DBS CPF investment account

DBS CPF Investment Account Review: Best for All-round Investors

Opening an account with DBS is easy: you can do it through their website or visit the branches. Also, a DBS account has an impeccable technical backup to help you manage your portfolios. However, the CPF investment account is only for Singaporeans. Click here to read more about how to use CPF to invest.

 

What is a CPF investment scheme?

If you are looking for an opportunity to invest with your nest egg, the Singapore CPF investment scheme is an ideal place to begin. The setup purpose of the CPF investment scheme is to help people save more for retirement. 

The ordinary account and special account from the scheme combine to form a retirement account at age 55. An account holder can begin to withdraw most of their savings from that time on.

How does it work?

Besides earning a 2.5% rate interest per year, you will get an extra 1% interest per annum for a total balance of CPF accounts(ordinary and special accounts only) with the first combined balance of S$60,000, of which, at least S$20,000 are in an ordinary account. 

The benefit applies to members at or under age 55.

Now you can invest in a DBS investment account offered by the CPF investment scheme to grow your money beyond the S$20,000 limit. You can now invest in stocks, bonds, and even gold with an investment account. Know more about CPF investment scheme here.

 

What are the benefits of a DBS CPF investment account?

The benefits with a DBS account:

  • Know your investments at a stop: You have a monthly report by DBS stating asset performance, investment costs, and related announcements.
  • Track and manage your investments through mobile phones, websites, and ATMs

More than that, you can include a DBS trading account in your investment scheme and transfer part or whole of your investible savings(beyond the S$20,000 cash savings) to the trading account. Of course, financial advisors from the bank can help you with this.

 

What can I invest with a DBS CPF investment account?

You have a ton of choices to invest in the various investment products offered according to CPF Board guidelines: 

The allowed investment products comprise:

1. Fixed Deposits

The deposit should be in a CPF Fixed Deposit Bank.

2. Singapore Government Bonds/Singapore Government Treasury Bills/Statutory Board Bonds/Bonds guaranteed by the Singapore Government

  • The bonds are tradable in the primary and secondary markets
  • Traded by bond dealers

3. Annuities/Endowment Insurance Policies/Investment-Linked Insurance Products

  • Providers must be the insurance companies specified by CPFIS.
  • Members must be insured.
  • Only single premium and recurring single premium policies are allowed.
  • The policy maturity date must expire before or on the member’s 62nd birthday.

4. Unit Trusts

  • The investing services providers must be on the list of being appointed by CPFIS.
  • The fund managers should invest according to the investment guidelines set by the CPF Board.

5. Exchange-Traded Funds

  • The funds should meet the guidelines set by CPF Board
  • The funds are listed on the Singapore Exchange – Securities Trading(SGX-ST).

6. Funds Managed Accounts

The funds should meet the guidelines set by CPF Board

7. Shares/Property Funds/Corporate Bonds

  • A company is incorporated in Singapore.
  • The ordinary, preference shares and corporate bonds are listed on the Singapore Exchange – Securities Trading(SGX-ST).
  • Investors should invest no more than 35% of investable savings in these assets.

8. Physical Gold, Gold ETFs like SPDR Gold shares(not more than 10% of investable savings)

The fund must meet the guidelines set by the CPF Board and be listed on the Singapore Exchange – Securities Trading(SGS-ST).

Investable savings is the sum of the ordinary account balance and the withdrawn amount for investment and education purposes.

Investors can invest in foreign currencies of items 3,4,5,6 and 8 other than the Singapore dollars.

 

How does DBS CPF Investment Work?

Let’s take an example. Suppose John has a savings of S$60k in a CPF ordinary account. An illustration of returns with and without investing activities in his account is shown below:

With S$40k for investment scheme from an OA account With S$60k earning interest in an ordinary account
Amount in John’s CPF ordinary account S$20,000 S$60,000
An account holder earns 3.5% interest per year. S$700 S$2,100
Suppose a participant makes a 6% return on the remaining S$40k savings for the first year.  S$2,400(40,000×6%) 0
The returns for the first year S$3,100 S$2,100
Compounded returns after five years based on the same rates S$17,308 S$11,261
Principals and Returns S$77,308 S$71,261

John will make S$6,047 more in return if he invests the allowable amount in the investment scheme.

 

What are the charges?

Investors should beware of other fees banks may charge as this may affect the return from investments. The following table lists the main charges DBS levies on the investment account:

Transaction Charges In Singapore Dollars
Shares/Loan Stocks/Unit Trusts/Property Funds/ETFs 

For every purchase, sale, application for rights, application for excess rights (successful or unsuccessful), cash offer, conversion of loans stocks/warrants/preference shares, IPO allotment, and exercise of share options.

$2.50 per 1,000 shares/loan stocks/units or part thereof subject to a maximum of $25 per transaction.
Gold ETFs – Every purchase, sale, and interest received. $2.50 per 10 units or part thereof subject to a maximum of $25 per transaction.
Funds Management Accounts/Fixed Deposits/Insurance Policies/Investment Administrators 

– For every payment/receipt of funds, interest received, lapsed insurance policy, and reinstatement of an insurance policy. 

$2.50 for each placement/payment, receipt, interbank transfer, and lapse/reinstatement transaction.
Singapore Government securities 

– Purchase and Sale transactions

$2.50 per transaction
Statutory Board Funds and Privatization Exchangeable Notes

– For every purchase, sale, and interest received.

$2.50 per minimum lot size or part thereof subject to a maximum of $25 per transaction.
Refund of Cash Top-Up (applicable for a top-up before 1 January 2007) $2 for each transaction
Cancellation of Trades $5 for each transaction that failed due to insufficient funds, insufficient sub-limit, insufficient holdings, or cancellation of contracts.
IPO Share Application 

-ESA 

-CPF Cashier’s Order

$2 for each transaction

A Goods and Services Tax rate(GST) applies to members with a residential address. Click here for more information about the charges.

 

How to apply for an account with DBS?

If you intend to apply for an account, you should read the following information:

1. Who can apply?

  • Singaporeans and permanent residents at or over 18 are eligible.
  • An applicant is not bankrupt.
  • An applicant who has an investment account with another bank can also apply and transfer existing assets to an account with DBS.

2. A self-awareness questionnaire

An applicant must fill out the questionnaire from the CPF investment scheme.

3. Additional documents required

  • 1. Phone bills
  • 2. Half-yearly statements
  • 3. Bank statements

 

DBS is one of three banks offering CPF investment accounts besides the united overseas bank and the OCBC. The account opening procedures is easy:

1. Online Digibot 

You can open an account online without queueing at a branch. Online Digibot service guides you step-by-step in applying for a CPFIA.

2. Branch visit 

If you think a human staff can solve your queries personally, a branch visit is a good way.   

 

Final Words

The CPF website is a good source of information for you to know before taking any action. 

  • A DBS CPF investment account offers major products you may need to grow your money.
  • If you have basic financial knowledge or less, you should consult a financial advisor before investing, as investing involves risks.
  • Opening an account with DBS is easy. You can do it through their website or visit the branches.
  • Cost affects investment returns. You should know more about an investment tool before putting your money into it.
  • A DBS CPF investment account lets you manage all your investments at a finger touch through your mobile phone, official website platforms, and ATMs.

 

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