How to Use Your CPF for Investments in Singapore (2025 Guide)

The Central Provident Fund (CPF) Investment Scheme offers Singaporeans the opportunity to potentially grow their retirement savings beyond the default interest rates. While CPF already provides attractive guaranteed returns, investment-savvy individuals may wish to explore additional growth avenues through various financial instruments. This comprehensive guide explores how you can utilize your CPF funds for investments in 2025, the available options, and important considerations before taking the plunge.

Introduction: Why Invest Your CPF?

CPF savings already earn risk-free interest at a steady rate of up to 5% per annum for those below age 55 and up to 6% per annum for those 55 and older. These rates are competitive, especially compared to regular savings accounts in the current financial landscape. However, for individuals with a higher risk appetite and longer time horizon, the CPF Investment Scheme (CPFIS) provides an opportunity to potentially earn higher returns through various investment products.

The primary motivation for investing CPF funds is to accelerate retirement savings growth beyond the baseline interest rates. By strategically allocating a portion of your CPF funds to suitable investments, you might enhance your retirement nest egg over time. This can be particularly beneficial for younger contributors who have decades ahead before retirement, allowing them to harness the power of compound growth.

However, it's crucial to approach CPF investments with caution, particularly when considering Special Account (SA) funds. Since SA funds already earn a higher base interest rate than Ordinary Account (OA) funds, the opportunity cost of investing SA funds is greater. Any investment must consistently outperform the guaranteed rates to justify the risk, which presents a significant challenge especially in volatile market conditions.

What Is the CPF Investment Scheme (CPFIS)?

The CPF Investment Scheme consists of two distinct components: CPF Investment Scheme-Ordinary Account (CPFIS-OA) and CPF Investment Scheme-Special Account (CPFIS-SA). This government initiative enables eligible CPF members to invest their savings in various financial products with different risk-return profiles.

Through CPFIS, members gain the flexibility to invest in a wide range of financial instruments, including shares, unit trusts, government bonds, and treasury bills 1. This diversity allows investors to tailor their investment strategy based on their risk tolerance, financial goals, and investment horizon.

To be eligible for CPFIS, you must meet several criteria. You need to be at least 18 years old, not an undischarged bankrupt, and have sufficient funds in your accounts – specifically, more than $20,000 in your OA for CPFIS-OA and/or more than $40,000 in your SA for CPFIS-SA. Before investing, you'll also need to complete the Self-Awareness Questionnaire (SAQ) to ensure you understand the risks involved.

The scheme offers both advantages and disadvantages. On the positive side, it provides an opportunity to potentially earn higher returns and diversify your retirement portfolio. However, it also exposes your retirement savings to market risks, potentially resulting in losses if investments underperform. Additionally, investing your CPF means foregoing the guaranteed interest rates, which is a significant opportunity cost to consider.

Types of Investments Allowed Under CPFIS

The CPFIS encompasses a variety of investment products to cater to different investor preferences and risk profiles:

Unit Trusts

Unit trusts pool money from multiple investors to invest in a diversified portfolio of assets managed by professional fund managers. These funds can focus on different sectors, geographies, or asset classes, offering various risk-return profiles. When selecting unit trusts under CPFIS, it's important to examine their historical performance, expense ratios, and management strategies.

Investment-linked Insurance

Investment-linked insurance products combine insurance coverage with investment opportunities. These products allocate a portion of your premiums to investments while providing life insurance protection. While they offer potential returns beyond traditional insurance policies, they typically come with higher fees and may be more complex to understand.

Singapore Government Securities (SGS) and Treasury Bills

For risk-averse investors, Singapore Government Securities and Treasury Bills represent safer options. These government-issued debt instruments provide reliable returns with minimal risk, as they're backed by the Singapore government. While the returns are generally lower than equities, they offer stability and capital preservation.

ETFs and Selected Stocks

Exchange Traded Funds (ETFs) offer a cost-effective way to gain diversified exposure to various markets. As of 2022, there are six CPF-approved ETFs listed on SGX that track different assets, including the Straits Times Index, bonds, gold, and REITs. ETFs have low expense ratios and are regularly rebalanced, making them suitable for long-term investments.

For CPFIS-OA, you can invest up to 35% of your investible savings in stocks or funds, and 10% in gold or gold-related investments. This limitation helps ensure diversification and risk management.

Robo-advisors

In 2025, several robo-advisory platforms have become eligible for CPFIS investments, offering algorithm-driven portfolio management at lower fees than traditional advisors. These platforms typically create diversified portfolios of ETFs based on your risk profile and investment objectives, providing a hands-off approach to CPF investing.

CPF Ordinary Account vs Special Account for Investing

Understanding the key differences between investing from your Ordinary Account versus your Special Account is crucial for making informed decisions.

For CPFIS-OA, you can invest your OA savings after setting aside $20,000 in your OA. This ensures you maintain a safety net even if your investments don't perform well. With CPFIS-SA, you can invest your SA savings after setting aside $40,000, reflecting the primary purpose of SA as retirement savings.

The trade-off between guaranteed interest and potential returns is a critical consideration. OA funds earn a base interest of 2.5%, while SA funds earn 4% 4. Consequently, investments made with SA funds need to consistently outperform 4% to be worthwhile – a significantly higher hurdle than for OA investments, which only need to beat 2.5%.

Another important limitation to consider is that while you can transfer funds from your CPF OA to your CPF SA, you cannot transfer from your CPF SA to your CPF OA. Once funds are moved to your SA for investing, they cannot be returned to your OA. This one-way transfer restriction means less flexibility once funds are allocated to SA investments.

Many financial advisors recommend leaving SA funds untouched to benefit from the guaranteed 4% interest rate, while using OA funds for investments. This approach provides more flexibility and has a lower opportunity cost, especially for those exploring higher-risk, higher-reward investment options.

Step-by-Step: How to Start Investing Your CPF

Step 1: Open a CPFIS-approved investment account

For CPFIS-OA investments, you'll need to open a CPF Investment Account with one of the CPFIS agent banks. As of 2025, these include DBS and OCBC. You can open an account through DBS's digibot (navigate to "Get started with CPFIA" and click "digibot") or through OCBC's website or mobile app.

For CPFIS-SA investments, no separate CPF Investment Account is needed. Instead, you can approach product providers directly to buy or sell investments. This streamlined process makes SA investments somewhat simpler from an administrative perspective.

Step 2: Choose your brokerage

Select a brokerage or investment platform that offers CPFIS-approved products and aligns with your investment needs. Consider factors such as platform fees, transaction costs, available investment products, and user experience when making your selection. Several brokerages in Singapore have specialized CPF investment services designed to make the process more seamless.

Step 3: Do your due diligence on product options

Research potential investments thoroughly before committing your CPF funds. Analyze historical performance, understand the risk factors, and assess whether the investment aligns with your goals and risk tolerance. For unit trusts and ETFs, examine expense ratios and management strategies. For stocks, review company fundamentals, industry prospects, and valuation metrics.

Remember that past performance doesn't guarantee future results, but it can provide insights into how investments might behave under different market conditions. Look beyond headline returns to understand risk-adjusted performance and consistency of returns over time.

Step 4: Invest through the platform

Once you've selected your investments, execute your transactions through your chosen platform. Ensure you understand all associated fees and charges, including brokerage fees, platform fees, and any ongoing management fees. Keep detailed records of your transactions for future reference and tax purposes.

Step 5: Monitor and rebalance annually

Regular portfolio monitoring and periodic rebalancing are essential components of successful investing. Review your CPF investments at least annually to ensure they continue to align with your investment objectives. Market movements can shift your asset allocation away from your target, so rebalancing helps maintain your desired risk level.

Additionally, reassess your investment strategy as you approach retirement age. Generally, it's advisable to gradually reduce risk exposure as you get closer to the time when you'll need to withdraw funds.

Risks and Considerations

Investing your CPF funds involves several important risks and considerations that must be carefully evaluated:

Market volatility

All investments are subject to market fluctuations, which can lead to periods of negative returns. Unlike the guaranteed interest rates provided by CPF, investment returns can vary significantly from year to year. During market downturns, your CPF investments could experience substantial losses, potentially impacting your retirement savings. The volatility risk is particularly concerning for those nearing retirement who have less time to recover from market downturns.

Loss of guaranteed interest

By investing your CPF funds, you forfeit the guaranteed interest rates of up to 5% per annum if you're below age 55 and up to 6% per annum if you're age 55 and older. These rates are already competitive, especially for risk-free returns. The opportunity cost of giving up these guaranteed returns should be carefully weighed against the potential but uncertain higher returns from investments.

Fees and charges

Various fees associated with CPF investments can significantly impact your net returns. These may include sales charges, transaction fees, platform fees, management fees, and withdrawal fees. Over time, even seemingly small percentage fees can compound and substantially reduce your returns. Before investing, calculate the total expense ratio of your chosen investments to ensure the potential returns justify the costs.

Long-term vs short-term thinking

Any returns from your CPF investments will remain within your CPF account, making it essential to adopt a long-term perspective. CPF investments are not suitable for short-term trading strategies or for those seeking quick access to funds. The long-term nature of CPF investments means that investment decisions should be aligned with your retirement goals rather than short-term market opportunities.

Real Example: $20,000 CPF Investment Scenarios (2025 Edition)

Conservative: SSBs or T-bills

For risk-averse investors, Singapore Savings Bonds (SSBs) or Treasury bills (T-bills) provide a conservative approach to CPF investing. As of 2025, these government-backed securities offer returns slightly above the OA interest rate while maintaining capital preservation. This approach is suitable for those who prioritize safety over maximizing returns, particularly individuals closer to retirement age.

Balanced: Unit Trusts with low risk

A balanced approach might involve allocating CPF funds to low-risk unit trusts, such as bond funds or balanced funds that combine fixed income and equities. These funds aim to provide moderate growth while managing downside risk through diversification. In 2025, several CPF-approved balanced funds are offering projected returns of 3-5% annually, providing a middle ground between the guaranteed CPF rates and more aggressive investment options.

Aggressive: ETFs or direct equities

For those with a higher risk tolerance and longer time horizon, allocating CPF funds to ETFs or individual stocks offers the potential for higher returns. The six CPF-approved ETFs on SGX provide exposure to various markets and asset classes 3. In particular, STI ETFs have historically delivered long-term returns that have outpaced CPF's guaranteed rates over extended periods, despite short-term volatility.

Should You Even Invest Your CPF?

Decision matrix: Are you risk-tolerant? Do you need liquidity?

Before investing your CPF, honestly evaluate your risk tolerance and liquidity needs. If market volatility causes you significant stress or if you anticipate needing access to your funds in the near future, CPF investments may not be appropriate. The default CPF interest rates provide competitive returns without risk, making them suitable for many individuals, particularly those who are risk-averse or nearing retirement.

When it makes sense

Investing your CPF makes sense if you have a long investment horizon (typically 10+ years), sufficient financial knowledge to make informed investment decisions, and a risk tolerance that aligns with your chosen investments. It's also more appropriate if you have CPF balances significantly above the minimum requirements, allowing you to maintain a safety buffer while exploring investment opportunities.

Young professionals with decades until retirement may benefit most from CPF investments, as they have time to weather market cycles and potentially earn higher returns over the long term. Those with substantial financial knowledge or who work with trusted financial advisors may also be better positioned to make effective CPF investment decisions.

When to avoid

Conversely, you should avoid investing your CPF if you have limited investment knowledge, a low risk tolerance, or are approaching retirement age. The closer you are to retirement, the more important capital preservation becomes, making the guaranteed CPF interest rates increasingly attractive. If your CPF balances are just meeting the minimum requirements, focusing on building those balances before considering investments is generally more prudent.

Additionally, if you're planning to use your OA funds for housing or education purposes in the near future, keeping those funds in the OA rather than investing them ensures they'll be available when needed.

Conclusion

The CPF Investment Scheme offers a pathway for Singaporeans to potentially enhance their retirement savings through various investment vehicles. While the opportunity to earn higher returns is appealing, it comes with risks that must be carefully weighed against the guaranteed interest rates provided by CPF.

Before investing your CPF funds, thoroughly assess your financial situation, investment knowledge, risk tolerance, and time horizon. Consider starting with a small portion of your eligible CPF funds to gain experience before committing larger amounts. Regular monitoring and periodic rebalancing are essential to ensure your investments remain aligned with your retirement goals.

Remember that your CPF is primarily designed to provide for your retirement needs. Any investment decisions should prioritize long-term security over short-term gains. For many Singaporeans, the default CPF interest rates already offer competitive returns without risk, making them a suitable option for building retirement savings.