Asked 4w ago
OA 60K SA 115K and MA 60K. Should I transfer 40K from OA to SA to reach FRS asap?
If you are sure that you dont need to use the amount in OA, I think should be fine.
Do note that it is irreversible so make sure you think carefully and consider if you will be using your OA for:
Education (yourself / children)
For myself, even though I'm only 21, I transferred 5k from OA to SA. I started part time quite early and got quite abit of CPF (current CPF total 30k). I did it after some calculations and considerations. As im still quite young, I would be able to build up my OA for housing after I graduate and start full time job. Thus I can make use of compound interest and start getting 5% (4 +1) p.a. to build up SA for retirement.
Without further information it's hard to give you an exact answer.
You'll want to consider if these apply to you:
Are you currently using your OA to pay for a house? If so, you might want to consider leaving at least a year's worth of mortgage payments in OA
Do you want to have the ability to save tax via RSTU? Then you might not want to transfer. The trade off is that the compounding of your FRS will definitely be slower, but it can also be offset by having other assets and investmnets other than CPF SA
What is your current age, are you still far from 55, or are you nearing it? If you are nearing 55 then it might make sense to push your SA closer to FRS so that you can at least meet it by having that 60% compound at 4% instead of 2.5%.
There are probably other factors to consider as well but these will be the key ones. Ultimately the decision lies with you and without sufficient information I can only give you some general considerations you will need to weigh before you take any action.
2 more comments
I personally think there is a way to optimise. But
Transferring depends on whether you
(1) need the tax relief offered by the SA top-up (if no need, then just transfer)
(2) for OA, there is more flexibility to invest the 2.5% in Endowus and other providers
(3) Is SA shield something you would much prefer also? (Then hit FRS asap to make it work), and top up the remaining to RA after 55 (for SA shield and RA to work hand in hand).
As other commenters said, you can even transfer to your parents etc. I would do SA transfer in this manner.
Parents, then self, then kids. Liquidity is something that people did not consider much, but i would because there is no further advantage to topping up your kids and you deprived them of the tax savings in the future,
while you have liquidity advantage to your parents and personal 1.
I like planning for balance with returns and change of plans in mind.
1 more comments
Maybe leave 3-6 months of housing installments for buffer, and transfer the rest to SA.
As Wenhao said, if you ascertain that you don't need the money in your OA account for housing and/or educational fees, you can transfer your moolah to your SA account.
For me personally, I will finish paying off my housing loan this year. And upon consideration, I think I will not make use of my OA account to pay for my child's educational expenses. (Am intending to pump in money into his Child Development Account first before looking into endowment plans.) So ya, since the start of this year, I have been transferring money from my OA account to my SA account.
Another consideration I have is that I feel obligated to help my wife reach the FRS, so whenever I'm feeling generous, I will transfer the money in my OA account to her SA account. Think I will do likewise for my child once I get our SA accounts to inch closer towards the FRS, heh.
If you still need your 60k in your OA, one trick I picked up at Seedly is to transfer the interest accumulated in your OA every year to your SA account at the start of the year. The key is to build in good habits. And yup, that was what I did on January 1st this year.