Should I invest part of CPF before HDB wipes out OA balance?

magna_strike

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why not just take a few thousand of your OA and put into dividend stocks? i had the same thought too, to set aside an amount such that in case i become jobless, i can liquidate that and use it for HDB monthly installments. quite sound i think.
 

lushiris

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on a separate note, is there any way to reduce accrued interest?

wipe OA, CPF accrued interest snowball

dun wipe OA, house loan interest snwoball..

smlj
 

dork32

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no wonder in the other thread, you dont mind capital losses in stocks. as long you are receiving dividends.

you got a serious flawed analysis.

notice I did not even mention one word of capital losses. the reason is there is no need to put money in stocks. just taking a housing loan and keeping your money cpf wins you money.

very simple calculation I borrow 100k from bank and keep my 100k in cpf intact. after 1 year, I need to 1.3k interest to bank. but my cpf would have earn 2.5k. pay bank 1.3k interest using cpf money. i still owe the bank 100k and i have 101.2k in cpf. you don't even need to put stocks to earn money. sit down shake leg and money drop into cpf.

not only that keeping lots of cash in cpf allows to tide over sudden job loss.
 

anfielder

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on a separate note, is there any way to reduce accrued interest?

wipe OA, CPF accrued interest snowball

dun wipe OA, house loan interest snwoball..

smlj

If you dun wipe OA, you pay more interest but don't forget your cpf balance also earns interest which is only 0.1% less than the HDB loan rate.

I don't see what's the problem with accrued interest.. It's basically paying interest to yourself.
 

dork32

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Like me? In the last few years, I have net unrealised loss at end of each year :o

As at yesterday I still got net unrealised loss of 37k. But year-to-date, I got realised gain including dividends of $43k. Last full year gain was 32k including dividends. Dividends help.

mine situation is quite similar to yours. my trading/capital gain is only a few thousand a year, some years only a few hundred. my yearly dividend gain is about 15k. still lose to you.

but i am not talking about stocks here. I am just talking about taking a large housing loan and paying minimum now that interest rates are lower than cpf.
 

dork32

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If you dun wipe OA, you pay more interest but don't forget your cpf balance also earns interest which is only 0.1% less than the HDB loan rate.

I don't see what's the problem with accrued interest.. It's basically paying interest to yourself.

with bank loans you dun wipe out your oa, you pay more interest but don't forget your cpf balance also earns interest which is 1.2% more than the bank loan rate.

i don't see what's the problem with the interest to the bank. i am getting more interest from my cpf
 

dork32

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to me who cares if 80% are not making money. Leaving the money in the cpf is making money as long as it is higher than bank interest rates.

the 80% are those that took money out from cpf and invest and lose money. i just put money in cpf and earn the 2.5%.
 

dork32

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my idea is very simple. it is like you going to poly or uni. you have intention to pay school fees by cash. should you pay by cash?

no. just go and get the 0 interest study loan and put the cash in fd. when you graduate, withdraw the fd and pay the loan before they charge you interest. as long as fd or savings pay more than 0% interest I will make money.

as long as cpf pay more interest that bank loan, i will make money
 

dork32

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my idea is very simple. it is like you going to poly or uni. you have intention to pay school fees by cash. should you pay by cash?

no. just go and get the 0 interest study loan and put the cash in fd. when you graduate, withdraw the fd and pay the loan before they charge you interest. as long as fd or savings pay more than 0% interest I will make money.

as long as cpf pay more interest that bank loan, i will make money

do you know who is best at playing this game? it is the banks. noticed why the floating rates is always sibor + 0.9%? the banks borrow from other banks at sibor rate and loans it to you at sibor + 0.9. No matter what happens, they still win 0.9%.
 

henrylbh

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mine situation is quite similar to yours. my trading/capital gain is only a few thousand a year, some years only a few hundred. my yearly dividend gain is about 15k. still lose to you.

but i am not talking about stocks here. I am just talking about taking a large housing loan and paying minimum now that interest rates are lower than cpf.


I also have a housing bank loan of 450k which I could settle fully with my CPF but chose not to. My idle money in CPF earns 2.5% but I am paying the bank 1.06022% currently. In fact I wrote to the bank to request that I service the interest only but they replied cannot because of MAS rules :(
 

bslow27

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But take bank loan need to fork out 5% in cash. HDB loan need not come out cash.
 

dork32

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I also have a housing bank loan of 450k which I could settle fully with my CPF but chose not to. My idle money in CPF earns 2.5% but I am paying the bank 1.06022% currently. In fact I wrote to the bank to request that I service the interest only but they replied cannot because of MAS rules :(

i fully endorse your move. you are a smart guy.

my loan left 100k but i kena 1.6% loan. loan amount too low for re-financing.

i even more extreme than you. i wrote in to ask that i don't even pay one cent and let the loan snowball while i keep all in the cpf. kena scolding by the bank
 

Aerial86

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Well, maybe you should start praying that interest rate is not going up next year. Not fun to see bank force sell flat because loan can't be repaid.

Never say never. Economy is recovering
 

dork32

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But take bank loan need to fork out 5% in cash. HDB loan need not come out cash.

if you bto, price of 4 room is 200+K. 5% is less than 15k. you only need to pay after few years after. so start saving after you apply for your flat. don't wait till you get keys then panic.

if you buy resale 5room at bishan for 800k, yeah 40+k cash can be quite xiong for some.

but no money then go for the flats you can afford lah. Seriously, if you cannot afford to pay 40k cash, you should be buying a 800k flat.
 

henrylbh

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i fully endorse your move. you are a smart guy.

my loan left 100k but i kena 1.6% loan. loan amount too low for re-financing.

i even more extreme than you. i wrote in to ask that i don't even pay one cent and let the loan snowball while i keep all in the cpf. kena scolding by the bank

But I only use $100 cpf to pay monthly instalment. The balance is paid in cash which is earning a miserable 0.8% from bank.
 

dork32

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Well, maybe you should start praying that interest rate is not going up next year. Not fun to see bank force sell flat because loan can't be repaid.

Never say never. Economy is recovering

agree interest go up, those people that owe a lot of money will be in trouble.

someone said this 7 years ago when interest first dips below cpf rate. today it is even lower than 7 years ago.

there are fixed rate loans for 3/5 years which is lower than cpf rates. fixed it if you are worried.

you ask mr henry what he will do if interest rises to 5% tomorrow. he will say he use his 450k in cpf and repay 100% of his loan tomorrow.
 

dork32

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But I only use $100 cpf to pay monthly instalment. The balance is paid in cash which is earning a miserable 0.8% from bank.

different people have different repayment strategies. judging by the dividend you received a year, you will have at least 500k in stocks (probably a few hundred thousand more).

the 0.8% is probably from cimb starsaver. you would have quite a lot of cash lying in it too.

i don't have as much cash/shares lying around compared to you. i hope to build till i can receive the same amount of dividend as you. as such, my payment through cpf is much higher than yours.
 

dork32

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agree interest go up, those people that owe a lot of money will be in trouble.

someone said this 7 years ago when interest first dips below cpf rate. today it is even lower than 7 years ago.

there are fixed rate loans for 3/5 years which is lower than cpf rates. fixed it if you are worried.

you ask mr henry what he will do if interest rises to 5% tomorrow. he will say he use his 450k in cpf and repay 100% of his loan tomorrow.

sorry mr henry may just write a cheque from the starsaver to repay the loan.
 
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