facebookWhat are some reasons why you should keep up to $20,000 in your CPF OA account under the new rule? - Seedly

Anonymous

01 Feb 2020

Property

What are some reasons why you should keep up to $20,000 in your CPF OA account under the new rule?

Why should you keep it in your OA, and not your SA?

Discussion (4)

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Elijah Lee

01 Feb 2020

Senior Financial Services Manager at Phillip Securities (Jurong East)

For me, the reasoning is as follows: If I lose my job, but I am paying my mortgage from CPF OA, then $20000 should be able to sustain the mortgage payments for a while so that I can focus on looking for a new job instead of worrying about the payments. That will be one less thing to worry about.

Additionally, with the extra 1% interest on the first $20000, I effectively earn 3.5% on this $20000, which is very close to CPF SA rate, yet I still have the flexibility to use it for my housing. The extra 1% is credited to my SA, which to me, is just additional funds for my retirement down the road.

Shengshi Chiam, CFA

01 Feb 2020

Personal Finance Lead at Endowus

Besides the housing emergency fund that Randall mentioned, anything above $20,000 can be used for CPFIS investments. Another fun fact- if you need to use the $20k as for mortgage payment, you do not have to liquidate your CPF investments to top it back up to $20k. You will just not be able to invest further.

For younger Singaporean adults, we have a long investment horizon before we hit 55 years old. It makes a lot of sense for us to invest in equities market through CPF OA so that we maximise our wealth while not using cash for investments.

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Randall Tan

01 Feb 2020

Coffee boy at Century Piano

The $20k housing emergency fund

The $20,000 in your CPF OA is basically an emergency funds ...

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