Wednesday, 11 January 2017
Understanding the "Spirit" of CPF
I think the pendulum has swung a little to the opposite direction this time...
CPF money can't see and touch
There was a time when people would "shun" CPF.
When got chance, quickly use our CPF to buy shares, properties, useless ILPs, integrated policies, and what not.
If don't use now, wait we'll never see our CPF money ever!
It seems we were in a race to deplete our CPF as fast as possible? Don't let big daddy get his hands on our money!
Of course this idea was planted by snake-oil salespersons, and successfully too! If not how to earn commissions and fees?
C'mon, be honest. You were sold to.
You didn't come up with it yourself, did you?
Come, take my money CPF
Now? With the low interest rate environment and the search for yields, all of sudden, there's renewed interest to voluntarily put money into CPF?
In big daddy we trust. Never mind the constant moving of the goal posts... Its OK lah! You say you have the memory of a gold fish?
Well, let's hope this time you came up with this idea yourself.
Time will tell
There's no wrong or right answers as each of us have our own individual situations that only we know best.
Who we are today is the sum of all the decisions we have and have not made in the past.
Using a track record of 30 or more years, some have discovered:
1) ILPs - It's just a dumb idea. Period. But great for the snake-oil that sold you!
2) Integrated policies - Some realise belatedly they can't afford to claim it when needed?
3) Shares - The majority wished they had never touched their CPF money...
4) Property - OK, this could be the saving grace. But asset rich; cash poor in retirement.
So those who voluntarily top-up money into their CPFs, well, we just have to wait patiently for the next 20-30 years to listen to their skin-in-the-game reviews.
What you planned and what you get in reality are two different things altogether. Like those who thought they can "invest" their CPF money to financial freedom 30 years ago...
The Spirit of CPF
Many have focused too much on the nuts and bolts of CPF.
Take a step back and see if you can understand the "spirit" of our CPF system.
Why it was introduced for starters.
And how this original "spirit" has morphed and evolved into another entity quite different from the original architects had intended.
Who is it mainly designed for?
Why is it turning away money from the very rich by having caps on its CPF contributions and top-ups? (Something for Ponzi-scheme conspiracy theorists to think about)
And yet it is "encouraging" top-ups from some of us with tax reliefs and other incentives.
Have you ever thought about it?
As for the poor and those not doing too well, they will never top up their CPFs. Or?
Only if you understand the "spirit" of this CPF beast will you ever tame and domesticate it.
Whatever you do, just don't be on the menu!