What can you do with your CPF?

Your Special Account is currently yielding 4% per annum. If inflation is 3%; your net gain is 1%. This means that the $40,000 in your special will take 72 years to double in real value.

Place it in a unit trust, and if that yields 8% net, it’ll double in 9 years – that’s $80,000. And that amount doubles again in the next 9 years, and doubles again in the following 9 years.

Assuming you have $40,000 in your Special Account at the age of 40, you’ll have $360,000** (based on a compounding growth of 8% per annum) by the time you’re 67.

Draw down from that amount (assuming interest is cancelled out by inflation) over the next 18 years (the new life expectancy is 85 years) and you’ll have an annual income of $20,000 or more than $1,600 per month. Now isn’t that a much more decent sum than $300?

Plus if you happen to be called back to that happy place in the sky sooner, the remaining sum forms part of your estate and not the common pool. At least you’ll be able to leave behind a legacy.

Now if you are already investing, and you’ve calculated that at the age of 67, a monthly income of $1600 is not going to be enough, then you might contemplate starting a business now.