Investing Updates: Why I Think It Make Sense To Invest Your CPF OA Savings In A Global Portfolio Through Endowus

Source:

https://dollarsandsense.sg/why-i-think-it-make-sense-to-invest-your-cpf-oa-savings-in-a-global-portfolio-through-endowus/

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The author argues that investing excess CPF Ordinary Account (OA) savings through Endowus can be a sensible way to achieve higher long-term growth—provided certain conditions are met.

First, “excess” OA funds refer to amounts beyond what is needed to cover mortgage payments for a few years as a safety buffer. Once this buffer is secured, leaving all funds in the OA earning a risk-free 2.5% may not be the most efficient strategy for long-term retirement growth. Investing offers the potential for higher returns, though not without trade-offs.

A key consideration is cost. OA interest is both risk-free and fee-free, whereas investing through Endowus involves a 0.40% annual management fee plus underlying fund fees. Therefore, returns must exceed these costs to justify investing.

Risk is another major factor. Unlike guaranteed OA interest, investment returns fluctuate and may result in losses. This risk can be managed by choosing conservative portfolios, maintaining a long investment horizon (ideally 10+ years), and diversifying globally to reduce concentration in any single market.

The author prefers Endowus’ advised portfolios rather than building a DIY portfolio, citing convenience and lack of time. These portfolios also provide global exposure, which helps overcome Singapore’s small and concentrated market, allowing access to major international companies and sectors.

Ultimately, investing CPF OA savings is not for everyone. It only makes sense if one has sufficient housing reserves, accepts market risk, and has decades before retirement. While transferring OA funds to the Special Account is a safer alternative, investing part of excess OA savings in a globally diversified portfolio may offer better long-term growth for those with the right profile.