My bank savings yield has dropped below cpf oa2.5% for the first time in years and what it means for my housing loan

[chopra]

It means that i should reduce payment via cpf oa. Instead, i should use my bank savings instead.

 

[reddevil0728]

It means that i should reduce payment via cpf oa. Instead, i should use my bank savings instead.

Yas

 

[thretiredDad]

It means that i should reduce payment via cpf oa. Instead, i should use my bank savings instead.

If you are so calculative

You should invest all your OA
into higher yield investment product
such as etf or equitities
or transfer into SA
for higher yield

and continue to use your cash
in your saving accounts
to service your mortgage

 

[reddevil0728]

If you are so calculative

You should invest all your OA
into higher yield investment product
such as etf or equitities
or transfer into SA
for higher yield

and continue to use your cash
in your saving accounts
to service your mortgage

hmmm then isn't it better to just invest using cash? more options

 

[chopra]

Yas

Wonder if there’s a big fraction of ppl doing voluntary housing refund.

 

[chopra]

the funny thing is—— for the past few years, if my memory serves right, stock market correction happens in tandem with all these savings account rates drop.

It should still not affect my point made as threadstarter. It’s really e first time in many years that bank general yield is significantly dropping below OA

 

[fr33d0m]

Haha i ignore replies that’s not logical (with no offense)

the funny thing is—— for the past few years, if my memory serves right, stock market correction happens in tandem with all these savings account rates drop.

It should still not affect my point made as threadstarter. It’s really e first time in many years that bank general yield is significantly dropping below OA

bank interest rate below OA most of the time. I still remembers all saving accounts(non-FD) pay like 0.05% for many years in the early 2000s

 

[chopra]

bank interest rate below OA most of the time. I still remembers all saving accounts(non-FD) pay like 0.05% for many years in the early 2000s

Late 2000s
2006 to 2008 high ir.
But ya… we are shifting back…

 

[thretiredDad]

hmmm then isn't it better to just invest using cash? more options

Then in the first place
his cash shouldn’t be in bank account
would be in the US market

 

[thretiredDad]

Late 2000s
2006 to 2008 high ir.
But ya… we are shifting back…

 

[chopra]

Then in the first place
his cash shouldn’t be in bank account
would be in the US market

About 30% in iwda qqq eimi, iir 10%

 

[BBCWatcher]

It means that i should reduce payment via cpf oa. Instead, i should use my bank savings instead.

Does that mean you’re holding gobs of cash (relatively at least) in bank savings accounts? If so, why are you doing that?

 

[wutawa]

Wonder if there’s a big fraction of ppl doing voluntary housing refund.

Advantage of housing refund:
- lose financial liquidity (provided u can get back the refunded money)

 

[chopra]

Does that mean you’re holding gobs of cash (relatively at least) in bank savings accounts? If so, why are you doing that?

Cos i practice a good hygiene of cash/Bond:equity

Advantage of housing refund:
- lose financial liquidity (provided u can get back the refunded money)

U mean Disadvantage. Ya cpf oa is locked. U may only use it during e private housing loan redemption to reduce mortgage amt, assume loan%>oa%2.5

 

[yslvlys]

About 30% in iwda qqq eimi, iir 10%

What's your total equity allocation including non-US equity?

 

[BBCWatcher]

Cos i practice a good hygiene of cash/Bond:equity

Bonds are not "bank savings." What do you actually mean?

As someone else pointed out upthread, both CPF OA (above $20,000) and cash can be directed into investments such as bond and stock funds. To which I would add that CPF OA dollars are not liquid for general purposes (at least not before age 55), the range of investment choices is limited compared to unrestricted cash, and the investment costs are higher compared to unrestricted cash. For these reasons it seems logical and sensible to use CPF OA dollars for servicing your mortgage regardless of market interest rates. Because your overall bond and stock investment positions would be whatever they would and should be, regardless.

But if there's something else going on that you haven't made clear yet, by all means feel free to elaborate.

 

[DevilPlate]

Then in the first place
his cash shouldn’t be in bank account
would be in the US market

Usually those so calculative is very very risk adverse.

 

[chopra]

What's your total equity allocation including non-US equity?

Around 3:7 equity:cash


40yo yang chewren

 

[chopra]

Bonds are not "bank savings." What do you actually mean?

As someone else pointed out upthread, both CPF OA (above $20,000) and cash can be directed into investments such as bond and stock funds. To which I would add that CPF OA dollars are not liquid for general purposes (at least not before age 55), the range of investment choices is limited compared to unrestricted cash, and the investment costs are higher compared to unrestricted cash. For these reasons it seems logical and sensible to use CPF OA dollars for servicing your mortgage regardless of market interest rates. Because your overall bond and stock investment positions would be whatever they would and should be, regardless.

But if there's something else going on that you haven't made clear yet, by all means feel free to elaborate.

I generalise bond , mmf, and cash synonymously. Factually, my cash is in uobone, isavvy, ocbc360, hsbc ega. Factually, i do not hold any bonds. Factually i hold $1000 mmf in syfe for theoretical fun.

i do not care about cpf oa 55yo, do not care about $20k cpf oa thingy. These are distractions. I care about isavvy 2.4% vs cpf oa 2.5%. I will use my isavvy to pay the housing loan.

Hope it clarifies

 

[BBCWatcher]

Cos i practice a good hygiene of cash/Bond:equity

Bonds are not "bank savings." What do you actually mean?
[....]
But if there's something else going on that you haven't made clear yet, by all means feel free to elaborate.

Around 30 to 40% equity:cash

This is very confusing. Cash and bonds are not the same. What do you mean?

In a "perfect world" (or at least a typical one) you'd hold X months of ordinary household expenses as cash (in a bank savings account), then you'd have some mix of bonds and stocks for the rest of your financial assets. CPF OA counts for these purposes as restricted cash (can be used for servicing your mortgage).

Are you actually asking whether you should reduce your bond position in favor of CPF OA?