My dad was asking me about CPF stuff, and I said
CPF interest is 5% or 6%. It is the best investment.
I am embarrassed because I have been brainwashed by CPF marketing.
I worked in eCommerce, and I am very aware when I see promotions like these.
UP TO always have conditions. They make the promotion BIGGER than it really is. Still, do use ShopBack for extra cashback (:
fine used to companies doing such marketing. But from the government.. that feels wrong.
What is CPF Interest Rate?
Go to CPF website where they explain their interest rates.
You will find a terrible website with bad copywriting.
The truth is, your
- Ordinary Account (OA) is 2.5%, and
- Special Account (SA) etc is 4%.
Then there are 2 extra schemes to help.
- Extra Interest +1% for first $60,000
- Additional Extra Interest +1% for first $30,000, if you are above 55 years old
You should note that historically, these extras were introduced in 2008 and 2016. They are provisional. They can be removed some day. It is extra extra, therefore I believe they should not add to and create that upto marketing bullshit.
The 5% interest is 4+1%. That extra 1% is for the first $60,000. That works out to be an $600.
The 6% interest is 4+1+1%, only if you are above 55 years old. That additional extra 1% is for the first $30,000. That works out to be $300.
If my dad ask me about CPF again, I want to say:
CPF interest is 2.5% for OA, and 4% SA etc. There are some little bit of extra 1% to help.
It is still the best investment. No hyped up 6% bullshit.
CPF has been distasteful with that kind of marketing, and they make it worse with bad copywriting in the website.
CPF is a complex system. Yet it is a good.
But the civil servants coming up with the names and explaining things.. they have done it poorly.
“Extra Interest” vs “Additional Extra Interest”?
One day, they might come up with “Bonus Interest” or “Special Extra Interest”? Or maybe an “Extra Ordinary Account”?
I used to say naming things is the hardest in my profession. Seems like it applies to many others.
Example: My CPF
I created a Google spreadsheet to calculate for my own CPF, and also for my dad. It turns out my total interest rate is 4.29%.
It is very good to have 4.29% interest rate.
I just don’t like the gimmicky and misleading up to 6%.
NOTE: I contribute to SA aggressively to enjoy tax relief. My calculation is simplified because CPF calculate slightly differently.