Asked on 06 May 2020
Realistic total amount for the degree alone would be around 28k, saved 12k so far in SC jumpstart account. Any advice on how to maximise my current savings?
Monthly savings: $300/month till Nov 2020
Taking a cpf loan for the degree. Course of study will be around 3-3.5 years
With prices of bond etfs going up, will it be wiser to continue saving and putting it to SC jumpstart?
CPF Education Scheme allows you to use your parents’ CPF to pay for university fees. The interest rate is pegged to the CPF Ordinary Account interest rate, which at 2.5% currently, and is payable a year after graduation or stop your studies, whichever happens earlier. You can use the CPF Loan Repayment calculator to help you anticipate your future cashflows: https://www.cpf.gov.sg/eSvc/Web/Schemes/EducationLoanRepaymentPeriodCalculator/EducationLoanRepaymentPeriodCalculate
You could put in SC Jumpstart, and the interest rate will be 2.0% max. This is lower than the interest rate which you are charged from borrowing from CPF. However, you will be sure that your principal will be there after 3-3.5 years and getting interest monthly.
Another method is to put your money in roboadvisors (or other investments) where there is much more potential for growth than JumpStart. With CPF Loan Repayment being monthly, the concern of the market condition should not be too big. In the scenario where the the economy is good, you could just pay off the loan from your investments. However if the economy is still recovering or another crash, then you will just have to pay through your monthly income (same as opting to go with Jumpstart solely).
1 more comments
06 May 2020
I prefer to be a bit more conservative. Depending on your monthly instalment, say $400, I will keep roughly 6 months' worth + personal expenditure (total ~4-5k for me) then invest the rest. This is to ensure a buffer in the case I am not able to find a job immediately after university or retrenched before full repayment of loan.
07 May 2020
Will it be wise to pay off the loan asap around 1 year upon graduating without touching emergency funds. And afterwards I can then focus on saving to invest for longer term goals.