CPF Easy Info Thread. :)

[Thoreldan]

Steering the convo to CPF and HDB loan. I have previously read in a thread but can't find it now so am asking here. If we have hdb loan and have cash on hand to fully redeem the loan say 50k I vaguely remember that the most common advice was to not accelerate the repayment. May I know why not? Assume we are investment risk adverse. Thanks *********

In it's simplest explanation if you can make more than the loan interest rate, keep the loan as long as possible.

If u cant, then redemn the loan.

 

[dork32]

Then second point is about the life plan interest is in the pool or will pass to my family which already answered by dork32

you will be glad that other than dork, there are a lot more people like you

 

[dork32]

In it's simplest explanation if you can make more than the loan interest rate, keep the loan as long as possible.

If u cant, then redemn the loan.

i thought i said something like dat before.

unfortunately there are a lot of people that feel that it is better to be debt free.

 

[s0crates]

Invest the cash in a diversified low cost funds. Maximise returns

Steering the convo to CPF and HDB loan. I have previously read in a thread but can't find it now so am asking here. If we have hdb loan and have cash on hand to fully redeem the loan say 50k I vaguely remember that the most common advice was to not accelerate the repayment. May I know why not? Assume we are investment risk adverse. Thanks *********

 

[maple96]

Good read

https://www.income.com.sg/blog/cpf-...SnH9SwajxJ_q5KG6e6LL3S_kOMLy5Q6vSypekntP6L5ls

 

[BBCWatcher]

Good read
https://www.income.com.sg/blog/cpf-...SnH9SwajxJ_q5KG6e6LL3S_kOMLy5Q6vSypekntP6L5ls

No, it's not a good read. The article contains this line: "Maximise your returns by not putting too much into your CPF Retirement Account." That's dumb. Yes, we know that the returns on initial CPF Retirement Account dollars are higher than the returns on subsequent CPF Retirement Account dollars. But that's comparing CPF v. CPF. It's not comparing incremental CPF RA dollars versus the next best available alternatives. Of course (surprise!) the author suggests "investment" products that the Web site's operator sells.

 

[maple96]

No, it's not a good read. The article contains this line: "Maximise your returns by not putting too much into your CPF Retirement Account." That's dumb. Yes, we know that the returns on initial CPF Retirement Account dollars are higher than the returns on subsequent CPF Retirement Account dollars. But that's comparing CPF v. CPF. It's not comparing incremental CPF RA dollars versus the next best available alternatives. Of course (surprise!) the author suggests "investment" products that the Web site's operator sells.

So u agree it is good read other than that one liner?

U dun understand what it is trying to tell u. I do.

 

[culture_counter]

First of all, you cannot borrow against a HDB leasehold, with the narrow exception of the HDB Lease Buyback Scheme. If you ever run out of cash due to cashflow problems, even by one dollar, then you must sell your HDB unit. Or try to rent out a room, but that may be awkward at best if your unit is fully occupied. Plonk down S$50K in accelerated repayment and you’re at least S$50K closer to a cashflow problem. (“At least” because that S$50K can earn interest.) Want to take that risk? The reason a mortgage borrower loses a home is because they cannot make a payment, not because they haven’t paid a mortgage faster. (HDB is a very forgiving, patient lender, though, that does everything possible to avoid that.)

Second, your payments are presently covered under the Home Protection Scheme. If one of the mortgage holders dies far too early, the HPS pays off that person’s share of the remaining mortgage. It’s a form of life insurance. Accelerate repayment of the mortgage then die too soon and you’ve effectively lost much or all of that S$50K. HPS would have taken care of it in the alternative.

Third, 2.6% money is still cheap money. A diligent saver and prudent, long-term investor should be able to do reliably better than that. One example: CPF Special Accounts are paying at least 4.0% interest, and 4.0% is definitely a bigger number than 2.6%.

Fourth, sub-2.0% mortgages are available from the private sector if you ever decide to refinance, i.e. even cheaper money is presently available.

Totally agree on this aspect.

 

[henrylbh]

So u agree it is good read other than that one liner?

U dun understand what it is trying to tell u. I do.

He only saw the one liner with a blocked mind and hence article is not a good read. There is only one way.

Who would be dumb to ‘Maximise your returns by not putting too much into your CPF Retirement Account’ and instead putting the less into a less yielding instrument, unless liquidity or cash flow matters more or you suspect you may not live as long or for whatever varied personal reasons one may have. Quite obvious, the writer may have vested interest and readers may be tempted or readers could wake up (from CPF as an end all) and rationally consider other investment products.

 

[8zaoyu]

Steering the convo to CPF and HDB loan. I have previously read in a thread but can't find it now so am asking here. If we have hdb loan and have cash on hand to fully redeem the loan say 50k I vaguely remember that the most common advice was to not accelerate the repayment. May I know why not? Assume we are investment risk adverse. Thanks *********

Nobody redeem (pays up) HDB loan unless getting a 2nd Time HDB!
Folks here usually at 55 or 65 are deciding on what CPF Life Plan to choose.
Once chosen, hard to reverse! Anyway as of today the draw down amount is roughly 90.5K for BASIC plan, × 2 for FULL, ×3 for Enchaned Retirement Sums. That will be the amounts your heirs will inherit on the next month you pass on at 65. If not, they are the self pension amounts divided by the whole life of months thereafter, not much to shout about, so don't mention pte annuity or pte investments of this miniscule amount. PS. Do pay up all loans before you retire.

 

[8zaoyu]

‘Maximise your returns by not putting too much into your CPF Retirement Account’

------- I read cos of the "Not Putting" but that does not stop me putting into Enhanced Full Retirement if i want to, even if the interest goes into the "pooled up interest earned" as i think that God is kind to you already if you have a long, happy life hopefully.

 

[henrylbh]

------- I read cos of the "Not Putting" but that does not stop me putting into Enhanced Full Retirement if i want to, even if the interest goes into the "pooled up interest earned" as i think that God is kind to you already if you have a long, happy life hopefully.

Go for the max if you're sure God is kind to give you long life.

 

[8zaoyu]

Go for the max if you're sure God is kind to give you long life.

If you have 0$ left at 55 or 65 with multiple loans, multiply by any max number gives u 0$. You will say God is unkind to u to live pass 100, thank who? Probably to thank those who put in "pooled interest"?

 

[dork32]

Nobody redeem (pays up) HDB loan unless getting a 2nd Time HDB!

sorry, many people do redeem their hdb loans. they have peace of mind by being debt free

 

[dork32]

------- I read cos of the "Not Putting" but that does not stop me putting into Enhanced Full Retirement if i want to, even if the interest goes into the "pooled up interest earned" as i think that God is kind to you already if you have a long, happy life hopefully.

if you live a long life
god is kind to you
cpf is also kind to you if you are on escalating

 

[8zaoyu]

sorry, many people do redeem their hdb loans. they have peace of mind by being debt free

Yes, smart HDB owners already redeemed and upgraded. Redeemed to buy bigger HDB or a small potentially better valuation location pte property, I think. Otherwise, some ulu part of SG gave a very elderly couple i know a fresh lease of 99 yrs , after selling their HDB 3 rm flat in a mature estate!

 

[8zaoyu]

if you live a long life
god is kind to you
cpf is also kind to you if you are on escalating

Any choice depends of how much i have at 55 or 65. We all know at that point, whether we still want to continue working past 55, 60 or 65. Only yourself knows your blood pressure, lipid and sugary blood conditions

 

[Kaypohji]

Can elaborate on why redeem the hdb loan to upgrade ?

When u sell the current hdb, the sales will be used to pay cpf and loan owe before giving u in cash. Then when u buy a bigger one, u just borrow again after paying whatever amount.

Why need to pay the hdb loan with cash before upgrading?

Yes, smart HDB owners already redeemed and upgraded. Redeemed to buy bigger HDB or a small potentially better valuation location pte property, I think. Otherwise, some ulu part of SG gave a very elderly couple i know a fresh lease of 99 yrs , after selling their HDB 3 rm flat in a mature estate!

 

[candy crush]

Btw if u all want to refund money to CPF account for HDB loan, must check your parent age

for my father age, no matter how much I refund to HDB, the money will not go into his SA/OA, it will always go into RA

 

[maple96]

Good read

https://www.straitstimes.com/busine...AkpfaFmqSRrE7h9I7I8fxadLco#Echobox=1588052867

Last para extracted below:

"Finally people should view retirement as not the end but the beginning of another life adventure. And money, while important in this journey, is not everything. After all, the happiest people don't have the best of everything, they just make the best of everything they have. "