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sg_schemes_reference

Singapore Investment Interest Rate Overview​

Investment TypeInterest RateCompoundingRisk LevelLiquidityTax Treatment
CPF OA2.5% + 1%*AnnualNoneLow (55+)Tax-free
CPF SA/MA/RA4% + 1%*AnnualNoneLow (55+/62+)Tax-free
SSB1.8-3.1% (step-up)None (distributed)NoneHighTax-free
T-Bills3-4% (market)None (discount)NoneNone (hold to maturity)Tax-free
High-Yield Savings2-3%Monthly/DailyNoneHighTaxable
Fixed Deposits1.5-2.5%AnnualNoneLow (penalty)Taxable
Robo Advisors4-8% (expected)ReinvestedMediumMediumTaxable
ETFs/Stocks6-10% (historical)ReinvestedHighHighTaxable

*Extra 1% on first S$60,000 combined CPF balance (under 55)

Interest Calculation Methods​

For detailed calculation methods and formulas: See interest_calculation_methods

CPF Interest Calculation Deep Dive​

Basic CPF Interest (Compounded Annually)​

  • OA: 2.5% per annum
  • SA/MA/RA: 4% per annum
  • Compounding: Interest earned each year is added to principal

Extra Interest (Under 55)​

  • 1% extra on first S$60,000 combined CPF balance
  • OA cap: Maximum S$20,000 in OA earns extra interest
  • Transfer rule: Extra interest on OA transferred to SA

Example CPF Calculation (Age 28)​

Scenario: S$50,000 in OA, S$30,000 in SA

OA Interest:

  • First S$20,000: (2.5% + 1%) = 3.5% = S$700
  • Remaining S$30,000: 2.5% = S$750
  • Total OA interest: S$1,450

SA Interest:

  • First S$30,000: (4% + 1%) = 5% = S$1,500
  • Total SA interest: S$1,500

Extra Interest Transfer: S$700 (extra OA interest) → transferred to SA Net Result: OA gets S$750, SA gets S$1,500 + S$700 = S$2,200

Tax Implications Cheatsheet​

Tax-Free Investments​

  • CPF interest - All interest earned
  • SSB interest - Government securities exemption
  • T-Bills returns - Government securities exemption
  • SRS investments - Tax-free while in account

Taxable Investments​

  • Bank savings interest - Added to income
  • Fixed deposit interest - Added to income
  • Stock dividends - Generally tax-free for individuals
  • Capital gains - Tax-free for individuals (not trading business)
  • Robo advisor returns - Dividends tax-free, interest taxable

Risk vs Return Matrix​

Conservative (0-2% risk)​

  • CPF: 2.5-4% guaranteed
  • SSB: 2-3% average, government guaranteed
  • High-yield savings: 2-3%, bank guaranteed up to S$75k

Moderate (2-5% risk)​

  • Robo advisors: 4-6% expected, diversified portfolios
  • Bond funds: 3-5% expected, interest rate risk

Aggressive (5%+ risk)​

  • Individual stocks: 0-15%+ potential, high volatility
  • Growth ETFs: 6-10% historical, market risk
  • REITs: 4-8% expected, property market risk

Liquidity Comparison​

Immediate Access​

  • Savings accounts: Instant
  • Current accounts: Instant
  • Money market funds: 1-2 days

Short-term Lock-up​

  • Fixed deposits: 1 month - 5 years (penalty for early withdrawal)
  • T-Bills: 6 months - 1 year (hold to maturity)

Medium-term Lock-up​

  • SSB: Up to 10 years (can redeem anytime without penalty)
  • Robo advisors: No lock-up but recommended 3-5 years

Long-term Lock-up​

  • CPF: Until 55/65 years old
  • SRS: Until 62 years old

Quick Decision Framework​

For Emergency Fund (High Liquidity Needed)​

  1. High-yield savings (2-3%, instant access)
  2. Money market funds (2-3%, 1-2 day access)

For Short-term Goals (1-2 years)​

  1. T-Bills (3-4%, 6-12 months)
  2. Fixed deposits (2-3%, various terms)

For Medium-term Goals (2-10 years)​

  1. SSB (2-3% average, flexible)
  2. Robo advisors (4-6% expected, moderate risk)

For Long-term Wealth Building (10+ years)​

  1. CPF top-ups (4% guaranteed for SA)
  2. ETFs (6-8% historical, diversified)
  3. SRS investments (tax benefits + growth potential)

For Tax Optimization​

  1. Max SRS contribution (S$15,300/year for residents)
  2. CPF voluntary contributions (guaranteed 2.5-4% + tax relief)
  3. Government securities (tax-free interest)

References