Results 1 to 4 of 4

Thread: What is the rational of having an agent bank to manage your CPF transactions?

  1. #1

    Question What is the rational of having an agent bank to manage your CPF transactions?

    As we all know, we need to open an CPFIS account with any of the 3 local banks before we can use the monies in our CPF accounts for investment purposes such as purchase of insurance policies, unit trusts and shares, etc.

    By opening such account, for example, if you bought one unit trust only in your lifetime, you will still need to pay a monthly maintenance fee to the agent bank. This means that you are technically paying the agent bank every month for nothing; just to maintain the account. You are not allowed to close the CPFIS unless you have sold your unit trust.

    On top of that, when you buy/sell shares using your CPF monies, you not only need to pay brokerages to the securities firms but also fees to the agent bank. This increases your transaction costs.

    Therefore, my question is why do we need a middle man aka agent bank? CPF Board has already spelled out the rules, restrictions, etc on the usage of CPF funds. For example, why can't the insurance company directly liaise with CPF Board on the withdrawal of fund for the unit trust purchase?

  2. #2

    Default Re: What is the rational of having an agent bank to manage your CPF transactions?

    Quote Originally Posted by dreaming View Post
    Thanks for the article but it has not addressed my question.

    As I have already mentioned earlier on the fees / transaction costs, these hinder your overall returns.

  3. #3
    Deregistered
    Join Date
    Sep 2013
    Location
    Simei
    Posts
    5

    Default Re: What is the rational of having an agent bank to manage your CPF transactions?

    Quote Originally Posted by Jedi View Post
    Thanks for the article but it has not addressed my question.

    As I have already mentioned earlier on the fees / transaction costs, these hinder your overall returns.
    Because CPF is not your money .....

  4. #4

    Default Re: What is the rational of having an agent bank to manage your CPF transactions?

    Quote Originally Posted by Jedi View Post
    By opening such account, for example, if you bought one unit trust only in your lifetime, you will still need to pay a monthly maintenance fee to the agent bank. This means that you are technically paying the agent bank every month for nothing; just to maintain the account. You are not allowed to close the CPFIS unless you have sold your unit trust.
    Someone correct me if i'm wrong, but as i understand, unit trusts are actively managed, i.e. there is a manager studying the market, buying and selling assets so that over time the value of the fund beats the market.
    So what you're paying is actually a fee, typically 2% per annum, to the fund manager for his talents, not just simply to maintain the account.

    Quote Originally Posted by Jedi View Post
    On top of that, when you buy/sell shares using your CPF monies, you not only need to pay brokerages to the securities firms but also fees to the agent bank. This increases your transaction costs.
    Never bought with cpf monies before, but as i understand, the brokerage firm is the bank, i.e. for ocbc, there is iocbc, etc...
    So you pay 2 fees, one to the brokerage firm, i.e. the bank, whenever it executes a trade for you, and another fee to the stock exchange, i.e. sgx.
    And gst on both.

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •