Anonymous
If I have a cpf student loan (~30k) which I have to begin paying in 2 years time. Should I be saving or investing?
Conflicted between saving or investing a small amount of about $200 monthly from allowance + side income. Currently have $10k saved up in singlife.
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Tan Choong Hwee
Edited 05 Oct 2021
Solutions Specialist at Providend
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- I will focus on paying off 1st asap.
- Cpf interest 2.5% guarantee lose.
- Yes, investing have higher return ~10% long term, but short term volatile
- Another perspective is why do you want to take a 10% - 20% market drop (in short term) if you can clear your 2.5% guranteed gain if you pay your debt.
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Do note that taking CPF Student Loan is actually borrowing money from yourself, and when you clear the loan, you are returning the principal you withdrew plus accrued interests to your CPF. All are your money and there is no leakage to external parties.
Having said that, it is still better to clear your CPF loan first so that you are returning your CPF to the original state as if you didn't take the loan, and you get to enjoy subsequent risk-free 2.5% interests moving forward.