Martin Lee @ Sg
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Lost $350k in OA Trading Stocks

Initially, I wanted to complete my writeup on CPF Life today but due to time constraints, I have to postpone it to another day.

Instead, I want to highlight an interesting case which was reported in the newspapers a couple of days ago.

There was one guy Mr Goh who mentioned that he lost $350k from his CPF by investing into the stock market and wanted CPF to disallow CPF members from investing their CPF monies.

First of all, we all know that the maximum amount of money that we can invest directly into shares is 35% of the investible amount in the CPF OA. For a person to lose $350k, it would appear at first glance that he would need to have at least $1mil in the CPF account and even so, lose 100% of his stock investments. This is highly unlikely.

Of course, the $350k could be losses accumulated over time. For example, if a person loses $35k a year, he will only need ten years of losses to reach $350k.

bear marketAnyway, the purpose of this post is not to speculate on how Mr Goh lost his money, but to revisit the topic of how much money from OA you can actually invest into shares.

I have talked about this topic in early 2009 on how an investor can invest beyond 35% of his OA into stocks by taking advantage of a certain mechanism during bear markets. You can refer to it here:

Increasing the CPF OA Investment Limit for Stocks

I guess that could be how Mr Goh racked up his $350k losses.

I think most people would be better off not investing (playing) into stocks with their CPF money as statistics has shown that the majority of them underperform the CPF returns.

Leave a Comment:

DanielP says 14 years ago

I think the term “investing” is used too liberally. Wild punting is not the same as investing.

    lioninvestor says 14 years ago

    Couldn’t agree more.

gerimegaly says 14 years ago

If my memory serves me well, in the early days of the CPFIS, there was actually no stock limit imposed on your OA monies.

    lioninvestor says 14 years ago

    Hi Gerimegaly,

    Wasn’t around that time yet but if it’s correct then possibly could be another factor.

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