Parking CPF money before applying for HDB loan

[Bedokian]

If I'm not wrong, the first $xxk (I think 20k) in OA can't be used for investment.

If that's the case, HDB Loan will still clear at least 20k of OA ya?

To TS, You can considering using FundSupermart.com and purchase money market / short term interest rate funds with 0% sales charge like Cash Fund, Philip Money Market Fund or for slightly higher risk, United SG Fund.

Yes.

Yes.

To do the "in and out", TS may have to incur some capital gain/loss and charges through commissions and admin fees. The timeframe is relatively short, depending on how he/she times it, probably in and around the date of the second appointment.

 

[sCuzzZy]

Not to me... I like to diversify so the per counter thing is quite an issue. Is it still by per counter per quarter?

Yup. Per counter.

But given OP is going to redeem and put it back to his OA, I assume it won't be very diversified?

 

[SBC]

Matchsticks bank also not bad.

 

[Scelestus]

Yes.

Yes.

To do the "in and out", TS may have to incur some capital gain/loss and charges through commissions and admin fees. The timeframe is relatively short, depending on how he/she times it, probably in and around the date of the second appointment.

Yeap, I'm planning to set up the accounts first and only do the investment closer to my 2nd appointment.

Sucks having to pay commissions and admin fees but I think it's worth it to make sure I have some backup funds.

 

[henrylbh]

Yeap, I'm planning to set up the accounts first and only do the investment closer to my 2nd appointment.

Sucks having to pay commissions and admin fees but I think it's worth it to make sure I have some backup funds.

Save all the trouble and cost. Just open a CPFIA and place a fixed deposit with your OA. $2 for placement and $2 for receipt on maturity. No need to open CDP and trading account. No need to decide what to buy and when to sell and the risk associated with it.

But I don't know whether all FDs can use CPF.

 

[MikeDirnt78]

Save all the trouble and cost. Just open a CPFIA and place a fixed deposit with your OA. $2 for placement and $2 for receipt on maturity. No need to open CDP and trading account. No need to decide what to buy and when to sell and the risk associated with it.

But I don't know whether all FDs can use CPF.

Isn't this a sure way of losing the value of your cpf money? I don't think there will be any bank that can provide a rate better than our cpf.

 

[tiny]

First off, do you already have a CPFIS-OA account? If not, go to DBS/OCBC/UOB to open one first. The one that you chosen will be your "CPFIS agent bank". You can have only ONE agent bank.

Next off, do you already have a trading account? If not, go Philips, CIMB, Maybank Kim Eng, DBS Vickers, bla bla bla and open one. You can chose the option to open a CDP account also. If in doubt you tell them you want the one that can do CPF trades. This would be your brokerage house or just broker. You can have more than one broker.

After the agent bank send you a letter telling you that your CPFIS-OA account is ready, give the account number to your broker. They will do the link up with your agent bank.

Once this link up is done, then you can trade with your CPF.

I got a question. Must the CPF agent bank be the same as the SRS agent bank? Or can be different banks?

 

[anfielder]

I got a question. Must the CPF agent bank be the same as the SRS agent bank? Or can be different banks?

Can be different.

 

[SBC]

They are 2 different account. Depends on which bank you had created account with.

 

[numbers]

hmm where can find a list of FD that can be applied with CPFIA? I tried finding but only can see a list of stocks, gold, etf and bonds.....

is it all bank FD can use CPFIA? or only special type for high networth ppl (250k min sum type)?

 

[henrylbh]

Isn't this a sure way of losing the value of your cpf money? I don't think there will be any bank that can provide a rate better than our cpf.

Sure way of losing money. Assuming he wants to protect his first 20k from being wiped out by HDB, he will lose between $104 to $204 if 3mth or 6mth FD yields 0.5%. Lesser if FD rate is higher.

But note what he mentioned -

I'm not interested in growing my CPF through investments. I just need a safe low-risk investment to park my funds.
I plan to transfer everything back to my CPF account once my HDB loan is approved.

Do you guys have any advice on what I should invest my CPF in? I have no experience in investments and as mentioned, I'm looking for the lowest risk option as I plan to transfer everything back to my CPF as soon as I can.

Sucks having to pay commissions and admin fees but I think it's worth it to make sure I have some backup funds.

 

[Bedokian]

Sure way of losing money. Assuming he wants to protect his first 20k from being wiped out by HDB, he will lose between $104 to $204 if 3mth or 6mth FD yields 0.5%. Lesser if FD rate is higher.

But note what he mentioned -

Opportunity costs and incurred fees, can't escape. In fact, TS's request is nothing new. I have seen a few people doing it.

On the contrary, for me I sold off everything in my CPF-OA just to reduce my loan amount.

 

[V_for_Vanilla]

Sure way of losing money. Assuming he wants to protect his first 20k from being wiped out by HDB, he will lose between $104 to $204 if 3mth or 6mth FD yields 0.5%. Lesser if FD rate is higher.

But note what he mentioned -

It is inaccurate to say he "lose" when his intention is to avoid HDB wiping out the 20k capital. The capital remains intact. Only those few months of CPF interests not earned.

 

[henrylbh]

It is inaccurate to say he "lose" when his intention is to avoid HDB wiping out the 20k capital. The capital remains intact. Only those few months of CPF interests not earned.

If he takes out 20k to place in FD, he sure to lose at least $291 of interest plus transaction cost of $4 if min FD tenure is 6 months. No loss of principal but how much CPF interest loss would depend on how much interest he earns from FD. That's the price he has to pay to protect his 20k from being wiped off for taking HDB loan. If the withdrawal and refunding of the CPF money is timed wrongly, he would lose 8 months instead of 7 months CPF interest.

 

[Bedokian]

It is inaccurate to say he "lose" when his intention is to avoid HDB wiping out the 20k capital. The capital remains intact. Only those few months of CPF interests not earned.

If he takes out 20k to place in FD, he sure to lose at least $291 of interest plus transaction cost of $4 if min FD tenure is 6 months. No loss of principal but how much CPF interest loss would depend on how much interest he earns from FD. That's the price he has to pay to protect his 20k from being wiped off for taking HDB loan. If the withdrawal and refunding of the CPF money is timed wrongly, he would lose 8 months instead of 7 months CPF interest.

In short, opportunity costs.

 

[henrylbh]

Not opportunity cost but pay the price.

 

[Bedokian]

Not opportunity cost but pay the price.

The amount of interest that he/she forego in CPF to protect his/her CPF capital using fixed deposit for a fixed period of time. That is opportunity cost.

 

[numbers]

well there are pros and cons la....

at least when cpf not wiped out there is security if he lose job or income. there is still cpf balance to help pay the loan.

on the other hand, the richer people who have very safe jobs dont need to do this.
Now economy is bad, just look around, retrenchments are starting.

 

[Darkzi0n]

If u r still young and ur sa is still far from 60k. Set aside sufficient fund to pay for dos payment and Transfer everything else to sa and earn 4.5% risk free.

 

[genie47]

If u r still young and ur sa is still far from 60k. Set aside sufficient fund to pay for dos payment and Transfer everything else to sa and earn 4.5% risk free.

Further to this, I paid for my flat solely with my CPF-OA. Spouse CPF did not contribute to the payment. Since there is no commitment from her CPF, told her to keep transferring the OA to SA. I was in the workforce nearly a decade before her, so got plenty of funds. She just started out. In the end, she leveled up fast through this. Later CPF don't allow her to transfer anymore because she hit MS. Then her OA slowly leveled up but the current contributions and that SA interest just kept snowballing it.

Once married, many ways to hup chok.