First, some basic informations about the Central Provident Fund (CPF) that every Singaporeans should know. It consists of 3 accounts, the Ordinary Account, Special Account and the Medisave Account.
Ordinary Account - the savings can be used to buy a home, pay for CPF insurance, investment and education.
Special Account - for old age, contingency purposes and investment in retirement-related financial products.
Medisave Account - the savings can be used for hospitalisation expenses and approved medical insurance.
Your CPF savings earns interest. The CPF Interest Rates are reviewed quarterly. Currently, savings in the Ordinary Account earn a minimum interest rate of 2.5% per annum, while savings in the Special and Medisave Accounts earn additional interest of 1.5 percentage points above the prevailing Ordinary Account interest rate.
Next, CPF OA only allows us to invest up to 35% of our account into shares, property funds etc. You can refer to here for more information.
Hey my ex classmate, due to the above fact, I will only buy UT when I have accumulated enough in my CPFIS-OA. As for my spare cash, I prefer to read up annual reports to buy undervalued business. Thanks for your recommendation anyway and I do not have the luxury of $5000 cash for its initial minimum investment. :)
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