1M65: Heard about it from Seedly talk, but still confused. Why isn't everyone doing it then?

It is an investment form where you leverage on the high interest rate of your CPF's SA.

This can be done by topping up SA (Special Account) on your own or moving fundsfrom your OA (Ordinary Account).

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The returns are high however, the main drawback is that you can't access to the funds as SA is a one way transfer. There is no liquidity to the 1M65 investment. Really depends on your priority.

Though topping up SA do give an attractive 4% compounded interest, the transfer to SA is locked and can't be withdrew at any point of time until you reach age 55.

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Unless you do not have any big ticket item (such as wedding, house renovation) coming up in the next 3 to 5 years, you can consider doing yearly deposit into your SA as retirement planning.

Pros:

Makes you very disciplined with your finances and you will have a peace of mind when you invest subsequently because of the knowledge that compound interest will allow you to have enough for your retirement even if your investments do not produce good results.

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Cons:

The main con is that there is no liquidity and you must be like Mr Loo who is willing to save aggressively and not believe in the Singapore property dream. However, Mr Loo does make a good point that property prices are pegged to Singapore's growth and it's not guaranteed that you would be able to make a handsome profit should you sell the property a few years down the road.

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You also need to know how to properly plan and manage your finances so that you will have enough for your house / wedding / renovation / child(ren) etc. since your money is locked up in SA.

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If you are a savvy investor, 4% might not be that attractive and there remains the possibility that the government will change its policies.

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I think if you are a savvy investor, you can build up your investment portfolio first and then consider using CPF SA as the last line of defence.

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I'll also share my favourite financial blogger's take on the 1M65 approach here: https://treeofprosperity.blogspot.com/2018/11/a...

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Hope the above helps!

1M65 means to have a million at the age of 65. I guess the biggest con is the liquidity of the cash invested. One can only withdraw the cash after the retirement age. This means that you have to make lifestyle and financial changes (and sacrifices) to fulfill the 1M65 objective. The pro is of course, retire with a million.