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QuestionsCategory: MiscellaneousCPA SA vs S&P 500 ETF
redvolver asked 7 months ago

Hi
Been encouraging my siblings to start Investing when they are still young. But they keep putting it off and want an easier way out.
My point is for someone who wants a hands off approach and have a much longer runway before they retire (about 20 – 25 years), is it better to invest his money into s&p 500 index funds rather than cpf sa?
Understand cpa sa is almost risk free(unless policy change or we have a mutiny against the government lol), but history has shown s&p500 can easily beat the 4-5% offered by cpa sa if the runway is longer.
Any advice ?
 

2 Answers
Victor Chng answered 7 months ago

Hi Redvolver,
 
It is very hard to persuade someone to do investing if they are not ready. It happens to my own siblings too. The best way is to approach them with your investment success and telling how you get there by enticing them. 
 
It is definitely better to invest in S&P 500 ETF compared to CPF SA as the former have better returns. If someone does not understand the advantage of S&P 500 ETF can give them, most people will put their money in CPF SA because of the trust from Singapore government. After all, if you are new to investing, you will definitely trust your local government more than the S&P 500 ETF. I think you can start by slowly educating your siblings on what S&P 500 ETF is about and how it have advantages as compared to CPF SA. In the meantime, if you can just take a small amount of money and purchase the S&P 500 ETF and show your siblings how it has done so well for you. It may pique their interest. 
 
Hope this helps :)

redvolver replied 7 months ago

Thanks Victor! Yup guess I have to walk the talk. :)

Victor Chng replied 7 months ago

Welcome :)

Jieren Zheng answered 7 months ago

Other ideas would be stuff like Robo advisors (Endowus) too.
I think FSMOne has a DCA plan for S&P500 ETF (not sure) too.
But take note that as all these involve the equity markets, they have to stomach price fluctuations.

redvolver replied 7 months ago

Thanks Jieren :). Need to read up more about the different index funds before investing.

Jieren Zheng replied 7 months ago

I am thinking VT as a whack all is a good idea haha. Doesn’t matter if China or US is the future superpower as the index will adjust

redvolver replied 7 months ago

If I am not wrong, vt also skewed towards US market ? But nonetheless these etfs can act as low risks investments for the long runway :)

Jieren Zheng replied 7 months ago

That’s because by market caps, US would be the largest. So naturally it would be skewed

Victor Chng replied 7 months ago

Yes FSMone have a DCA plan for S&P 500 ETF called RSP