Asked on 05 Dec 2018
Top Contributor (Jan)
Definitely. In fact you're locking up that 20k for 32 years and is irreversible.
A balanced portfolio over 30 years can give you a 5-6% compounded return, a moderately aggressive portfolio can give you 7-8% returns plus gives you full liquidity.
Nobody know which is better only Time know.
I put 20% deposit $108,000 in 2006 and 4 years later property appreciate by 1 million.
If I use your question what will be your answer.
Why don't you topup your own CPF special account instead. Yes, u might not earn the extra 1% but u are able to receive tax relief. Eg, your taxable income is $40k, for every dollar u earn above 40k is taxed at 7%. Therefore, if u topped up $1000 into your special account, u get $1000 tax relief, u saved 7% of $1000 = $70 tax money. Effectively have gotten 7% return on your money. If u are earning more than $80k, u will be in the 11.5% tax bracket.
Topping up your son's CPF although is able to earn the extra 1%, u will not be able to use the funds for yourself.
There are definitely plenty of investments that can potentially produce better returns, but it comes with higher risk as well. CPF provides superior risk adjusted return.
It really depends what purpose u intend your 20k for. You cannot use CPF monies except for its allowed purposes only. Not to mention it is your son's CPF.
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07 Dec 2018