Is it worth to top up up to 3k for government dollar-for-dollar matching CDA account? - Seedly
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Anonymous

Asked 3w ago

Is it worth to top up up to 3k for government dollar-for-dollar matching CDA account?

My child's CDA account interest rate is 2%. if i can find investment like robo-advisor return rate which is more than 2%, is it better to invest there than top up in CDA?

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    Hi anon,

    The rate of return you should look at is not 2%. Rather, because the government matches your contribution, it is in fact a 100% rate of return for a year. Since this is risk free (in terms of getting the government matching), then you also have to see if there are any risk free instruments that give 100% in a year (there are none).

    That's why it is a good idea to top up to the CDA account, especially if you intend to use the money on your kid. The government is subsidizing your cost of raising a child, and that can only be a good thing.

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    Question Poster

    3w ago

    So can i say that i invest in other investment first which the return rate is more than my top up and government top up return rate, after the cda account almost zero, i only top up is more worth?
    Min Sheng

    2w ago

    The current interest rate is low, so there's no harm in topping up later.
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    Yes definitely, government match dollar for dollar means as good as 100% guaranteed returns, easily x10 of what you can get with a robo or endowument.

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    Of course it's worth it. Where to find dollar for dollar match Risk free "investment" lol

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    Best investment, the expenses will drain off most of the CDA within 4 years after using it for the childcare fee.

    1

    Question Poster

    3w ago

    So, can i say that i invest in other investment which the return rate is more than my top up and government top up return rate? After the cda account almost zero, i only top up is more worth?
    Thank You!
    Can you clarify
    I wonder if
    This is so helpful 👍
    What about
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    Z

    ZY

    Level 6. Master

    Answered 3w ago

    Definitely worth it to top up. You get $3k from the government when you open the account, and a further $3k from topping up $3k. You can see that as a 100% or 200% return - risk-free, no roboadvisor can top that. Plus the 2% return risk-free return cannot be matched by anything else out there, except Singlife savings account.

    Cda can be used to pay infantcare/childcare, which is something you will eventually pay anyway. Hence I don't see the money as being locked up.

    2

    Question Poster

    3w ago

    So, can i say that i invest in other investment which the return rate is more than my top up and government top up return rate? After the cda account almost zero, i only top up is more worth?
    ZY

    2w ago

    Never crossed my mind to it this way. But don't forget that the 2% p. a. also applies on the matched amount from the government. I can't say your way is wrong. But when I have my next child, I will still probably do the same - top up whenever the account is open and forget about it. Anyway it's only 3000, I wouldn't bother thinking too much about it.
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    YL

    YL

    Level 3. Wonderkid

    Answered 3w ago

    Taking the gov dollar for dollar matching gives you "free cash" to spend on your kid. Most parents will then use CDA to pay for infant care, child care services, vaccinations, etc. This way, you don't have to use your own cash and you free your cash for other purposes.

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    Question Poster

    3w ago

    So can i say that i invest in other investment first which the return rate is more than my top up and government top up return rate, after the cda account almost zero, i only top up is more worth?
    YL
    YL

    2w ago

    Seedly has a made a guide on baby bonus CDA. https://blog.seedly.sg/best-posb-ocbc-uob-savings-account-cda-kids-baby-bonus/ Dollars and Sense also has one. https://dollarsandsense.sg/5-ways-maximize-child-development-account/
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    Government give free $$$ , just take.

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