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AMA 1M65

Held on 7th Nov 2018, Monday

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SeedlyTV S2E08

CPF

AMA 1M65

Savings

Is 1M65 really that desirable? I would rather have $1M cash than have the government give $5k~ monthly payouts till I die (in which I may not even receive the full sum). What are your thoughts?
No doubt, attaining wealth in the form of cash is the most satisfying as it is as real , as cold, as hard as money gets. If you're comparing $1M in cash vs $1M in CPF then for sure, one would rather go with the $1M cash option. One should not think of 1M65 as the sole retirement strategy but rather, a sure-win safety net for retirement. Here are some points to note about CPF: 1. The repayment of accrued interest when selling your property financed with your CPF OA is so that you are still on schedule to saving for your retirement through CPF. This accrued interest that you top up back to CPF still belongs to you. 2. Not everyone has the financial prudence to save and plan for retirement with cash. Some squander it away on gambling, others splurge the moment they get hold of a sizeable sum of money. CPF is supposed to make it stupid simple for anyone to have a decent retirement plan based on their financial standing (BRS, FRS or ERS). 3. Topping up to your own or loved ones CPF SA up to a max of $7k is tax-deductible. This could be a proposition for some to save on some income tax yet ensuring their loved ones hit a comfortable retirement goal. 4. Amount in excess of BRS can be withdrawn from 55 onwards. It is not as illiquid as you imagine. CPF is designed to make sure you are on track to a decently comfortable retirement where restrictions on withdrawals are there to ensure you do not overdraw on your retirement savings and deplete it before you leave this world.
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SeedlyTV S2E08

CPF

Insurance

Investments

AMA 1M65

Savings

Would joining insurance be the fastest way to reach 1M? Or would joining a 9 to 5 and investing still allow me to reach the same end goal with the same time frame?
Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered 3w ago
Using insurance to achieve investment goals is one of the lousiest way to get financial returns. Insurance is meant for protection not investment. And when you mix both objectives together, you will get fleeced by the very expensive insurance cost. Just look at the flashy cars and luxury suits that many showy insurance agents don on... who do you think pays for that?
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SeedlyTV S2E08

AMA 1M65

CPF

Savings

My income is not high like what other peers my age are earning and I am currently drawing only $5.5K. I’m 35 and I like this strategy that you are sharing. But is it too late for me to get 1M65 now?
Sharon
Sharon
Level 6. Master
Answered 3w ago
"Only $5.5K" sweatdrops Your income level is above average. You can make it!
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SeedlyTV S2E08

AMA 1M65

CPF

Savings

HDB BTO

Property

Home Loan

Loans

I'm in my mid-30s and getting married next year. I have 30K in my OA currently, would it be better to pay a lump sum for my HDB loan first or would you advice transferring some to SA or keep in OA?
Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered 3w ago
Basic needs must come first... housing down payment to me, is a priority.. After that, I would quickly race to set up my 1M65 safety net.
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SeedlyTV S2E08

CPF

AMA 1M65

Savings

What kind of advice would you give a fresh graduate or first jobber thinking of starting 1M65?
Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered 3w ago
To a fresh graduate or a first jobber, before you embark on 1M65, you need to look at your financial plan holistically. I will always advise everybody to 1. Make sure you are covered adequately with term insurance; never buy whole life insurance. 2. Cater enough money for a stormy day, I will suggest an amount enough to cover 6-9 months of living expenses including your housing mortgage. 3. Make sure you cater enough money for your BTO down payment, at least in your CPF or in cash. The rest is up to you. If I were in your position, I would start topping up my SA to form a very strong financial safety net, leading to the 1M65 goal.
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SeedlyTV S2E08

CPF

AMA 1M65

Savings

Retirement

Savings Accounts

How can I use the 1M65 or 4M65 strategies to retire comfortably? It sounds too good to be true now and if it's so easy to achieve, then why aren't more people using CPF to be a multi-millionaire?
Hi Anon, I believe this question should be answered by Mr Loo himself, since he probably had many people asking him similar questions, but here is what I think: To be able to use CPF as a way to be a multi-millionaire requires a significant amount of discipline and fortitude. When you put money into CPF, you are essentially deferring your spendings into the future. As simple as it sounds, Mr Loo is right to point out that "It is not easy". Many people would choose, consciously or otherwise, to use their earnings on "things" that give them pleasure right now, or at least in the near future. And these "things" generally have no value in the future. Some examples pointed out by Mr Loo are a nice restaurant meal, a vacation, a nice car, and even a nice condominium. Unless these expenses are able to generate a return on par with what CPF gives you, you will lose out in the future. Another main criterion for 1M65 to work, as pointed out by Mr Loo, is to be healthy and working in your early years. If anything happens to you, and it cripples your ability to earn a stable income, your 1M65 plan will be in jeopardy.
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SeedlyTV S2E08

CPF

AMA 1M65

Inflation

Retirement

Would you agree that if we factor in inflation, 1M65 may not be sufficient for those who are younger to retire?
Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered 3w ago
Historically, inflation in Singapore has always been very low, so the purchasing power of 1M dollars will still be pretty strong. I think the concern is for those with much less than that, which is the vast majority of people who cannot even hit 1M65. Yes depending on your lifestyle, 1M may not be enough, but....hey, the vast majority of Singapore wont even have 1M at retirement.
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CPF

Retirement

CPF SA

AMA 1M65

Savings

If I want to max out my CPF top up and let my SA grow with interest compounded at 4%, my RA would have about 710k by the time I'm 55. Is this correct?
SW
Shaun WQ Lim
Level 7. Grand Master
Answered 3w ago
Please note that the CPF Annual Limit is currently $37,740. Meaning if you include your mandatory contributions plus voluntary contributions the maximum amount you can put into your CPF a year. You can have more than the ERS in your SA account but you will not be able to contribute more voluntarily once you hit the FRS.
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SeedlyTV S2E08

CPF

Salary

AMA 1M65

Savings

I am a 28-year-old currently taking in a net salary of 3.5k. How much should I put in to obtain 1M65?
Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered 3w ago
Download the CPF calculator from our Telegram Chat Group and you can run various simulations to how to achieve 1M65. https://t.me/Loo1M65
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SeedlyTV S2E08

CPF SA

CPF

AMA 1M65

Singapore Saving Bonds (SSB)

Interest Rates

COVID-19

Economics

Based on the assumptions of 1M65 that OA/SA rates remains the same, and given the low SSB rates of 0.8% in average of 10 years, what are the odds of the CPF board lowering the OA/SA rates?
Lok Yang Teng
Lok Yang Teng
Top Contributor

Top Contributor (Jun)

Level 9. God of Wisdom
Answered 3w ago
Mr Loo mentioned: 2.5% of OA is bound legislatively and will be hard to change. Change in the interest rate for SA, however, is entirely possible but low probability. First, the change will come at a political cost. Quite a few citizens are already unhappy that their money is locked away for many years, and a further drop in interest rate is going to fuel their anger. It will definitely not be good to the ruling party then. Next, assuming the Government has to decrease the interest rate, it may a last resort. Despite challenging and the uncertain economic situation now, the interest rate for SA still holds at 4%. While there is a chance the interest rate will fall (due to some situation or catastrophe), it can still be the best option out there with no better alternatives around (just like now).
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