CPF Easy Info Thread. :)

[dork32]

So it's not entirely correct to say that interest is computed based on the lowest balance in the month

case 1 contribution to cpf
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
31 jan closing balance 11k
1 k received no interest. so interest only on 10k so lowest balance is correct.

case 2 withdrawal from cpf
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
31 jan closing balance 9k
1 k received no interest. so interest only on 9k so lowest balance is correct.

case 3 withdraw then contribute
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
20 jan contribute 1k into account. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is correct.

case 4 contribute then withdraw
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
20 jan withdraw 1k. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is wrong.

 

[dork32]

Not just $16.55. There is forbearance cost.

i am following bbc's calculation. yes i understand there are other cost associated.

 

[BBCWatcher]

Fair point(s), so let's try the calculation a different way. Let's assume you have a $21,000 balance in your OA and no deposits or withdrawals (except the T-bill in Scenario 2). We'll also ignore end of year interest crediting in this example, so we'll assume a hypothetical January 15 to July 15 T-bill ($1,000 face value, 3.32% yield). We'll look at the 7 whole months period from January to July inclusive.

OK, here we go...

Scenario 1: Leave Dollars in OA

$21,000 * 2.5% * 7/12 = $306.25 Net Interest

Scenario 2: Buy the 6 Month T-Bill

T-Bill Interest = $16.55
OA Interest January: $20,000 * 2.5% * 1/12 = $41.67
OA Interest February to July: $20,016.55 * 2.5% * 6/12 = $250.21
Total OA+T-bill Interest = $308.43

Difference (in favor of Scenario 2, before CPFIA fees): $2.18

This might get a little more interesting (tilt a bit in favor of the T-bill) if you can roll the T-bill over to a new, decently higher yielding T-bill (within July in this example).

 

[dork32]

Fair point(s), so let's try the calculation a different way. Let's assume you have a $21,000 balance in your OA and no deposits or withdrawals (except the T-bill in Scenario 2). We'll also ignore end of year interest crediting in this example, so we'll assume a hypothetical January 15 to July 15 T-bill ($1,000 face value, 3.32% yield). We'll look at the 7 whole months period from January to July inclusive.

OK, here we go...

Scenario 1: Leave Dollars in OA

$21,000 * 2.5% * 7/12 = $306.25 Net Interest

Scenario 2: Buy the 6 Month T-Bill

T-Bill Interest = $16.55
OA Interest January: $20,000 * 2.5% * 1/12 = $41.67
OA Interest February to July: $20,016.55 * 2.5% * 6/12 = $250.21
Total OA+T-bill Interest = $308.43

Difference (in favor of Scenario 2, before CPFIA fees): $2.18

This might get a little more interesting (tilt a bit in favor of the T-bill) if you can roll the T-bill over to a new, decently higher yielding T-bill (within July in this example).

it does not matter whether you use 21k or 1k lah. the difference is the same.

remember, i did a simple calculation and say break even is 2.9%? it is 3.3% now. 0.4% diff. 0.4% of 1k is $4. since this is 6 months, it is $2. so my estimation of 2.9% is good

 

[dork32]

Tbill is still not investible even with $1,000x10. Need at least $1,000x50 and even then the net gain is pittance (less than $6 for the trouble and loss of opportunity to invest in other financial products if OA is still within investible limit. Hopefully cpf members do not jump in just because Tbill pays 3.32% or 32.8% more than OA or get the impression that it's dumb to leave OA idle.

who is tokking about 1k or 10k or 50k? remember this guy?

even for a cannot make it guy like me, i have a few hundred thousand in oa. it is worth the effort for many of us

My interest.

Old uncle, got RA

 

[henrylbh]

who is tokking about 1k or 10k or 50k? remember this guy?

even for a cannot make it guy like me, i have a few hundred thousand in oa. it is worth the effort for many of us

Even if you invest $1,000X500 or more the difference is negligible and worst if CPFIS transaction cost is $25 (max lots) instead of $2.50 per lot, not to say if there is brokerage fee and all related GST levy. One of my CPF shares costing 185k is likely to give $10,000 dividend yearly with extra $4,000 special for this year.

 

[BBCWatcher]

Even if you invest $1,000X500 or more the difference is negligible and worst if CPFIS transaction cost is $25 (max lots) instead of $2.50 per lot, not to say if there is brokerage fee and all related GST levy. One of my CPF shares costing 185k is likely to give $10,000 dividend yearly with extra $4,000 special for this year.

There's no brokerage fee with T-bills. UOB's CPF Investment Account (for example) charges a flat $2 per SGS transaction plus a quarterly service charge of $2 per individual SGS. Plus GST (for residents of Singapore).

 

[iMac]

who is tokking about 1k or 10k or 50k? remember this guy?

even for a cannot make it guy like me, i have a few hundred thousand in oa. it is worth the effort for many of us

Wahhhhhh....SKenny

 

[reddevil0728]

https://www.cpf.gov.sg/member/faq/g...terest-computed-and-credited-into-my-accounts
So it's not entirely correct to say that interest is computed based on the lowest balance in the month

case 1 contribution to cpf
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
31 jan closing balance 11k
1 k received no interest. so interest only on 10k so lowest balance is correct.

case 2 withdrawal from cpf
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
31 jan closing balance 9k
1 k received no interest. so interest only on 9k so lowest balance is correct.

case 3 withdraw then contribute
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
20 jan contribute 1k into account. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is correct.

case 4 contribute then withdraw
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
20 jan withdraw 1k. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is wrong.

ah right yes. more accurate to just say any transfer in and out earns no interest.

 

[lzydata]

SINGAPORE - The 4 per cent floor rate for interest earned on all Special, MediSave and Retirement Account (SMRA) monies has been extended for another year until Dec 31, 2023.

... "While the recent rise in interest rates has led to an increase in the pegged SMRA rates, they remain below the floor rate of 4 per cent," the statement added.

The Government will thus be extending the 4 per cent floor rate on SMRA interest to help CPF members grow their savings consistently, said the agencies.

https://www.straitstimes.com/singap...-and-retirement-accounts-extended-to-end-2023
The floor rate is maintained.

For reference, the average 10 year SGS yield for this month so far is 3.13% pa. The average for the past year (21 Sep 2021 to 2022) is 2.27% pa. So while the floor rate is maintained, things may get interesting soon...

 

[henrylbh]

There's no brokerage fee with T-bills. UOB's CPF Investment Account (for example) charges a flat $2 per SGS transaction plus a quarterly service charge of $2 per individual SGS. Plus GST (for residents of Singapore).

Thanks for the info.

Only UOB is $2 while the other 2 agent banks are charging 2.50. So holding cost should take into account at least 2 quarterly service charge for a 6 m Tbill. Still the differential gain is small for $1,000 x 500. Not more than ??? I rather place the investible amount in any of the 3 local bank shares yielding more than 4% even at current prices without accounting for capital gain or loss. You are more likely to make capital gain than loss, if they are held like long term bonds to be realised anytime when there is attractive capital.

 

[henrylbh]

case 1 contribution to cpf
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
31 jan closing balance 11k
1 k received no interest. so interest only on 10k so lowest balance is correct.

case 2 withdrawal from cpf
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
31 jan closing balance 9k
1 k received no interest. so interest only on 9k so lowest balance is correct.

case 3 withdraw then contribute
1 jan opening balance 10k
10 jan withdraw 1k into account. total balance 9k
20 jan contribute 1k into account. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is correct.

case 4 contribute then withdraw
1 jan opening balance 10k
10 jan receive 1k into account. total balance 11k
20 jan withdraw 1k. total balance 10k
31 jan closing balance 10k
withdrawal and deposit receive no interest received no interest. so interest only on 9k so lowest balance is wrong.

https://www.cpf.gov.sg/member/faq/g...terest-computed-and-credited-into-my-accounts
According to my reading of the link provided, interest on 9k is correct in case 4. There is nothing in the narration to say earlier inflow = later outflow will be taken into account in determining the interest for the month. That why I thought it would be misleading to say interest is calculated based on the lowest balance in the month. If CPF were unequivocal to say that interest is calculated based on the lowest balance in the month, then you are right in case.

 

[NTTDoCoMo]

https://www.cpf.gov.sg/member/faq/g...terest-computed-and-credited-into-my-accounts
So it's not entirely correct to say that interest is computed based on the lowest balance in the month

Yes, you are right.

Based on the CPF FAQ, it is more like (Opening Balance on the 1st of the Month) - (All Withdrawals / Deduction in the Month) right?

Opening Balance on the 1st of the Month will include Contributions & Refunds of Previous Month.

 

[reddevil0728]

Yes, you are right.

Based on the CPF FAQ, it is more like (Opening Balance on the 1st of the Month) - (All Withdrawals / Deduction in the Month) right?

Opening Balance on the 1st of the Month will include Contributions & Refunds of Previous Month.

Just take it there any addition or subtraction will not earn anything

 

[henrylbh]

who is tokking about 1k or 10k or 50k? remember this guy?

even for a cannot make it guy like me, i have a few hundred thousand in oa. it is worth the effort for many of us

Not many will have a few hundred thousand in OA? Most of their money is in housing with not much left especially it's common that they dump almost what they have in CPF for more atas flats. If there are, how many are savvy and adventurous enough to dump a few hundred thousand in T-bills? Cannot make it guy like me, wouldn't dump a dollar into T-bills unless I am dumb or it's about time to heck OA and SA or the T-bills are giving more than the current 3.32%. 4% is more palatable, if using CPF.

 

[dork32]

Even if you invest $1,000X500 or more the difference is negligible and worst if CPFIS transaction cost is $25 (max lots) instead of $2.50 per lot, not to say if there is brokerage fee and all related GST levy. One of my CPF shares costing 185k is likely to give $10,000 dividend yearly with extra $4,000 special for this year.

i am quite surprise that a uncle like you talk like.

who is denying that the returns for shares? i have 3000 dbs shares average price $21 during covid. It is now $33. i put in 63k. it is worth about 100k now. this is not to mention how many quarterly dividend i got. but do you know that dbs did drop to below 18?

you ask me to repeat this? i dont think i can do it.

in tbills the gain will never be that great. but fluctuation in tbills rates is small. but i am certain i will get back my money.

your qaf dropped from peak of 1.3 to 0.6 during the covid. till today, it cannot recover to its pre-covid level. yes the dividend yield is good. but the risk is definitely there. i may consider qaf as part of my portfolio. but i will never all into qaf. i may want to all in to t-bills.

 

[dork32]

500 * $2.1 = $1000 for 6 months, 2k for 1 year. there are people here say take $16 to go buy kolo mee.

you want to say kenny is stupid? his oa interest is 26k. he did not plough it into qaf like you do.

 

[henrylbh]

who is tokking about 1k or 10k or 50k? remember this guy?

even for a cannot make it guy like me, i have a few hundred thousand in oa. it is worth the effort for many of us

We talking about ordinary people wanting to invest 1k or 10k or 50k. You have few hundred thousands in OA but most don't have if CPF is used for housing. And most use CPF for housing.

Why need to mention or compare with SKenny? Not many is like him.

Interest on my OA of > 100k profit withdrawn in 1999 would have compounded to more than 64k with 4k coming in 2018 alone. Alas I was then ignorant of the merits of CPF and like some youngsters never thought of growing my CPF until around 2014. Even after that I left my CPF relatively dormant for about 5 or 6 years because I chiong the wrong blue chips After getting rid of them, I started to grow my CPF again. Now my interest from OA and dividend from CPFIS-OA is about what Skenny got and it will get better with CPFIS-OA growing at 5% excluding capital gain, if any. Now sitting on unrealised loss of 15k but the annual dividend will cushion the loss till the shares turned green.

 

[henrylbh]

i am quite surprise that a uncle like you talk like.

who is denying that the returns for shares? i have 3000 dbs shares average price $21 during covid. It is now $33. i put in 63k. it is worth about 100k now. this is not to mention how many quarterly dividend i got. but do you know that dbs did drop to below 18?

you ask me to repeat this? i dont think i can do it.

in tbills the gain will never be that great. but fluctuation in tbills rates is small. but i am certain i will get back my money.

your qaf dropped from peak of 1.3 to 0.6 during the covid. till today, it cannot recover to its pre-covid level. yes the dividend yield is good. but the risk is definitely there. i may consider qaf as part of my portfolio. but i will never all into qaf. i may want to all in to t-bills.

Any 3 local banks are yielding about 4% even at today's prices. Even if they dropped, they will rise higher. They are the lifeline and health of Sg.

DBS has been below it's peak of $35 for more than 20 years ago before recovering and surpassing its peak (after adjustment for issues) to reach new peaks in recent years. So for long term it's still good returns.

For QAF, if you have bought at peak of 1.60 (it's suck) in 2017 treat it as a long-term bond like CPF. It has been paying 5c dividend since 2011 in good and bad times. The yield at cost of 1.60 still beats OA rate of 2.5% by good margin. At today's price of 85c, the yield is more than double 2.5%. and there is potential to creep towards its peak, if not surpass it, unless nobody wants to eat bread anymore.

I must be dumb to put a cent with T-bills unless it's more than 3.32% yield. I will only buy T-bills even at less than 3.32% if I am hecking my OA/SA when the time comes.

But I am not suggesting any buy. Only giving my observations.

 

[henrylbh]

Any 3 local banks are yielding about 4% even at today's prices. Even if they dropped, they will rise higher. They are the lifeline and health of Sg. The gov has interest in their survival and growth more than any listed companies.

DBS has been below it's peak of $35 for more than 20 years ago before recovering and surpassing its peak (after adjustment for issues) to reach new peaks in recent years. So for long term it's still good returns.

For QAF, if you have bought at peak of 1.60 (it's suck) in 2017 treat it as a long-term bond like CPF. It has been paying 5c dividend since 2011 in good and bad times. The yield at cost of 1.60 still beats OA rate of 2.5% by good margin. At today's price of 85c, the yield is more than double 2.5%. and there is potential to creep towards its peak, if not surpass it, unless nobody wants to eat bread anymore.

I must be dumb to put a cent with T-bills unless it's more than 3.32% yield. I will only buy T-bills even at less than 3.32% if I am hecking my OA/SA when the time comes.

But I am not suggesting any buy. Only giving my observations.