Over the last few years, CPF Shielding Hacks have grown in popularity. From a theoretical standpoint, the CPF Shielding Hack is used to block certain portions of your CPF balance from performing automatic transfers or transactions.
There are at least three reasons to consider using CPF Shielding Hacks.
#1 CPF SA Shield Hack
You can block special account (SA) balances from automatically flowing into newly created retirement accounts at 55. When you do this, your Ordinary Account (OA) balance will flow into your Retirement Account (RA) instead. The advantage is that you can earn 1.5% additional interest on OA funds flowing into RA (4.0% for RA and 2.5% for OA). Even if the balance of the special account flows into the retirement account, there is no difference in the interest received.
Also read: CPF Shielding Hacks (Special and Ordinary Accounts): Does It Really Make Sense?
#2 CPF OA Shield Hack
After performing the CPF Special Account Shielding Hack (above), you may also want to block your OA balance from flowing into your retirement account before you turn 55. CPF LIFE scheme.
#3 Shield Hack To Keep Over $20,000 In OA When Buying A Home With HDB Preferential Loans
Regardless of your age, you can only deposit up to $20,000 in your savings account when using HDB’s preferential mortgage when buying a home. Any amount above this will automatically be used to pay for the house. With the CPF Shielding Hack, you can maximize the amount you can keep in your OA and take full advantage of our 80% loan-to-value (LTV) ratio.
Also read: Take an HDB Mortgage: Stay Above $20,000 or Sweep the CPF OA
CPF Shielding Hack requires you to invest your CPF savings
You should invest in CPF savings (i.e., stay out of the CPF ecosystem) to protect yourself from automated transactions that you want to avoid. This is done through the CPF Investment Scheme (CPF-IS). By adopting the CPF Shielding Hack, automated trading on your CPF account will continue, but the majority of your CPF savings will remain unaffected.
Of course, the intent of the CPF Shielding Hack is to ultimately get our funds back into the CPF ecosystem relatively quickly. As such, you should look for very safe investments with low barriers to sale and low transaction costs. So, as long as you don’t incur significant costs and retain the flexibility to move the funds back into the CPF ecosystem relatively quickly, you can afford to make lower-return investments.
First, you can only invest $40,000 or more in the special account and $20,000 or more in the regular account. For a pre-retirement person looking to adopt the CPF Shielding Hack, at least he will have $60,000 credited to his retirement account. If he uses the Shielding Hack when buying a house, he needs to calculate the down payment accurately so he doesn’t accidentally “protect” a large sum of money.
Also read: 7 Types of Investments You Can Make Using CPF OA Money Via CPFIS-OA
What should I invest in when using the CPF Shielding Hack?
You can invest in different types of investments through the CPF-IS scheme. As mentioned earlier, you should look for safer investments when adopting the CPF Shielding Hack.
Source: Screenshot taken from CPF website
Looking at this list, good investments to consider are Singapore Government Bonds (SGS) and Treasury Bills (T-bill). You can check the latest SG and T-bill issues on the MAS website. Fixed Deposits, Statutory Board Bonds and Singapore Government Guaranteed Bonds are good options, but there are no products available.
When considering the other types of investments that can be made through CPF-IS, it quickly becomes apparent that even relatively safe unit trusts and ETFs can be highly volatile. From the approximately 100 unit trusts we could invest in (listed on the CPF website), we chose those deemed to be “low to medium risk”. The results show that the unit trust investment alone generates an expense ratio of at least 0.41% to 0.95%. In addition, it can be highly volatile, with the maximum loss being around 16% in his one year period.
| selected fund | risk class | CPF-IS OA/SA? | expense ratio | 1 year performance (As of Q2 2022) |
| Eastspring Investments Unit Trusts – Singapore Select Bond Fund Class A | Low to moderate risk – limited | CPFIS-OA & SA | 0.63% | -7.79% |
| Reg Mason Western Asset Global Bond Trust (Class A (SGD) Cumulative) | Low to medium risk – broadly diversified | CPFIS-OA & SA | 0.95% | -11.04% |
| Lion Global Short Duration Bond Fund Class A (SGD) (Diversified) | Low to moderate risk – limited | CPFIS-OA & SA | 0.59% | -3.30% |
| LionGlobal Team – Singapore Bond Investment (Class A) | Low to moderate risk – limited | CPFIS-OA & SA | 0.67% | -6.92% |
| Manulife Singapore Bond Fund (Class A) | Low to moderate risk – limited | CPFIS-OA & SA | 0.91% | -9.71% |
| Nikko AM Shenton Short Term Bond Fund (S$) Class | Low to medium risk – broadly diversified | CPFIS-OA & SA | 0.41% | -1.67% |
| Pinebridge International Fund – Singapore Bond Fund | Low to moderate risk – limited | CPFIS-OA & SA | 0.85% | -8.04% |
| Schroeder Asia Investment Grade Credit Class A SGD | Low to moderate risk – limited | CPFIS-OA & SA | 0.89% | -8.75% |
| Schroeder Global Quality Bond Class SGD Hedge F Acc | Low to medium risk – broadly diversified | CPFIS-OA & SA | 0.69% | -15.95% |
| Schroeder Singapore Bond Fund Class A | Low to moderate risk – limited | CPFIS-OA & SA | 0.69% | -9.10% |
| United SGD Fund – Class A (ACC) SGD | Low to medium risk – broadly diversified | CPFIS-OA & SA | 0.68% | -2.35% |
| United Singapore Bond Fund Class A SGD Account | Low to moderate risk – limited | CPFIS-OA & SA | 0.76% | -7.45% |
Source: CPF website
Similarly, ILP, annuity, and endowment policies can be costly and have limited divestment concerns, as well as fluctuating values.
For investments in stocks, real estate funds, corporate bonds, and gold, we can already see that the CPF itself has limits on how much of its investable savings can be used for purchases. Considering these limitations, apart from the fact that the CPF Shielding Hack cannot be applied properly, it is also a fairly risky investment.
Also read: US Treasury bills (T-bills): what they are and how to buy them
What you need to know when investing in SGS and T-Bills when doing the CPF Shielding Hack
I’m trying to run the CPF Shielding Hack right before a very specific time period, so I need the right strategy.
First of all, even if you have a very specific time period when you want to use the CPF Shielding Hack, don’t leave it to the last minute. Instead, you should consider making the necessary investments months before the deadline. In addition to facing unnecessary additional stress, leaving it to the end can also surface problems that cannot be resolved in time.
First, there are 6-month and 1-year bonds available for investment. Since the purpose is to return the funds to the CPF account, the shorter the duration, the better. It is possible to sell both T-bill and Singapore Government Securities (SGS) before maturity, but this may result in losses and increased transaction costs.
The MAS website also appears to issue 6-month Treasuries every other week. So don’t worry too much about missing a problem. One-year government bonds are issued less frequently.
Source: MAS website
If you want to invest CPF general account Treasury bill savings, we need to Open a CPF investment account Use one of the three CPF-IS agent banks (DBS/POSB, OCBC, or UOB).there is No need to open such an account if you want to invest special account savings on government debt. In both cases, it appears that the application must be submitted directly to a branch of a CPF-IS bond dealer (DBS/POSB, OCBC, or UOB).
The minimum bid is $1,000, but we should be more concerned about getting the full quota. This is also why it’s better to roll out your strategy a few months earlier than the deadline you need to hit.
For example, the latest auction results for September show that the total amount allocated was $4 billion. But the total amount he filed was $9.7 billion, more than double. Furthermore, only about 8% of the competing applications assigned were assigned, while the non-competing applications were assigned 100%.
Source: MAS website
Moreover, the current 6-month Treasury yield is very close to the special account floor rate of 4.0%, which is higher than the regular account floor rate of 2.5%. Therefore, holding the T-bill for 6 months is not a big loss.
Previously, those who calculated the difference in yield between holding the T-bill and selling it after the required period of time chose to sell the T-bill immediately after the retirement account was opened by the CPF Board. may have been reasonable. Or the funds will be used to purchase our home.
You can also invest in SGS. SGS is a similar government bond with a longer maturity. Looking at the current issuance schedule, we may have to apply for longer term SGS bonds as the frequency of issuance is not disclosed.
Source: MAS website
The obvious concern is that you actually want the funds back into your CPF account. So it is possible that at some point he will have to sell his SGS that he bought. So the older SGS may not be the most ideal investment for CPF Shielding Hacks.
Of course, you can also sell these bonds, but the transaction costs can be high. This is why T-bill makes the most sense if you want to adopt the CPF Shielding Hack.
Also read: CPF Shielding Hacks (Special and Ordinary Accounts): Does It Really Make Sense?
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