If I feel that I can make 3-4% return on my investments through index funds (i.e STI ETF), should I pay my home loan using my cpf oa or using cash instead? ? - Seedly

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Asked by Andrew Kwek

Asked on 13 Apr 2019

If I feel that I can make 3-4% return on my investments through index funds (i.e STI ETF), should I pay my home loan using my cpf oa or using cash instead? ?

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Personally, I will advise to pay a portion of it with cash, as CPF is a really good financial instrument for retirement. Giving 3.5% for your first 20k in OA and 2.5% subsequently.

Taking money out of your CPF, means you will lose the 2.5 or 3.5% of interests and on top of that you are also paying your loan interests of 2.6% (assuming one took a load from HDB) so thats is like a -5%.

But not everyone can afford to pay with cash and also some may earn more than enough for CPF hence its good for them to split as they have surplus from their CPF. (Everyone has a different number so its good to do your maths before deciding on the % split)

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Andrew Kwek
Andrew Kwek

20 Apr 2019

Thanks Clarence, I think I'll pay my next 10% deposit in cash which is due in 2 years time when I get my flat. Previously I used 5% cash and 5% cpf for my initial 10%. I think I agree with you and I'm thinking of using my cpf as my bond portfolio and thus I transferred most of my oa to sa.
Clarence Chua
Clarence Chua

22 Apr 2019

It’s heartening to see more Singaporeans like yourself making good use of the Financial Instrument we have! I wish you the best of luck and pray your wealth grow steadily!
Teo See Hwa
Teo See Hwa, MArketing Associate at Propnex
Level 3. Wonderkid
Answered on 17 Apr 2019

Compare apple to apple.

HDB loan is leverage and depends on the type you buy you get capital apprecation.​​​ investments through index funds (i.e STI ETF) is only using your money call cash or CPF.

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