Asked 3w ago
1) Drained out all OA to pay some of my HDB downpayment.
2) current OA level is $10500 thanks to Edusave transfer at 31.
3) HDB monthly OA payment is $560.
4) getting monthly pay of $4000 - as a 1 year contract research staff, with additional $600 per month giving tuition
Was thinking of transferring OA to SA leaving 12 months worth of buffer in case of job uncertainties. Is this a good idea? Is the 12 months buffer enough given the nature of my employment?
Hi Tong Soon,
There is no right answer, as it depends on what you prefer, but what I would do would be to try to hit $20K in my OA, not only as a buffer, but to also maximize the extra interest that will be given on the first $20K of my OA. This extra interest is credited to my SA, so I'm only marginally losing out compared to transferring the monies into my SA, where I will earn the full 4%, but lose flexibility on the monies.
Given the current economic climate, I'd hang on to a bit more OA money, as you are a contract staff, if you don't manage to get another contract after the current one ends, you will want to put your energy and focus into finding another job instead of stressing as your OA monies run dry and you end up having to pay your HDB payment in cash. $20K would last you a couple of years.
Transferring OA to SA to earn the incremental interest seems like a decent idea. However, the transfer is irreversible so you'll be unable to reverse transfer your funds in your SA account.
What you should perhaps think about is:
Do you intend to upgrade or buy a second home in the future? The additional incremental interest earned from the transfer may not be worth giving up as compared to having the flexbility of the using it later on.
The use of SA funds are also rather restricted; in the sense that not only will you be unable to use it for housing. The funds for investments are limited as well (if you consider doing CPFIS in the future).
Having said, if it aligns with your financial goals in the future. By all means go for it.
Leaving 12 months of buffer means $560 x 12 = $6720 in OA? Then transfer around 3k to SA?
Should be fine since your monthly income of 4k will have more than $560/mth to OA. So your OA will never fall below 12 months.
Regardless how uncertain your job is, you shouldnt be unemployed for 12 months. Even in difficult times like now, you can still work part time for healthcare / safe distancing ambassador etc. So you will still have CPF contributions.