CPF

Every Singaporean's contribution till 55 and beyond

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Property

General

CPF

Eleanor Ng Lai Hong
Eleanor Ng Lai Hong,
Level 2. Rookie
Answered 6d ago
I would suggest both. Cpfoa earns a risk free interest rate of 2.5%pa. Currently, HDB loan is 2.6% but if loan is taken from bank, you can still probably get a low 2%. So by using cpfoa, on top of losing the interest rate cpfoa earns you, you are using a higher yield instrumt to service a lower cost of debt. But having said that, you may need liquidity when the kids come etc. So having a mix of both you the option to adjust the ratio of cash / cpf mix.

Resale HDB

HDB BTO

CPF

Insurance

BL
Brian Lee,
Level 3. Wonderkid
Updated 8h ago
You mean Term (Level Term) vs HPS (Reducing Term)? MRTA and HPS basically the same where it takes care of your house loan upon the insured death. MRTA is used by the bank and HPS is used by HDB loan that uses CPF monies. If Term vs HPS, then you can go to comparefirst website and generate the loan amount and see the premium vs what you are currently paying for your MRTA/HPS. You might be surprise the Term might cost about the same or slightly more than your MRTA/HPS. Maybe just to add some e.g. on how Term vs MRTA/HPS payout. Assume insured took $400k loan for 30years and bought the same protection. Death happen on year 20. A) MRTA/HPS will pay off the remaining 10 years (of about 168k) B) Term will pay the full 400k. So you can use the 400k to pay the remaining 168k loan and have additional $232k for other purpose. Bonus: You can "re-use" your term policy should you plan to sell current house and buy a new one.

SeedlyTV EP06

CPF

Kenneth Lou
Kenneth Lou, Co-founder at Seedly
Level 8. Wizard
Updated 2w ago
This is indeed one of the biggest 'hacks' and 'recommendations in today's working adult world to contribute and top up your CPF SA for higher interest rates. TL;DR: It’s all about 2.5% vs 4.0% ! Essentially this act of topping up the SA account is about your retirement funds and allowing it to compound at a faster rate of 4% to 5% p.a risk-free rate. By doing this action: - It locks up your money with the CPF Special Account till age 55 - You are unable to use this money for property, education or CPF approved investments (normally from your OA) WARNING: You cannot reverse this action and take out the funds! Thus by going by the above illustration, the people who should do that are people who: - Are willing to lock up their funds till 55 years old - Are likely single and plan to stay single (with no kids for education) - Do not plan to buy any property using your CPF OA (housing) Hope this helps :) You can read more about this topic in a blog post I wrote some time back also: https://blog.seedly.sg/should-you-transfer-cpf-oa-to-sa/
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CPF

HDB BTO

Savings

Junus Eu
Junus Eu,
Top Contributor

Top Contributor (May)

Level 8. Wizard
Answered 2d ago
It's a question that I am facing myself as well - but I am single and have no kids on the way (Congrats on no. 2 coming btw! And also savings of $150k at age 35!) There are several data points you would need to evaluate. If you took up a bank loan, do check to see how interest rates have changed (they have gone up) if you took it at a floating rate, and also see if there are any penalties whatsoever for early repayment. I was also considering refinancing my mortgage, but post doing the calculations (which included other admin fees), it made more sense for me to wait. If your wife is looking to stay at home, and you are essentially the sole breadwinner to a household of 4 (not including your parents on both sides), it is important for you to evaluate your cashflows. Paying up fully with cash now might not make the most sense, UNLESS you have enough buffer.

Resale HDB

Property

CPF

AMA 1M65

Loo Cheng Chuan
Loo Cheng Chuan, Founder at 1M65 Movement
Level 6. Master
Answered on 07 Nov 2018
It is a good idea because cash carries a lower opportunity cost compared to the CPF OA. With the CPF SA, you actually get up to 6% returns where the HDB Housing Loan is currently at 2.6% interest rate. Hence, I would suggest you to use cash every month to pay for the HDB housing loan.

SeedlyTV EP06

CPF

Yixiong Chang
Yixiong Chang,
Level 5. Genius
Answered 3d ago
Getting 4% riskfree interest rate is way above market rate. Which is indirectly subsidised by taxpayers. Such restriction is there to limit the rich that can fully take advantage of this.

CPF

Property

Junus Eu
Junus Eu,
Top Contributor

Top Contributor (May)

Level 8. Wizard
Updated 5d ago
Congrats on paying off your BTO! If your age is close to 55 (which I don't think it is) - you wouldn't need to be so concerned about your money being locked up. Of course, you wouldn't want a bulk of your savings being locked up until 55!

Retirement

Investments

CPF

Family

Savings

Bank Account

Elijah Lee
Elijah Lee,
Level 6. Master
Updated 6d ago
Firstly, ensure that she has a basic level of guaranteed income when she retires by ensuring that she has CPF contributions. CPF Life is one of the best annuities around and it gives a lifetime of income. As we do not know how long we live, a lifetime annuity forms the basis of 'survival income' to ensure that she will has money for essentials. You can also contribute to her SA (up to the prevailing FRS) when you start working so as to enjoy tax relief and help her retire better. Once she turns 55, you can contribute to her RA. Do note that this is a one way traffic however, money put into SA/RA will largely not be able to be withdrawn. Next, ensure she has medical and Long Term Care coverage. Medical and nursing bills cab be quite hefty and we want to ensure that such bills do not drain us of money for retirement. Beyond Medishield life and Eldershield, look at getting an integrated shield plan as well as Eldershield enhancement. Once those are taken care of, we can look beyond the basics. Creating lasting income from both guaranteed and variable sources will ensure diversification across various asset classes (retirement plan, equities, fixed income, etc) and a stable, low volatility portfolio. The exact composition of such a portfolio is dependent on your mom's risk appetite and preferences, so discuss with a consultant who can help you to plan and allocate her limited resources accordingly. Retirement saving plans from the banks would be an option but it is important to compare with other insurer plans as the banks only distribute products from a single insurer, so as to ensure that she gets the most for her money.

Property

CPF

HDB BTO

Glenn Toh
Glenn Toh, Founder at Whatcard.sg
Level 3. Wonderkid
Updated 21h ago
Never gone through the process, but sharing from personal knowledge (anyone who has personally gone through the process can feel free to correct any errors!) The CPF money will be taken in two stages. For this initial period where you are about to sign the lease/book the flat you only need to pay the 5% downpayment, which can be done via CPF or cash. After this you have the 4-5 year waiting period where no additional payments are required, and then only when the house is complete HDB will take all the money currently sitting in your CPF OAs and use that to paydown the cost of the house. The remaining value will then be your home loan. If you have a lot of money in CPF OA, this is the stage where you will need it in the account to payoff the loan value.
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