I am currently transferring OA to SA regularly. OA 20k, SA 13k. When should I stop and allow OA to accumulate? Upon reaching 60k mark? (Meaning SA 40k)? - Seedly
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Anonymous

Asked 2w ago

I am currently transferring OA to SA regularly. OA 20k, SA 13k. When should I stop and allow OA to accumulate? Upon reaching 60k mark? (Meaning SA 40k)?

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JK

JK

Level 4. Prodigy

Updated 2w ago

60K mark doesn't necessarily mean SA 40K, as you do need to take into account the other accounts. For example, OA 20K + SA 20K + MA 20K will allow you to fully utilise 1% additional interest as OA 10K + SA 35K + MA 15K, or even OA 10K + SA 28K + MA 22K.

I will say, it depends on your goals and objectives, in both short term and long term. As your OA + SA total is very close to my own, I will assume that you are around my age, with similar objectives as stated below:

  • To maximise the additional 1% interest for the first 60K

  • To maximise the additional 1.5% interest for transferring from OA to SA

  • To want to have enough in OA to pay for a flat in a few years' time (or at least the downpayment)

With your OA kept at 20K limit, my guess is that you are not considering the 2nd point that much, mainly more interested in the 1st point while thinking of the 3rd point.

My advice is to work backwards on the math:

  1. Estimate when you might need to pay for the flat

  2. Estimate how much you might need to pay for the flat

  3. Calculate how long you need with your monthly CPF contribution to reach that amount

  4. If you are ahead of estimated period of when you might need to pay for the flat with your OA, transfer more to SA, to earn the additional 1.5% interest difference between OA & SA

Of course, the most theoretically correct answer is to keep transferring to fully maximise the interest, until you hit at least FRS. However, if you do foresee a need for your OA, it is better to work backwards to try and transfer the excess from OA to SA as early as possible to allow them more time to compound.​​​

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Question Poster

2w ago

Thank you for your comprehensive answer! I kept my OA at min 20k because I believe you can only invest any amount above 20k, if I'm not wrong. Now I'm reconsidering whether to keep that minimum.
JK
JK

4d ago

Personally, I don't think I will use any of my CPF month for investment, as there is a chance of lower/negative returns. Though the above situation is unlikely over long invested period, I rather have my CPF to grow steadily with predictability. I will rather take the risk with cash, as there is a higher opportunity cost of at least 2.5% when investing with CPF, compared to investing with cash. Also, I treat CPF as the risk-free safety net that I can fall back on in the event everything fails. With that in mind, I can afford to have a riskier cash investment portfolio without worrying about retirement, even if all markets crash. That is just my opinion. Up to you how you think best fit your needs and objectives. Feel free to ask anything and I'll try my best to provide you with my two cents worth.
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Hi anon,

What is your objective? Is it to hit FRS as soon as possible? If this is the case, then you should transfer till you reach FRS.

However, do note that since the transfer is one way, then you might face difficulty if you wish to get a flat later on and pay for the downpayment in CPF.

I do not know your life situation, but I can share with you that you can consider investing the rest of your OA above $20K once you have maximized the extra interest from SA/MA (i.e. first $60K). If you have a long enough time frame (at least 3 to 5 years), you may be able to get 4% or more returns on your OA monies, while keeping it fairly liquid in the event you wanted to get a propetry and use your OA for the downpayment.

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sl Chuan

2w ago

What is FRS? Can you dont use short form. We dont understand.
Elijah Lee
Elijah Lee

2w ago

FRS = Full Retirement Sum
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It depends if you have any use of the oa (housing, education). If there isnt, then you can transfer all. how much to move over will depend on your circumstance.

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