facebookAnything that I can do to optimize my CPF OA balance? Should I invest it through means like Endowus, or transfer to SA to get the 4%? - Seedly

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Anonymous

05 Oct 2020

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CPF

Anything that I can do to optimize my CPF OA balance? Should I invest it through means like Endowus, or transfer to SA to get the 4%?

Currently 25, single, no personal housing yet, and working towards FIRE.
OA $20K and SA $40K prerequisites already met.
I could invest with Endowus through one of their global index fund.
Since I still have 10 years to go before I can buy my own house, I can also consider transferring everything from OA to SA, and let it regrow back from employer contribution.

Discussion (6)

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Shengshi Chiam, CFA

05 Oct 2020

Personal Finance Lead at Endowus

Hi Anon,

This is Sheng Shi here from Endowus. I am 31, single, no housing plans yet, and also working towards FIRE.

If you choose to be single and want to get a BTO 2 bedroom flat (my plan somewhat!) then you indeed have a lot of time of time to build up your CPF balance to pay for your housing.
I prefer to invest my CPF OA monies than transfer my money SA as over a long run it should do better than 4% returns. The most challenging part of my strategy is to stay invested - I have invested most of my CPF monies before the market crash in March 2020 and am still making a loss on my investment.

If I were to liquidate my investments in March, at the lowest, and held on the money in CPF OA I would have missed the fast rebound and lost even more.

Is it possible that I am worse off investing my CPF in the short term? Definitely

Is it possible that I am worse off investing my CPF in the short term, relative to transfering to SA for a 4%? Even more likely,

Can i do better than 4% over very long investment horizon, and doing recurring investment? I would say very likely, as long as we are passive, diversified and low cost in our investments, and staying invested. That is what I am going for.

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If there is no immediate need for buying a home (as you mentioned), then this becomes purely a question of risk appetite.

Do you prefer a higher return with volatility or a safe, essentially guaranteed 4%? I donā€™t think there isnā€™t one right answer and only you can answer this question.

Personally for me, Iā€™ll max SA FRS first before investing in CPF OA. But thatā€™s for me and cos Iā€™m risk averse (as my username suggests haha)

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