Aim to hit FRS at 40yo. Cash top-up to SA till 40 or DCA into Robo-advisor till 40 then liquidate and do lump sum top up?

Considering 2 options:
1) Perform a monthly cash top-up into my SA till it hits the FRS when I’m 40. Pros-almost guaranteed returns, Income tax relief and cons would be illiquid.
2) Set-up a system to DCA into Robo-advisor till I’m 40, then liquidate the portfolio and do a lump-sum cash top up to my SA. Pros of this is I thought would be liquidity and cons would be volatility and value might fall or go into negative.

Anyone can share their views? Thank you.

Discussion (13)

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Takingstock @

08 Sep 2020

I have almost reached this step of hitting FRS by 40 this year. Still got a few months to reach it though.

I started late in 2017, and I think including this year, I would have done 25-28k in the retirement sum top-ups, transferred about 30k in oa to sa transfers, and was helped by the medisave to sa transfers.

In the last two years, I think the two main reasons why my SA grew fast was

a) the medisave to sa transfer (once you hit the BHS cap) and
b) the annual interest and bonus interest (as well as interest on medisave account)

I think it is better to reach frs faster, and it doesn't have to take a lot of cash. Focus on top-up to medisave to bit bhs more, then the SA top-up, and use oa to sa transfer to supplement if you don't need the money to be in oa. Then it will be up to compounding to do the rest of the work. It's just smarter, less risky and "more efficient" (from manual effort and capital point of view).

In that sense, option 2 would be a very clunky approach to getting there, and I won't recommend it. Besides, you can only get tax relief up to 7k for top-up to SA. I won't say its not good, but it's not very efficient.

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Elijah Lee

08 Sep 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

Why not do both?

Although I do not know what your current numbers are, you can mitigate risk by adopting a balanced approach.

Let's assume you are 30 and employed. If you are doing RSTU, just cap it at $7K per year. This compounds to $86K from 0 in 10 years and you've already met around 50% of the FRS. I have not counted work contributions to SA yet.

For the remainder of your budget, you can then invest and top up your SA by periodically taking profit from your portfolio.

You are right about the pros and cons in general, so the only thing you need to do is decide how you want to execute. But if you do both, you get the best of both worlds in a way. You have tax relief, some liquidity, and almost guaranteed returns on a large chunk of your portfolio.

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