Should one invest the monies in CPF-OA before key collection to generate as much as possible in the account to reduce loan amount?

We are on average 31 YO.
Actually, we have not figured out our game plan for CPF but we have already used our CPF OA monies to pay for the first 5% deposit and other fees.
Is it wise to continue using CPF to pay for our house if we have no intention of selling it in future and use the additional money (monthly contribution less mortgage payment) for investment/ transfer to SA to fund our retirement?

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Samuel Don Oh

28 Aug 2020

Hey there!

It is possible to invest your CPF OA and attempt to outbid the interest but that depends on your time horizon. A shorter time horizon might be a little risky. I'm guessing your time horizon is approximately 2 years before you get your keys. That MAY work but you will need a diversified portfolio then (maybe 40% on fixed income to hedge against the volatility) because your housing needs are guaranteed but investment returns are not. If your time horizon is less than a year, I'll highly discourage you from investing your OA.

Ultimately if you have dedicated your OA for your housing needs, that'll work and you can use the cash on hand for better use, either to fund your SA or use an investment instrument for that. Do note that any cash that goes into your SA is irreversible so do think twice on liquidity before doing that.

Financial planning is an integral part of life. You can reach me here to find out more.

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