Terminate CPF ILP and leave monies in CPF to earn interest?

Hi anon,

Your total CPF OA + SA + CPF ILP is valued at $394K.

That'll leave $106K in CPF if you opt for ERS next year (I have not factored interest earned yet on this year's monies)

If you perform the SA shielding trick correctly, you can have $288K in CPF RA and $106K in CPF SA, which will earn 4% interest instead of 2.5%. This will be what I would do, since 4% interest is risk free and 60% better than the 2.5% in OA. There's no need to risk this $106K by investing it elsewhere. As we age, it's better to have a peace of mind, which is priceless.

If you don't know what the CPF SA shielding trick is, read this article to find out more:

https://dollarsandsense.sg/cpf-shielding-hacks-...

If I wanted to invest, I would do so with cash as the alternative is to earn 0.05% in the bank. At least CPF monies can earn up to 4%.

My approach to this would be simple. At age 54, you want to reduce volatility exposure in order to protect downside risk to your 180k investment. If stock market crash now (assuming your ILP invests in underlying equities), don't know how long it'll take to recover and you certainly don't have that investment horizon.

The alternative is to convert your funds to money market instruments / more stable funds. But if that's the case, you will start losing money as your fees are still there but your returns drop. So if you are able to encash your policy, that would seem like the best option to me.

For the second question of investing vs earning 2.5% CPF interest, it all depends on how confident you are of investing your CPF and achieving better returns than that. Most people wouldn't advise touching it at this point but if you still have 10 years and you know how to do it safely, I don't see why you can't invest it. Also, you don't know if the 10 years might turn into 15 years, etc.