facebookIs it wise for a freelancer to contribute about 2.5k per month to CPF, aiming to use the entire amount for housing in 3 years time? - Seedly


07 Jun 2019


Is it wise for a freelancer to contribute about 2.5k per month to CPF, aiming to use the entire amount for housing in 3 years time?

The interest is pretty good at 3.5% (with the additional interest), hence I’m thinking of putting it there like a savings plan for 3 years.

AMA Christopher Tan

Discussion (5)

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Loh Tat Tian

07 Jun 2019

Founder at PolicyWoke (We Buy Insurance Policies)

With regards to the CPF scheme, you will need to understand the following:

(1) CPF-OA earns 2.5% interest which will be directly credited back to CPF-OA. The additional interest of 1% will go into CPF-SA. Do take a look at this


" Extra interest received on monies in the OA will go into the member’s SA or RA to enhance his or her retirement savings. "

(2) As a freelance, to even consider doing Voluntary contrbution, do also check on the tax relief that you will be getting. If your annum taxable has hit 7%, then maybe, just maybe, it will make sense for you to voluntary contribute to CPF. (because every $100 you put in, gives you $7 which you can use instead of being taxed by IRAS).

If you wish to capitalise on CPF as a pepertual bond, I would just say, keep at least combined amount of 60k (to earn the extra interest for retirement).

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Christopher Tan

26 Jan 2019

CEO at Providend Ltd

Dear anonymous, thanks for your question and sorry for the late reply. I think Tat Tian has given you a very detailed answer and I can't agree more. I just want to add that when you do voluntary contribution into your CPF, you cannot dictate that they go into the OA only. Your money will be spread over the 3 accounts (OA, SA and MA) in the allocation rate based on your age. So not every dollar will go into OA for you to save towards your property.

Having said the above, I will still encourage you as a freelancer to contribute to your CPF as it is a good form of forced savings towards your retirement.

There are 3 "things" you will need in retirement:

  1. A fully paid house

  2. A good medical expense insurance

  3. A lifellong income stream

Under lifelong income stream, CPF LIFE forms the foundation. It gives you a reliable income stream that hedges against longevity and market volatility risk. By contributing into your CPF now, you are actually accumulating towards a lump sum to buy this annuity (CPF LIFE) at age 65.

Hope this helps.

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