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Anonymous
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.
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Shengshi Chiam, CFA
05 Oct 2020
Personal Finance Lead at Endowus
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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 donāt think there isnāt one right answer and only you can answer this question.
Personally for me, Iāll max SA FRS first before investing in CPF OA. But thatās for me and cos Iām risk averse (as my username suggests haha)
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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.