 0:06:11.469 sleeping better, right? Whatever. So the track record is not great. 0:06:11.480 --> 0:06:14.428 It's not that every seven out of 10 investors who 0:06:14.440 --> 0:06:18.349 invested in CPFIS do better than 2.5%. It's not that 0:06:18.359 --> 0:06:21.420 it's probably about 40 50% at best. So we have 0:06:21.428 --> 0:06:25.149 to remember that it's not right. It's not a given. 0:06:25.160 --> 0:06:29.010 So think carefully. There are instruments you can invest, you 0:06:29.019 --> 0:06:31.739 can put into ETF S which potentially gives you a 0:06:31.750 --> 0:06:33.089 bit more 6 7%. 0:06:33.320 --> 0:06:36.329 But there's always a risk. Of course, of course, with 0:06:36.339 --> 0:06:42.049 ETF S. Now how different is investing CPF versus cash 0:06:42.059 --> 0:06:44.928 apart from the types of products? What other considerations are 0:06:44.940 --> 0:06:48.700 there in terms of the differences? I think again, we 0:06:48.709 --> 0:06:51.140 come back to the core mission of what CPF is for, right? 0:06:51.178 --> 0:06:54.709 We all earn a certain level of income, we contribute 0:06:54.720 --> 0:06:57.868 significantly CPF as well as from the employer side. 0:06:58.160 --> 0:07:00.988 So the mission of CPF is really to build three 0:07:01.000 --> 0:07:04.029 key pillars that we talked about, right? Health care, retirement 0:07:04.040 --> 0:07:07.570 and housing needs, right? Although O A along the way, 0:07:07.940 --> 0:07:11.440 because of your demand, you have allowed to invest, you know, 0:07:11.450 --> 0:07:13.609 you can even use it for education loan and some 0:07:13.619 --> 0:07:17.579 of the other stuff. But the fundamentals of CPF should be, 0:07:17.589 --> 0:07:20.750 we should remind ourselves of it, right? Cash is always 0:07:20.760 --> 0:07:23.029 the other source. The question is, of course, you know, 0:07:23.040 --> 0:07:25.750 what are you getting from the cash? To me, the 0:07:25.760 --> 0:07:28.369 logic is obviously, if cash is lazy out there 0:07:28.769 --> 0:07:31.470 is getting only 1% I mean, these days, at least 0:07:31.480 --> 0:07:34.040 interest rate is slightly better, but you know, rewind 34 0:07:34.049 --> 0:07:36.529 or five years back, the interest rates were bad, you 0:07:36.540 --> 0:07:39.239 are hardly getting anything. So then you have lazy cash, 0:07:39.339 --> 0:07:42.299 then of course, you want to deploy lazy cash first, right? Yeah, 0:07:42.309 --> 0:07:45.649 of course. As a 2030 year old when you start off, 0:07:45.660 --> 0:07:49.079 I think inevitably you will start carrying some debt. So 0:07:49.089 --> 0:07:51.989 you have to ask yourself again carefully. Should I invest 0:07:52.000 --> 0:07:54.809 or should I just my debt? If your debt is 0:07:54.820 --> 0:07:56.200 costing you 4 5% 0:07:56.480 --> 0:08:00.130 you retire with lazy cash, you are actually saving 4 5%. 0:08:00.140 --> 0:08:01.910 Right straight away. You get a yield, you get a 0:08:01.920 --> 0:08:04.450 pick up 4 5%. So you can, you must think 0:08:04.459 --> 0:08:06.679 of it that way, right? If you think that you 0:08:06.690 --> 0:08:10.440 can outperform 4 5% or whatever that your debt is, 0:08:10.450 --> 0:08:13.769 then invest the cash, right, then that's the way to 0:08:13.779 --> 0:08:16.970 think about investing, right? So use those lazy cash, 0:08:17.390 --> 0:08:19.980 but take into consideration whether how much debt you're carrying 0:08:19.989 --> 0:08:23.049 at what cost and then ask yourself, would you be 0:08:23.059 --> 0:08:26.320 better off retiring the debt or you can invest the 0:08:26.329 --> 0:08:29.959 cash with multiple returns over the course of the debt? Right. Right. 0:08:29.970 --> 0:08:33.190 So either shut that debt down and that will be 0:08:33.200 --> 0:08:37.900 an investment. Of course, it is. Yeah, exactly. Yeah, down 0:08:37.909 --> 0:08:40.580 the road. So either that or if you don't have debt, 0:08:40.590 --> 0:08:43.159 which I don't know who would have debt in Singapore 0:08:43.289 --> 0:08:45.380 in your twenties and twenties maybe, I don't know, 0:08:45.482 --> 0:08:50.723 I think I would say, yeah, definitely, definitely have that. Ok. 0:08:50.732 --> 0:08:53.322 So either shut the debt down or think about the 0:08:53.333 --> 0:08:55.381 kinds of instruments that can give you that kind of 0:08:55.393 --> 0:08:59.533 returns that would be above and beyond it being asleep 0:08:59.752 --> 0:09:02.533 in your way of being ok. Now, I wanted to 0:09:02.543 --> 0:09:06.093 talk about the age group here. I'm way past my 0:09:06.102 --> 0:09:08.612 twenties and thirties and I wish I had better advice 0:09:08.622 --> 0:09:10.982 when I was at that age. But you know what? Yeah, 0:09:10.992 --> 0:09:13.283 better late than never I say, 0:09:13.575 --> 0:09:15.596 but let's talk about that group of people, the twenties 0:09:15.606 --> 0:09:19.536 and thirties. Do you think that this age group and 0:09:19.546 --> 0:09:22.895 especially in today's context where you have a lot of 0:09:22.905 --> 0:09:26.665 temptation in terms of retail investing, should they have a 0:09:26.676 --> 0:09:30.986 different strategy when it comes to investing their CPF versus 0:09:30.995 --> 0:09:34.765 those in their forties? For example, where they would have 0:09:34.776 --> 0:09:37.716 been a bit more mature in terms of where their 0:09:37.726 --> 0:09:41.195 CPF allocations and accumulations would have been? Yeah, 0:09:41.820 --> 0:09:44.868 I think this you can see as more distractions. Um 0:09:44.880 --> 0:09:49.210 the flipside is that there are more avenues, more, more opportunities, 0:09:49.219 --> 0:09:52.609 more channels. So the question is how do you navigate it, 0:09:52.619 --> 0:09:56.469 make sense of it? But bottom line in investing, there's 0:09:56.479 --> 0:09:59.179 no shortcut, you have to do your ground work, you 0:09:59.190 --> 0:10:01.700 have to do your homework, whatever you call it, you 0:10:01.710 --> 0:10:05.069 have to be disciplined, you have to know where you're going, 0:10:05.080 --> 0:10:07.590 you have to know your objective. So these ground rules 0:10:07.599 --> 0:10:08.489 remain whether 0:10:08.820 --> 0:10:11.130 during my generation, your generation on this new, it's just 0:10:11.140 --> 0:10:13.098 that now you've got a lot more, perhaps a bit 0:10:13.109 --> 0:10:15.510 more confusing. Ask yourself whether you have the discipline to 0:10:15.520 --> 0:10:18.989 do the homework. Some people just hate financial analysis and 0:10:19.289 --> 0:10:22.109 they just want the latest hot tip from somebody that's 0:10:22.119 --> 0:10:24.950 not investing, right? That's gambling. So you need to know 0:10:24.960 --> 0:10:27.510 the difference. If you are of the kind of mindset 0:10:27.520 --> 0:10:30.109 where you just want a quick tip to make some 0:10:30.119 --> 0:10:32.520 money in 3 to 4 weeks time, then you know, 0:10:32.530 --> 0:10:34.728 that's not investing. So I think that's the advice for 0:10:34.739 --> 0:10:35.849 the younger age group because 0:10:36.309 --> 0:10:40.199 unfortunately, maybe because people are more impatient, things are faster 0:10:40.349 --> 0:10:43.289 and you see a lot of influences from socials and 0:10:43.299 --> 0:10:45.880 all that stuff and you want things to be quick. 0:10:45.890 --> 0:10:48.640 Hence you have this thing about people trying to get 0:10:48.650 --> 0:10:52.218 rich quick. But I wanted to ask because of their 0:10:52.229 --> 0:10:56.119 longer runway at that age, would this mean that they 0:10:56.130 --> 0:10:58.460 can afford to be a bit more aggressive? The good 0:10:58.469 --> 0:11:00.640 news is of course they can afford to, they can 0:11:00.650 --> 0:11:03.859 afford to provide it again. We come back to the fundamentals, right? 0:11:04.080 --> 0:11:07.619 What is your objective for every pot of money that 0:11:07.630 --> 0:11:10.669 you want to invest? Right? Do you have the aptitude 0:11:10.679 --> 0:11:13.569 to do the groundwork and the homework? These are fundamentals 0:11:13.580 --> 0:11:16.010 must be there, right? If you do have all this 0:11:16.020 --> 0:11:18.848 and you are clear about your objective, you can take 0:11:18.859 --> 0:11:22.069 more risk because you are younger, you have the benefit 0:11:22.080 --> 0:11:26.179 of two things compounding. Plus you can recover. Yes, right. 0:11:26.190 --> 0:11:28.569 You can recover. Should markets you know, go into a 0:11:28.580 --> 0:11:31.039 bit of a dive, you can recover. So you have 0:11:31.049 --> 0:11:32.710 the advantage but then again, 0:11:33.099 --> 0:11:35.469 if you don't have the aptitude, you need to outsource 0:11:35.479 --> 0:11:38.500 or you are a very risk averse person. The last 0:11:38.510 --> 0:11:41.909 thing you should be doing is to invest and then 0:11:41.919 --> 0:11:44.270 not being able to sleep at night or have quarrels 0:11:44.280 --> 0:11:47.699 with your spouse. Forget it. It's not worth it, it's 0:11:47.710 --> 0:11:50.030 not worth it. So these are some of the things 0:11:50.039 --> 0:11:53.270 which you have is very personal and each individual has 0:11:53.280 --> 0:11:56.340 to sort of know your makeup. If you have all 0:11:56.349 --> 0:11:58.570 these things addressed and you are happy that this is 0:11:58.580 --> 0:12:01.169 beer money, right? Then do your homework 0:12:01.400 --> 0:12:04.530 and there's a world of products, there's a world of opportunities. 0:12:04.539 --> 0:12:07.080 Um and being young, like I said, you can afford 0:12:07.090 --> 0:12:09.659 to take more risk, but it's not like a must 0:12:09.669 --> 0:12:10.549 do or it 0:12:10.909 --> 0:12:13.849 something which are compulsory because you're young, right? Yeah. So 0:12:13.859 --> 0:12:15.390 I wanted to pick up on that. So there is 0:12:15.400 --> 0:12:20.159 obviously another camp that says, you know what, at 2.5% 0:12:20.169 --> 0:12:23.080 leaving my money in CPF. Not a big deal. Not 0:12:23.090 --> 0:12:25.719 so bad. I should just ignore it, let it roll. 0:12:25.729 --> 0:12:28.500 I'll let it sleep in my CPF account. What do 0:12:28.510 --> 0:12:32.820 you say to this? 2.5% will be short of inflation obviously, 0:12:33.030 --> 0:12:34.989 but given the fact that he's going to compound over 0:12:35.000 --> 0:12:37.599 a period of time, you know, long term is not 0:12:37.609 --> 0:12:39.858 that bad. And if you don't have the risk appetite 0:12:39.869 --> 0:12:43.959 or the aptitude to invest, then that's the best for you. Right. 0:12:44.099 --> 0:12:46.469 You can outsource, you can put your money into a 0:12:46.479 --> 0:12:49.880 fund and have a regular way of investing. There are 0:12:49.890 --> 0:12:52.830 some tradeoffs with that because you outsource to somebody, you 0:12:52.840 --> 0:12:55.340 rely on their strategy, of course, you have to pay them. 0:12:55.549 --> 0:12:57.130 So there are some of these things that you have 0:12:57.140 --> 0:13:00.039 to be happy with. But to me that's fine. If 0:13:00.049 --> 0:13:02.630 that is your personality, your profile is fine, there's nothing 0:13:02.640 --> 0:13:05.520 too bad about it. You won't lose out necessarily. Well, 0:13:05.900 --> 0:13:08.880 you will not have something that grows as quickly, right? 0:13:08.890 --> 0:13:12.439 With compounding, perhaps you could, you know, depends on again 0:13:12.450 --> 0:13:14.390 what the inflation outlook is in the next two or 0:13:14.400 --> 0:13:15.179 three years. But 0:13:15.489 --> 0:13:20.219 if things hopefully taper down without runaway hyper inflation, then 0:13:20.229 --> 0:13:24.429 it's OK. Right. But if inflation becomes a bit out 0:13:24.440 --> 0:13:26.329 of control, then of course, it puts a lot of 0:13:26.340 --> 0:13:29.530 pressure on, then even 2.5 can sort of fall into 0:13:29.539 --> 0:13:31.469 the camp of a bit lazy money. 0:13:32.729 --> 0:13:35.030 But then again, overall interest rate should adjust. Like if 0:13:35.039 --> 0:13:38.380 things persist at a high level, we, we shall see. Ok. 0:13:38.390 --> 0:13:41.469 So that's the other thing that I wanted to touch 0:13:41.479 --> 0:13:46.579 on there is this longer investment horizon. We're talking about 0:13:46.590 --> 0:13:48.820 20 to 25 years before you can even touch that 0:13:48.830 --> 0:13:52.299 money in your CPF. Right. So you would need to 0:13:52.309 --> 0:13:55.429 rid the ups and downs of the market again, depending 0:13:55.440 --> 0:13:58.590 on your risk, appetite, your aptitude to stomach all the 0:13:58.599 --> 0:14:00.400 ups and downs of volatility in the market. 0:14:00.640 --> 0:14:03.739 So it's obviously as a younger person in your twenties 0:14:03.750 --> 0:14:07.630 and thirties, you'd feel easily disheartened. You might even panic. Um, 0:14:07.640 --> 0:14:11.020 when you see your investments in the negative, it's turning 0:14:11.030 --> 0:14:13.900 red on the piece of paper or rather it's on 0:14:13.909 --> 0:14:17.859 your digital app. Now, what advice would you have in 0:14:17.869 --> 0:14:18.450 terms of 0:14:18.664 --> 0:14:23.155 emotionally handling these episodes? So there are two parts to it. Right. 0:14:23.164 --> 0:14:26.215 I think most people would be still using the CPF 0:14:26.224 --> 0:14:30.304 especially they heavily for their mortgage. That is an investment 0:14:30.315 --> 0:14:32.155 in itself because you are using it to pay down 0:14:32.164 --> 0:14:36.554 a loan on a property which you hope will sustain value. 0:14:36.830 --> 0:14:39.880 So it's also an investment in terms of investing in 0:14:39.890 --> 0:14:43.000 financial market products which are more volatile than your home. 0:14:43.010 --> 0:14:45.289 Then of course, it comes back to my point at 0:14:45.299 --> 0:14:48.059 the outset. Do you have the attitude to take this? Right. 0:14:48.599 --> 0:14:51.390 It will be ups and downs. My advice is if 0:14:51.400 --> 0:14:56.380 you feel stressed, don't delete the app or whatever, don't, 0:14:56.390 --> 0:14:56.820 don't stand 0:14:56.909 --> 0:14:59.940 did every other day in your office, then perhaps you 0:14:59.950 --> 0:15:03.609 should outsource some of your investing or tear down in 0:15:03.619 --> 0:15:05.570 terms of your risk profile. So you don't have this 0:15:05.580 --> 0:15:09.190 sort of volatility, right? So move from a moderately conservative, 0:15:09.369 --> 0:15:13.690 slightly more conservative. Correct, correct. My advice is always keep 0:15:13.700 --> 0:15:16.690 an eye on the objective, right? What have you invested 0:15:16.700 --> 0:15:20.960 in are the fundamentals of the underlying assets? Have they changed? 0:15:21.559 --> 0:15:25.659 Notwithstanding an event or a market episode, have they changed? Right. 0:15:25.900 --> 0:15:28.169 Obviously COVID has given us a very good example of 0:15:28.179 --> 0:15:33.159 how some fundamental stocks, businesses can be impacted. So you 0:15:33.169 --> 0:15:35.669 really get a sense of, ok, are we facing the 0:15:35.679 --> 0:15:38.520 kind of Black Swan situation or is it, you know, 0:15:38.530 --> 0:15:41.070 really a sense of a situation where a short term 0:15:41.080 --> 0:15:42.330 market psychology, 0:15:42.590 --> 0:15:45.419 an industry event, which is sort of limiting, it will 0:15:45.429 --> 0:15:47.830 be limiting, although it looks very bad perhaps on the 0:15:47.840 --> 0:15:51.020 day's newspaper. Sure. But if you look over a cycle, 0:15:51.030 --> 0:15:54.369 you will be limiting. So if your fundamentals are there, 0:15:54.419 --> 0:15:57.270 the assets, the business that you've invested in or the 0:15:57.280 --> 0:16:00.000 stock that you've invested in the fundamentals have not changed. 0:16:00.090 --> 0:16:03.109 Stay the course. Yeah, I think that's the piece of 0:16:03.119 --> 0:16:05.619 advice that we've been hearing consistently here on money talks 0:16:05.630 --> 0:16:08.349 is that you look at the market fundamentals or even 0:16:08.359 --> 0:16:10.260 the businesses fundamentals, 0:16:10.645 --> 0:16:15.015 funds fundamentals. If they have remained intact over the course 0:16:15.025 --> 0:16:18.854 of say something like COVID, then it's just best to 0:16:18.864 --> 0:16:22.174 stay the course. Don't back out, just don't panic just 0:16:22.184 --> 0:16:24.655 because you see the first sign of bad news and 0:16:24.664 --> 0:16:27.244 that premises again, back to our basic that these monies 0:16:27.255 --> 0:16:29.534 are beer money, right? It is something which you have 0:16:29.544 --> 0:16:31.474 no sudden need or you don't say that I'm going to, 0:16:31.484 --> 0:16:34.044 I really need that cash in one month's time because 0:16:34.054 --> 0:16:36.174 of XYZ. So you got to make sure that this 0:16:36.184 --> 0:16:38.125 is not the kind of that part of your funds. 0:16:41.530 --> 0:16:44.650 Hello, everyone. My name is Christina and I'm Adrian and 0:16:44.659 --> 0:16:46.979 we're the host of a podcast called Work It. If 0:16:46.989 --> 0:16:48.989 you never heard of it. Well, it's a good time 0:16:49.000 --> 0:16:51.700 to tap in, in the last 20 episodes. We've discussed 0:16:51.710 --> 0:16:54.809 topics like how to negotiate for a salary increase or 0:16:54.820 --> 0:16:57.400 how to get along with younger colleagues who have different 0:16:57.409 --> 0:16:58.780 values from you, which 0:16:58.890 --> 0:17:02.530 incidentally it's our top performing episode. If work consumes your 0:17:02.539 --> 0:17:06.199 life and you want some perspective on issues like management stress, 0:17:06.209 --> 0:17:10.099 even office romance, then this podcast should be on your list. 0:17:10.280 --> 0:17:13.159 A new episode drops every Monday. Catch us on the 0:17:13.170 --> 0:17:16.160 CN A app or wherever you get your podcast. 0:17:19.819 --> 0:17:22.079 So one of the things obviously, and we've talked about 0:17:22.089 --> 0:17:25.439 this during this conversation, Lawrence is how we use CPF 0:17:25.449 --> 0:17:28.890 to pay off our housing loans for these younger people 0:17:28.900 --> 0:17:31.560 in their twenties and thirties, they would either have a 0:17:31.569 --> 0:17:34.280 BT O or a younger flat relatively or just they're 0:17:34.290 --> 0:17:36.919 just being that by virtue of the fact that they're younger, 0:17:37.069 --> 0:17:39.530 they have the option of using their CPF to pay 0:17:39.540 --> 0:17:42.790 off their housing loan as quickly as possible. And I 0:17:42.800 --> 0:17:44.510 know people who have done this, 0:17:44.755 --> 0:17:47.425 but then they fall into the trap of weak cash flow, 0:17:47.435 --> 0:17:51.244 for example. So overall using your CPF to clear your 0:17:51.255 --> 0:17:56.974 housing loan, is this a sound strategy rather than using 0:17:57.005 --> 0:18:00.564 the money for investments, for example. So again, it boils 0:18:00.574 --> 0:18:04.114 back down to where are your lazy money for each individual, right? 0:18:04.255 --> 0:18:09.364 If your CPF funds at 2.5% is your Laziest money 0:18:09.719 --> 0:18:11.989 because you have put your funds in things that you 0:18:12.000 --> 0:18:15.698 can yield 10 15% or whatever or be higher risk, 0:18:15.819 --> 0:18:18.599 then of course, paying down loans is always a good 0:18:18.609 --> 0:18:23.250 thing to me. Right. So if you sacrifice 2.5% but you, 0:18:23.260 --> 0:18:25.579 you are saving 5% on your housing loan, Hey, that's 0:18:25.589 --> 0:18:28.688 a good carry. So if that's your Laziest money, then 0:18:28.699 --> 0:18:31.399 of course. Right? But if you have lazy money, then don't, right. 0:18:31.410 --> 0:18:33.800 If you have lazier money somewhere, then don't. So at 0:18:33.810 --> 0:18:34.899 the end of the day, you have to look at 0:18:34.910 --> 0:18:35.949 where your funds are. 0:18:36.219 --> 0:18:38.560 So that's the way to sort of make that decision 0:18:38.800 --> 0:18:42.359 for most younger people with mortgage. My advice is don't 0:18:42.369 --> 0:18:45.819 forget that your mortgage, you're paying 4 5%. That's a 0:18:45.829 --> 0:18:49.560 drag on your investment, your overall wealth, right? So you 0:18:49.569 --> 0:18:53.229 can pay off do so. Ok. Ok. That's good advice. 0:18:53.510 --> 0:18:56.209 Have you had any stories where 0:18:56.449 --> 0:19:00.609 uh CPF investments have gone awry? Any pitfalls that you've 0:19:00.619 --> 0:19:02.900 heard of that we need to be aware of because 0:19:02.910 --> 0:19:05.089 I've heard of some myself, but I wanted to hear 0:19:05.099 --> 0:19:08.180 from you what you've heard on your side. I think 0:19:08.189 --> 0:19:12.139 the CPF IFI S scheme is relatively ring fenced. Hence, 0:19:12.150 --> 0:19:14.719 there's always a logic why you can only invest in 0:19:14.729 --> 0:19:18.719 certain type of products. So where people have lost money 0:19:18.729 --> 0:19:21.718 it is more because of market risk, right? And 0:19:22.020 --> 0:19:25.160 they needed the funds immediately and, and it was not 0:19:25.170 --> 0:19:28.319 a good time. Hence the milk powder money versus beer 0:19:28.329 --> 0:19:32.160 money thing. So they were not clear how long term 0:19:32.170 --> 0:19:34.849 could they deploy the funds. Right. And, and of course, 0:19:34.859 --> 0:19:37.219 we always always have a camp of people who panic 0:19:37.229 --> 0:19:41.040 and they decide to withdraw and then they basically crystallize 0:19:41.050 --> 0:19:44.530 the loss. So the horror stories have been well relatively 0:19:44.540 --> 0:19:47.800 mild because it's not because of scams or some 0:19:47.989 --> 0:19:52.589 regulated scheme that has misled. So CPFIS is kind of contained. 0:19:52.599 --> 0:19:55.619 So I've not heard of any scam related or people 0:19:55.630 --> 0:19:58.939 who have invested in, in stuff which have turned negative 0:19:58.949 --> 0:20:02.329 because they were poorly regulated. Right? Yeah. So CPF SI 0:20:02.339 --> 0:20:06.089 S is really contained. Ok. That's good. That's reassuring. 0:20:06.489 --> 0:20:10.739 Ok, so wanted to get your thoughts on the best 0:20:10.750 --> 0:20:15.069 hacks for growing CPF money within a 20 to 25 0:20:15.079 --> 0:20:18.579 year horizon. Ok. Let's hear it. So a couple of things, 0:20:18.589 --> 0:20:19.979 I'm going to start with a big picture. Of course, 0:20:19.989 --> 0:20:23.420 I have to champion money since and if so best 0:20:23.430 --> 0:20:27.099 hack is invest in yourself, come to our platform ifl 0:20:27.109 --> 0:20:27.880 we conduct courses 0:20:27.944 --> 0:20:31.104