Last updated on June 8th, 2021
As you are calculating your net worth, you may wonder if you should be including your CPF in the calculation.
Even though it’s your money, it is being ‘locked up’ the government. So should it be still considered as an asset?
Here is my opinion on why you should still consider CPF as a part of your net worth.
Should I consider CPF as part of my net worth?
The funds in your CPF account should be considered as a part of your net worth. Even though they are rather illiquid, they are still a part of your assets. The only difference is that these assets are ‘locked up’ by the government to help you to prepare for retirement.
CPF is still your money
You may be quite unhappy whenever your CPF contributions are deducted from your salary. While this reduces the amount of cash you have in hand per month, you can think of it more as a type of forced savings.
In the end, the funds in your CPF account is still your money. The only restriction is that you can’t freely withdraw these funds whenever you wish.
CPF is meant to help you achieve 3 main financial goals
The government created CPF to help you with achieving different financial goals:
- Medical bills
This helps to increase your financial security, as you already have these funds set aside for your different needs.
Are the funds in my CPF account considered as assets?
An asset is anything that you own that can provide a future benefit for you. Since the funds in your CPF account are earning a decent rate of return, they can be considered as assets that give you a larger amount of funds in the future.
While the funds in your CPF account are being ‘locked up‘, they are actually earning really attractive interest rates.
With these high rates of return, the funds placed in your CPF account should be considered as an asset.
An asset is a resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.Investopedia
Furthermore, you are able to invest your OA funds to obtain even better returns! You can use platforms like Endowus to do so.
However, you will need to set aside at least $20k in your OA. You are then able to invest the remaining amount of funds in your OA account.
Since your CPF funds are earning quite a high rate of return, it should be included inside your net worth calculation.
While CPF is considered as an asset, it is still rather illiquid.
Is CPF considered a liquid asset?
CPF should not be considered as a liquid asset. There are limits to how much you can withdraw, as well as what you can withdraw them for. Nevertheless, it is still an asset that should be considered when you are calculating your net worth.
A liquid asset is an asset that can easily be converted into cash in a short amount of time.Investopedia
If you consider CPF as a liquid asset, you are assuming that you will be able to receive the cash you have in your accounts quickly.
However, that is not the case!
You can only use the funds from your CPF accounts under different conditions:
|CPF OA||Housing |
|CPF MA||Medical Bills|
Medical Insurance Premiums
As such, your CPF funds should be considered as an illiquid asset, since they can only be withdrawn for certain purposes.
No matter what anyone tells you, CPF is still your money.
You may not be able to withdraw the money for your personal use. However, it will help to pay for your retirement expenses in the future.
Furthermore, your CPF is earning a rather high interest rate at relatively low risks!
As such, I believe that your CPF funds should still be considered as an asset, just that it is not a liquid asset!
👉🏻 Referral Deals
If you are interested in signing up for any of the products mentioned above, you can check them out below!
Endowus Referral (100% access fee credit till 31 December 2021)
If you are interested in signing up for Endowus, you can use my referral link to create your account.
There is no minimum investment amount, no cap on the fee credit that you can obtain until 31st December 2021.
If you invest at least $1,000 with Endowus, you will receive an additional $20 access fee credit!
The access fee does not have any expiry date. As such, you can invest at any pace that you wish, and still get $20 off your fees!
For more information, you can view the details on Endowus’ website.
Bonus SRS Promotion (Up to $100 SRS cash rewards till 20 November)
If you wish to invest your SRS funds with Endowus, you can use this alternative link to sign up for an Endowus account.
You will be able to receive an additional amount of up to $80 (on top of the $20 fee credit) in your UOB Kay Hian Account!
Here’s what you need to do:
- Sign up for an Endowus account
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- Hold the investment until the end of the promotional period (20 November)
Here are the rewards you’ll receive, depending on the amount you invested:
|Amount Invested |
|$5,000 – $15,299||$20|
|$15,300 – $35,699||$60|
The cash reward has a minimum 1 year holding period in the UOB Kay Hian trust account. You are free to invest the cash reward, or use it to pay for Endowus access fees
For more information, you can view Endowus’ website for the details of this promotion.
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