Save or invest 15% of gross income (on top of normal CPF contributions).
Consider splitting the 15% of gross income into:
5% as top-up to CPF Special Account (on top of normal CPF contributions)
10% for kids or other long-term goals
Start lower than 15% if necessary, and build it up.
Increase by 1%-2% (of new gross income) per year – the higher the better, even up to 30%.
When investing bonuses, consider putting half into retirement and half into investing for kids/ other goals.
Why should we do this?
Grow your money with the power of compounding to beat inflation over the long term.
Long-term saving and investing build wealth and provide options in life.
If you have kids, the amount accumulated gives them options for higher education or purchasing their own home in the future. And if they don’t need it – it becomes your nest egg!
Securing your own retirement is for your kids, too – it means your kids won’t need to worry about you.
How do we do it?
Top up CPF SA first to Full Retirement Sum (FRS), before investing for retirement.
Use a suitable OwlInvest solution set for kids/ other goals, or for retirement after FRS limit is reached.
Example
Attention
Pre-conditions for investing:
You have an emergency fund.
Your debt servicing ratios are healthy.
You don’t have high-interest debt: otherwise, pay off debt first.
You have a suitable risk appetite.
You need to be able to stay invested in a suitable portfolio.
Top-ups to CPF SA are one-way/ irreversible, so be sure that you do not need the money.
Additional Resources
5 Top Tips to Fire Up Young People’s Personal Finance Game
