(SEEDLYTV EP06 GIVEAWAY) Share your best CPF hack OR an interesting personal CPF story!?

My best CPF would be NOT choosing to utilise all your CPF OA monies to pay for your BTO HDB flat.

Why would I do that?

The answer is simple. The sum that is withdrawn for paying your HDB will have interest accrued on it, which means that by choosing to utilise CPF for your home loan you will "own" yourself interest, instead of CPF paying you interest! In other words, when you sell your property, not only will you have to pay back the principal(20k), you also need to pay back the compounded interest on it as if it was sitting in your CPF OA.

On the other hand, by paying in cash, the 20k of your CPF monies left inside earns an additional 1% interest on top of prevailing rates(bonus interest applies to first 60k of your CPF monies accross the three accounts: OA, SA, MA) so you enjoy a wonderful thing called "inversion"- in which your CPF monies would be working harder than that of the loan. This is because HDB loan charges a 2.6% interest, which is 0.1% on top of the current OA rate of 2.5% interest. However, the first 20K in OA will yield a 2.5% + 1% = 3.5% interest so you get 0.9% more every year!

Also, the 20k balance in your OA can also serve as a security net to cover the monthly mortgage instalments for your BTO in times of need eg retrenchment or unexpected illnesses. This can really help you ease your mind in hard times- you don't have to spend sleepness nights worrying about how can you service your mortage loan.

In fact, if you were more adventerous, you can do an OA to SA transfer and that can net you a wonderful 4%+1% = 5% interest rate! Such an act would let you witness the awesome power of compound interest: the amount you put in will x2.5 in 25 years time!

Hack to be assured of a higher cash inflow after 55 from 4% pa interest earned on a bigger SA balance, annual interest which you can withdraw every year or let it compound and snowball into a bigger second retirement fund risk-free, apart from CPF Life! Yes you can stop CPFB from automatically transfer all your SA (except 40k) funds into RA at 55. It is legitimate. You cannot do it only if you do not know this loophole or how to hack to stop the SA transfer. Read this articel to understand and know how : https://smartinvesting18.blogspot.com/2019/06/h...

Prob not a hack, but over the past year, I have different perspective of CPF now.

One of the important things to note is even if you have to declare bankruptcy, your cpf balance is yours alone, and as long as you are alive, creditors and family cannot touch it.

This point makes the cpf oa somewhat a useful "bank account" that can help folks from humble backgrounds work towards their future.

For the folks who earn below average wages, they will often need to focus on expenses and hardly be able to invest. Hence if they could learn more to optimise cpf oa, it could very well help them to buy a decent hdb.

For this group, if I could advise, I would hope they learn to make the employer pay their cpf and forsake some cash in pay (especially if they are part work part study). Let them use the 2.5% and compounding to quickly get through the minimum 35k, and start to use the oa for decent investments with quarterly dividends. Use compounding to make it roll, and slowly build up this dividend income. Then work towards a goal to build the dividend income to service the hdb loan payments.

This would be an ideal outcome, because this group also face tremendous risk of being obsoleted by future technology or cheaper foreign labor. If they could get some of this help, maybe they would need to worry less about losing the roof over their heads.

One of the CPF hack/tip that I have is to make voluntary CPF topup (to all 3 accounts) yearly as it will generates higher returns. As opposed to what many people may think that the CPF money can see cannot touch, I felt that there are certain ways that we can use our CPF monies effectively.

For OA account, its quite direct. Many of us only use it for housing. So if we start topping up early we will get more funds (compounded interest) so that we minimise cash payments. On top of that OA can also be used for education (either for university or for our future child)

For Medisave, many of us thought it can only be used when we are hospitalized. But we can actually use it to purchase certain approved medical and health insurance! Not forgetting the 4-5% p.a.
*Fun fact: If you have the full BHS $57,200, the yearly interest will be $2,288 (4%) which is enough to pay for your medishield and enhanced Integrated Shield Plan. Which means that the premiums are free!

As for Special account, it will definitely be a great savings accumulator for retirement. Great interest rates and after age 55 you can withdraw lump sum (after FRS)