facebookTo pay housing loan in cash to save CPF OA? Or to pay with CPF OA and do voluntary contribution later? Since they will spread to MA and SA with more interest? - Seedly
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Syalon

Level 2

14 Oct 2020

To pay housing loan in cash to save CPF OA? Or to pay with CPF OA and do voluntary contribution later? Since they will spread to MA and SA with more interest?

Hi
I am paying my house loan with CPF currently and looking to change.
Not being investment savvy, i'm looking to put money into CPF for stable growth.
I have set aside enough money for emergency funds n dailys so no worries on that.
Should I pay the loan in cash instead so there are more money in OA, or, should i pay with OA, and later do a VC so that the money can spread out to MA and SA which have higher interest?
Understand at 55 yo, will be able to draw out after setting aside Life amount.

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    Discussion (2)

    What are your thoughts?

    Hi there,

    It's a personal choice rather than right or wrong.

    It depends on what you are going to do with your money if you use your CPF OA to pay. For myself, I will much rather use CPF OA and invest my spare cash as I'm confident I can generate much more returns than the CPF OA interest.

    Thewokesalaryman wrote a post on this, check it out!

    https://thewokesalaryman.com/2020/08/18/should-...

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      Hi Syalon,

      If you don;t want to consider other options, then yes, use the CPF but always understand can put in, cannot take out ( until 55yrs-provided meeting BRS/FRS).

      Yes, you should pay with your spare cash since they are sitting in the bank with 0.2%? interest. Your loan is probably at 1.5% interest? (if amt is large, you can consider refinancing currently).

      If you really want to, you can try to maximise your SA by transfer or VC.

      As for MA, I would not recommend since you really cant use it unless for medical bills/insurance. Anyway, it currently has a limit of $60K, in excess, the interest will flow out to OA (and oh, @ 55yrs old, you also cannot take out the money here)

      https://woocard.me/alvinmok

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