25-08-2014, 12:20 PM
(This post was last modified: 25-08-2014, 06:50 PM by specuvestor.)
Pre 2009 (and pre-97) our inflation rate has roughly been around 2-3% which is how they got the 2.5% base rate
Then again because of CPFIS and properties, most of us do not even have OA savings per se, hence the weighted average of the SSGS yield is 4%.
I agree that they probably need to tweak the OA rate from 2.5% to perhaps somewhere between 3-4% to generate real returns. The scheme of pegging SA to 1% plus SGS 10 years is already in place, just that past few years it has been delayed as the SA rate would have been below 4% if implemented. As I posted elsewhere it remains to be seen which fund could try to beat 4% NET return in SGD (not USD) terms over extended period of a decade or more.
For a prudent investor/ saver, CPF should be a pseudo-bond allocation for retirement. That would give a better balanced portfolio perspective vs our own PA, SRS, house and other fixed income allocation vis a vis our net worth.
Then again because of CPFIS and properties, most of us do not even have OA savings per se, hence the weighted average of the SSGS yield is 4%.
I agree that they probably need to tweak the OA rate from 2.5% to perhaps somewhere between 3-4% to generate real returns. The scheme of pegging SA to 1% plus SGS 10 years is already in place, just that past few years it has been delayed as the SA rate would have been below 4% if implemented. As I posted elsewhere it remains to be seen which fund could try to beat 4% NET return in SGD (not USD) terms over extended period of a decade or more.
For a prudent investor/ saver, CPF should be a pseudo-bond allocation for retirement. That would give a better balanced portfolio perspective vs our own PA, SRS, house and other fixed income allocation vis a vis our net worth.
(25-08-2014, 11:55 AM)kagemusha Wrote: I wonder how the picture looks over a longer term period, maybe 7 - 15 years time frame.
2007 - 2012 are not exactly vintage years nor representing how the stock market performs generally.
While I agree that CPF provides a form of safe harbour in times of uncertainty, it certainly is not the most efficient allocation of money either.
Public money and accountability could be the reason, but 2.5% is not exactly compensating for the effects of inflation.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
Think Asset-Business-Structure (ABS)