You will be able to decide which part of your allocation to hold in cash, SRS and CPF accounts.
Farhan now has three places his long-term money could sit: his ordinary brokerage account, which this course calls his cash account, an SRS account he has just opened, and his CPF. His first instinct is to give each one its own mini-portfolio, 65/35 in each, so everything looks neat. It would mean three sets of funds, three rebalancing jobs and three times the commission. It would also miss the point of having different accounts at all.
This lesson shows a better approach: one portfolio, one allocation, spread across accounts according to what each account is good at.
Your target split from lesson 1.4, Draft your target allocation, applies to all your long-term money, wherever it sits. A world fund in SRS and a world fund in your cash account are both shares. A bond fund in either account is bonds. The account changes how the money is taxed and when you can get at it. It does not change what the money is invested in.
So the useful question is which parts of your one allocation should sit in SRS, rather than what SRS's own allocation should be. Once you think this way, each account gets a job, and you only need to rebalance the total.
SRS money is locked until your statutory retirement age, as lesson 7.1, How SRS works for an ETF investor, explained. That is a long horizon for most readers, and lesson 1.3 showed that a long horizon is exactly what shares need. So SRS is a natural home for the share part of your allocation.
There is a second reason. Rebalancing means moving money between shares and bonds. If your shares sit in SRS and your bonds in your cash account, you can still rebalance, but you do it by changing where new money goes in each account rather than by moving money between accounts, which you cannot do freely. The flexible account does the steering, which leads to the last section.
The practical limit is the product list. Your SRS operator may not offer the exact fund you chose in module 3. If so, use the closest fund on the same index that it does offer, and record the difference on your comparison sheet.
Lesson 7.2, CPFIS: what you can buy and what it costs you, set a high bar for investing CPF money. Before you even get to that bar, check your housing plans. If there is any realistic chance you will buy a flat in the next several years, or if your OA already pays a home loan, your OA has a job, and it is not investing.
If you have no housing plans and you have passed the test in lesson 7.2, CPFIS can hold part of your long-term allocation. Because the product list is narrow, it usually fits only a piece of your plan, for example part of the share holding through an eligible fund.
Whether to count your uninvested CPF balances in your allocation is a separate choice. Some investors count them as part of the safe side of the portfolio, since they do not fall in value. Others leave them out and treat CPF as a separate base for housing and retirement. Either is reasonable. Choose one, write it down and stick to it, because switching between the two makes your allocation look different from year to year when nothing has changed.
Your cash account is the only one where you can buy almost any fund, sell freely and take money out at any time without penalty. That makes it the right place for the parts of your plan that need flexibility.
Bonds are the obvious candidate. They are what you sell after a crash to buy shares, and what you add to after a boom. Holding them in your cash account means your rebalancing tool sits where you can use it. It also means that if a genuine emergency ever outruns your emergency fund, the money you might draw on is reachable.
Farhan's plan settles quickly once he thinks of one portfolio. His SRS contributions go into a world equity fund that his operator allows. His Singapore government bond fund stays in his cash account, alongside the rest of his world fund. He leaves his CPF uninvested and out of his allocation, because he may buy a flat within ten years. Grace has no SRS account, and her OA pays her mortgage, so all of her long-term money stays in her cash account.
Expect some of your holdings to miss their first-choice account, because of a product list or a lock-up. That is normal. A mismatch you write down now is easy to plan around in lesson 7.4, Draw your account map, and a mismatch you ignore turns into a surprise at your first rebalance.
Assign each holding in your plan to a cash, SRS or CPF account and note any that do not fit the account's rules.
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