Anonymous
Why should you keep it in your OA, and not your SA?
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Elijah Lee
01 Feb 2020
Senior Financial Services Manager at Phillip Securities (Jurong East)
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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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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.