𝗧𝗼 𝗶𝗻𝘃𝗲𝘀𝘁 𝘄𝗶𝘁𝗵 𝗖𝗣𝗙 𝗼𝗿 𝗻𝗼𝘁 𝘁𝗼 𝗶𝗻𝘃𝗲𝘀𝘁? 𝗧𝗵𝗮𝘁 𝗶𝘀 𝘁𝗵𝗲 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻. 🤔

[Expanded article from my LinkedIn post, with side notes below.]

A Grab driver said something to me last week that stuck: “𝘊𝘗𝘍 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘪𝘴 𝘸𝘳𝘰𝘯𝘨 𝘭𝘦𝘩, 𝘵𝘩𝘦𝘳𝘦’𝘴 𝘯𝘰 𝘤𝘰𝘮𝘱𝘰𝘶𝘯𝘥𝘪𝘯𝘨! 𝘖𝘯𝘭𝘺 𝘵𝘩𝘦 4% 𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘣𝘺 𝘊𝘗𝘍 𝘤𝘰𝘮𝘱𝘰𝘶𝘯𝘥𝘴. 𝘐𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨 𝘺𝘰𝘶𝘳 𝘊𝘗𝘍 𝘪𝘴 𝘫𝘶𝘴𝘵 𝘱𝘶𝘵𝘵𝘪𝘯𝘨 𝘺𝘰𝘶𝘳 𝘩𝘢𝘳𝘥-𝘦𝘢𝘳𝘯𝘦𝘥 𝘮𝘰𝘯𝘦𝘺 𝘪𝘯𝘵𝘰 𝘨𝘢𝘮𝘣𝘭𝘪𝘯𝘨!”

Instead of jumping into a debate with him, I invited him to walk me through his thinking.

To him, compounding means a guaranteed rate stacking predictably every year, just put in, get 4% back, repeat. Because equity funds inside CPFIS go up and down (and sometimes hit the negative), he felt that volatility resets the clock each time. In his eyes, it doesn’t compound.

Honestly, that’s a very common way to look at it. And it sounds ‘reasonable’ if we define compounding only as a fixed rate stacking on itself.

So here’s the question I put back to him, and to you: 𝗪𝗵𝗲𝗻 𝘄𝗲 𝗶𝗻𝘃𝗲𝘀𝘁 𝗶𝗻 𝗮𝗻 𝗲𝗾𝘂𝗶𝘁𝘆 𝗳𝘂𝗻𝗱, 𝘄𝗵𝗮𝘁 𝗮𝗿𝗲 𝘄𝗲 𝗮𝗰𝘁𝘂𝗮𝗹𝗹𝘆 𝗯𝘂𝘆𝗶𝗻𝗴?

We’re buying small slices of real businesses. These are companies that grow revenue, reinvest their profits, and compound their own earnings year after year. That internal business growth is compounding too! It’s just that the stock market looks noisier, and the returns are never promised upfront. Besides, many funds reinvest dividends automatically, which grows the value of the total portfolio.

𝗪𝗵𝗮𝘁 𝗺𝗮𝗸𝗲𝘀 𝗲𝗾𝘂𝗶𝘁𝘆 𝗰𝗼𝗺𝗽𝗼𝘂𝗻𝗱𝗶𝗻𝗴 𝘄𝗼𝗿𝗸 𝗶𝘀 𝘁𝗶𝗺𝗲. And CPF, by design, gives exactly that: a long runway most of us wouldn’t otherwise stick to.

That doesn’t make the 4% offered by CPF less valuable. It has its place in offering a predictability that the equity side simply can’t. But measuring equities against it as if they’re the same tool just isn’t a fair comparison. They are both tools that work differently yet complement each other for your retirement planning.

𝗧𝗼 𝗶𝗻𝘃𝗲𝘀𝘁 𝘄𝗶𝘁𝗵 𝗖𝗣𝗙 𝗼𝗿 𝗻𝗼𝘁 𝘁𝗼 𝗶𝗻𝘃𝗲𝘀𝘁? Is that the only question we can ask?

I would like to offer a re-frame of “the question” to this:
“𝗛𝗼𝘄 𝗺𝗶𝗴𝗵𝘁 𝘄𝗲 𝗺𝗮𝗸𝗲 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗖𝗣𝗙 𝘄𝗼𝗿𝗸 𝗳𝗼𝗿 𝘂𝘀, 𝗻𝗼𝘁 𝗮𝗴𝗮𝗶𝗻𝘀𝘁 𝘂𝘀?”
It’s not about competing against either tool; it’s about understanding the rules well enough to make both tools work in tandem. 🤝

If this is something you’ve wondered about too, I’d be happy to unpack it properly over coffee. ☕

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🎭 Side Note 1: Behind the Post in June, A Dash of “Midsummer Madness”

If you noticed the opening hook of the above post,“To invest with CPF or not to invest? That is the question” , you might recognize it as a cheeky nod to Prince Hamlet’s famous soliloquy on the agonizing paralysis of human decision-making.

Writing this in late June actually brings a bizarrely perfect historical coincidence into play. As it turns out, this week is incredibly significant in the world of William Shakespeare:

• We just passed “Midsummer Madness” (June 23–24): In Elizabethan England, Midsummer Eve and Day marked the summer solstice. Folklore held that the boundary between the mortal and fairy realms wore thin, causing people to act irrationally from illusions—a concept that Shakespeare immortalized in his play, A Midsummer Night’s Dream. In a way, letting the short-term illusions of market volatility scare us away from long-term compounding is its own form of modern “financial midsummer madness”!
• The Globe burnt down (June 29): A few days from now marks the anniversary of the ultimate endgame in Shakespeare’s career. On June 29, 1613, during a performance of Henry VIII, a theatrical cannon misfired, ignited the thatched roof, and burned the iconic Globe Theatre to the ground in under an hour. This had been the birthplace of the play Hamlet, where the well-known quote “To be, or not to be, that is the question” came from. Talk about an unexpected market crash! (Luckily, everyone survived, though one man’s burning pants had to be put out with a bottle of ale 🍾💦🔥).

Universal truths have a funny way of echoing across centuries.

Whether it’s a 17th-century theater director dealing with a sudden catastrophic fire, or a 2026 Singaporean navigating the choppy waters of retirement planning, the human struggle with risk, timing, and fear remains exactly the same.

🎭 Side Note 2: Paradoxical Consequence from the Fear of the Unknown

When Hamlet asks his famous question, “To be, or not to be, that is the question”, he is wrestling with the ultimate human dilemma: Action vs. Inaction. It is the exact same psychological roadblock the Grab driver faces.

Here is how that 400-year-old parallel plays out in modern financial planning:

• The Fear of the Unknown: Hamlet hesitates because he fears the “undiscovered country” of the future. Similarly, leaving money in the guaranteed 4% is clinging to the safety of the “ills we know.” Moving into the stock market feels like stepping into the unknown, where short-term returns are never promised.
• Paralysis by Analysis: Hamlet warns that overthinking causes great enterprises to “lose the name of action.” You can draw a parallel to when an investor lets market noise freeze them; their long-term wealth strategy gets “sicklied o’er” by fear. By trying to avoid short-term drops, can their hesitation also actively work against them by missing the compounding engine of global growth?
• The Irony of the “Safe” Choice: Hamlet’s ultimate tragedy is that by delaying action to find a perfectly safe path, he creates a worse outcome. In retirement planning, clinging purely to the “absolute safe route” out of fear can end up being the riskiest move of all against the quiet erosion of inflation.

Ultimately, deciding whether to invest your CPF isn’t a math or logic problem—it’s a human one. We often let our fear of short-term discomfort completely derail our long-term destiny. To be fair, fear is important; we need to be cautious, and fear reminds us to be mindful and intentional with our actions. Reviewing the fear and evaluating the options with an unbiased frame of mind will help us move beyond fear to constructive critical thinking.

The next time you find yourself overthinking a big decision, remember Hamlet—and try not to let the “pale cast of thought” turn your long-term currents awry.

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Disclaimer: Luchan Studio is an independent educational and design zine platform. This content is for informational purposes only and does not constitute financial advice. We are not affiliated with, endorsed by, or representing the Central Provident Fund (CPF) Board or any government statutory body. The perspective shared in this article is intended to invite openness to cultivate a balanced, objective mindset about the tools available for retirement planning, as their efficacy largely depends on an individual’s circumstances, financial position, risk tolerance, and time frame.