Asked by Anonymous
It's an unpopular opinion/decision. Any advice or 'better' ways to use that $5k?
Interesting that you are planning to do that, in fact you can read this article I wrote about. The pros and cons are highlighted below.
Essentially this act of topping up the SA account is about your retirement funds compounding at a faster rate of 4%+ risk-free rate.
By doing this action:
If you plan to withdraw it in the next 10 years, maybe a SSB at around 2.4% would work better? no fees to withdraw also.
I think you should build up 6 months of emergency funds and stash it away in a higher interest account first.
After that you can consider different investment options such as SSB, ETFs, stocks and maybe just cost dollar average into the STI.
The Top up CPF is really a one way street. Personally I didn’t take this option as I wanted to use the money for property down payments
It depends on your objective. Money that goes into CPF cannot be taken out in the short term.
1) Do you have a 6 months emergency fund? 2) Do you have any plans for any cash use that is foreseeable in the next 5 years? (hint wedding, house, travel) 3) When I was 25 years old, I was already planning to spend $30,000 for wedding and $20,000 for basic renovation. Hence I only put my money in high interest saving account (OCBC 360 that time). I didn't touch or invest because pretty much foreseeable expenses.