CPF savings 'may not be enough for old age'

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#52
Buying US Treasuries is NOT riskless. There is FX risk in SGD terms.

And as for the statement that in the past, interest rates were higher.... take note that you can put your CPF savings into a fixed deposit (which btw is not totally riskfree). The 2.5% CPF rate is merely a floor.

All these arguments about how the SG government is giving too low a return on CPF or even implying that the government is somehow conning us, is basically just masking the fact you expect a free ride. On a open market basis, please tell me how you can get 2.5% riskfree with a 1Y duration (I say 1Y because CPF credits interest on a yearly basis).

To D.O.G.

The real wealth of a country like Singapore (with no natural resources) is in
1. Our productive capacity. Our ability to do work or perform services that other people (in other countries) want.
2. Our foreign reserves and assets. Literally our hold on other people's obligations to us.

Given that the government can literally print money, SGD balances, SGD budgets, CPF monies in SGD etc are a book keeping mechanism. It doesn't really matter what the SG government does with the money, it only matters what we can do with the money or what alternative returns we can get from the money.

From a macro point of view, I only need to worry if the SG government will run actions in the future that will devalue the SGD currency. From the CPF balance point of view, I only need to ask myself : is there a viable riskless alternative for myself compared with the 2.5% rate?
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RE: CPF savings 'may not be enough for old age' - by tanjm - 03-03-2012, 10:26 AM

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