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]

Usually those so calculative is very very risk adverse.

I gave numbers above.
I said i have $100 and i invest $30. Remaining $70 as cash in ega uobone isavvy yadda.

cpf oa, sa i do not invest. Sit inside rot.
Feel free to share ur equity to cash ratio to quantify ur risk. Else, it’s purely a qualitative point u r making about “ very very “ which might not be meaningful to the thread here

 

[chopra]

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?

To unpack the confusion, i stated my cash:mmf:equity. Don’t know how else to make it easy for u to digest. I thank ur kindness to listen n help however.

as with my first sentence in this thread, i am declaring that i am switching to using cash to pay housing loan instead of cpf oa. And I explained why so

 

[BBCWatcher]

I generalise bond , mmf, and cash synonymously.

But you shouldn't! They're not the same at all. The whole point of bonds (of any reasonable tenor) is that their prices vary inversely with market interest rates. As a simple example, people holding a reasonable allotment of Singapore Savings Bonds yielding above 3% are rather happy right now.

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.

OK, so that's a problem. You've been caught "naked" by lower market interest rates. This was predictable and predicted. Is this something you want to change?

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.

The only "gotcha" is that CPF OA is not generally liquid. For example, you can't buy a refrigerator with CPF OA dollars if you need to replace one when it breaks. However, if you maintain at least adequate general liquidity then you can tolerate a reduction in unrestricted cash liquidity. And it sounds like you've got gobs of unrestricted cash liquidity, so that's not your problem at the moment.

 

[chopra]

I used the term bond in between this thread as i thought it’s a common term ppl use (bond:equity ratio).

so im sorry if i confuse anyone here.
Maybe next time we standardise industry to use

cash:mmf:bond:equity ratio

 

[chopra]

But you shouldn't! They're not the same at all. The whole point of bonds (of any reasonable tenor) is that their prices vary inversely with market interest rates. As a simple example, people holding a reasonable allotment of Singapore Savings Bonds yielding above 3% are rather happy right now.

OK, so that's a problem. You've been caught "naked" by lower market interest rates. This was predictable and predicted. Is this something you want to change?

The only "gotcha" is that CPF OA is not generally liquid. For example, you can't buy a refrigerator with CPF OA dollars if you need to replace one when it breaks. However, if you maintain at least adequate general liquidity then you can tolerate a reduction in unrestricted cash liquidity. And it sounds like you've got gobs of unrestricted cash liquidity, so that's not your problem at the moment.

Never caught naked. Im stating why i am switching to cash payment of housing loan as a result of isavvy 2.4%. They announced on 30jun. Today is 5jun. I am super fast to react already

Re cpf liquidity and my huge amt of cash. I dont see it as a problem. Long term, i am confident of maintaining overall iir 5 to 7% of my overall wealth in cash mmf bond equity and it’s decent to me

 

[chopra]

Bbc , grateful if u can show me an industry standard that does not use bond:equity ratio as a terminology

i will ask chatgpt now

 

[chopra]

Gpt

qn
Is cash:bond:equity ratio a more common term for financial world or bond:equity ratio. The question is asked by a person that is savvy of the difference between cash , fixed deposit, mmf , bond and equity

answer
In the financial world — especially among professionals or savvy individuals — bond:equity ratio is the more commonly used and meaningful term compared to cash:bond:equity ratio.

• Use “bond:equity ratio” for standard, widely accepted terminology — especially when the focus is on investment allocation and risk.
• Use “cash:bond:equity ratio” only when making a point that explicitly separates liquidity from fixed income, especially in discussions with financial planners, wealth managers, or in cash flow-focused contexts.

Since the person you’re referring to understands the distinction between cash, MMFs, bonds, etc., they might appreciate the cash:bond:equity ratio if you’re trying to highlight liquidity management, but would default to bond:equity ratio when talking about standard portfolio mix.

 

[chopra]

Gpt

qn
Is cash:bond:equity ratio a more common term for financial world or bond:equity ratio. The question is asked by a person that is savvy of the difference between cash , fixed deposit, mmf , bond and equity

answer
In the financial world — especially among professionals or savvy individuals — bond:equity ratio is the more commonly used and meaningful term compared to cash:bond:equity ratio.

• Use “bond:equity ratio” for standard, widely accepted terminology — especially when the focus is on investment allocation and risk.
• Use “cash:bond:equity ratio” only when making a point that explicitly separates liquidity from fixed income, especially in discussions with financial planners, wealth managers, or in cash flow-focused contexts.

Since the person you’re referring to understands the distinction between cash, MMFs, bonds, etc., they might appreciate the cash:bond:equity ratio if you’re trying to highlight liquidity management, but would default to bond:equity ratio when talking about standard portfolio mix.

Chatgpt answered. Bbc, ok hor?

 

[reddevil0728]

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

true that.. but not sure about the us market part

 

[BBCWatcher]

I used the term bond in between this thread as i thought it’s a common term ppl use (bond:equity ratio).

"Bonds" is the term people use when they actually mean bonds (of some reasonable tenor or longer). "Cash and cash-like assets" is how they typically refer to cash and short-term debt instruments.

Take a cue from the Monetary Authority of Singapore. MAS issues Singapore Government Securities. SGS "bills" have tenors of 12 months or less. SGS "bonds" have tenors of 2 years or more.

When investment guides and textbooks make bond recommendations, they really mean bonds. They don't mean cash and cash-like assets. And it's unfortunate you missed this distinction, because exactly what's happening now (lower market interest rates) is why general investment advice involves bonds.

When the tenor is reasonably long or longer then (on average, over a long enough period or longer) you get to enjoy more of the higher interest rate portions of interest rate cycles, plus the yield curve benefits (which is not usually inverted). Short-term assets don't enjoy those benefits. The long play is the smarter bet when you have the time horizon to play. Whether your investment posture is conservative, aggressive, or somewhere in between. (30% in stocks, everything else in cash and cash-like instruments, is way too conservative. But that's a separate matter in this case because I'm just talking about the cash/cash-like versus bond distinction.)

 

[BBCWatcher]

Chatgpt answered. Bbc, ok hor?

Yes, ChatGPT happens to agree with me. You've clarified, but I found it very confusing until you did.

 

[chopra]

Reddev bbc
Assume u have $100.i want to do a quick survey. Can u populate ur

A cash
B Mmf
C Bond
D Equity
E Cpf
F Debt

mine
A 69.000…9
B 0.000..1
C 0
D 30
E: 75 (ie i have $100 in ABCD and $75 in E)
F: 108 (ditto)

 

[chopra]

Yes, ChatGPT happens to agree with me. You've clarified, but I found it very confusing until you did.

U r professor quality ma. I practice keep it simple and stupid

 

[chopra]

"Bonds" is the term people use when they actually mean bonds (of some reasonable tenor or longer). "Cash and cash-like assets" is how they typically refer to cash and short-term debt instruments.

Take a cue from the Monetary Authority of Singapore. MAS issues Singapore Government Securities. SGS "bills" have tenors of 12 months or less. SGS "bonds" have tenors of 2 years or more.

When investment guides and textbooks make bond recommendations, they really mean bonds. They don't mean cash and cash-like assets. And it's unfortunate you missed this distinction, because exactly what's happening now (lower market interest rates) is why general investment advice involves bonds.

When the tenor is reasonably long or longer then (on average, over a long enough period or longer) you get to enjoy more of the higher interest rate portions of interest rate cycles, plus the yield curve benefits (which is not usually inverted). Short-term assets don't enjoy those benefits. The long play is the smarter bet when you have the time horizon to play. Whether your investment posture is conservative, aggressive, or somewhere in between. (30% in stocks, everything else in cash and cash-like instruments, is way too conservative. But that's a separate matter in this case because I'm just talking about the cash/cash-like versus bond distinction.)

Post as clarified.

 

[thretiredDad]

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

To be honest

your assumption is
this saving deposit lower than OA
will be a long term or forever
or at least during the mortgage loan period

and of course we know
this is not possible
anything can happen anytime

once cash is paid to housing loan
is difficult (or not free) to reverse

So just continue servicing your home loan
with your Cpf

 

[chopra]

To be honest

your assumption is
this saving deposit lower than OA
will be a long term or forever
or at least during the mortgage loan period

and of course we know
this is not possible
anything can happen anytime

once cash is paid to housing loan
is difficult (or not free) to reverse

So just continue servicing your home loan
with your Cpf

Fake news

i have been tweaking for years. Right now i put cash $1, cpf $xxxx

i just switched to cpf $1, cash $xxxx. Just applied today. 1 August effective

use cpf portal to do. Super easy man

 

[tazzycorner]

Fake news

i have been tweaking for years. Right now i put cash $1, cpf $xxxx

i just switched to cpf $1, cash $xxxx. Just applied today. 1 August effective

use cpf portal to do. Super easy man

i think what retiredDad is saying is that if you pay by Cash, and in case you need money in future, you cannot touch what you have in CPF

but if you pay by CPF, you will have more liquidity in the Cash you hold

​

 

[BBCWatcher]

Assume u have $100.i want to do a quick survey. Can u populate ur
A cash
B Mmf

I'll take B first. We really don't have money market funds in Singapore, not as such. They're really short-term bond funds. I don't understand why so many people find short-term bond (debt instrument) funds attractive unless perhaps they're day traders and aren't going to stay in the short-term bonds funds long. Short-term bond funds are uninsured, and they rise and fall almost instantly with market interest rates.

Yes, I know the firms pushing them advertise heavily on bus stop billboards in HDB estates. That doesn't mean they're good choices.

In terms of cash it's not really about a percentage. It's "a couple months of ordinary household expenses." Supplemented by Singapore Savings Bonds (C category, but liquid within a few weeks at par plus accrued interest) and CPF OA. CPF OA counts in terms of servicing a mortgage. Your cash, SSBs, and CPF OA (for the housing portion only) should ideally total to at least 6 months of ordinary household expenses. Some people like a few more months, and that's fine in my view. Past 12 months it's getting too cash/cash-like heavy for my tastes unless you've got some big spending objective coming up soon like a wedding.

C Bond
D Equity
E Cpf
F Debt

Category F (debt) is really just a "What are you buying, and how will you pay for it?" question. High cost debt is best avoided. Low cost debt can be wonderful.

There was a government that loaned me money (a student loan) at 0% interest with all payments deferred for years. That was wonderful. When that deal ended, and the interest rate rose from 0% to a moderate interest rate (not low, but also not awful) I decided to pay off the loan in full because fortunately I could while still maintaining adequate liquidity.

CPF is what I'd consider "bond-like." I'd treat it as an extension of your bond holdings.

And then there's bonds (including bond-like CPF) versus stocks. Some people like setting the stock allocation to 110% minus current age. I prefer holding 80% stocks (20% bonds) until age 50 then gradually converging to a 50-50 split (bonds-stocks) by age 65. I think a constant ratio until 50(ish) is simpler operationally, but either way seems fine to me.

 

[fr33d0m]

But you shouldn't! They're not the same at all. The whole point of bonds (of any reasonable tenor) is that their prices vary inversely with market interest rates. As a simple example, people holding a reasonable allotment of Singapore Savings Bonds yielding above 3% are rather happy right now.

SSB price is fixed. you can only redeem it at 100, there is no other price increase or whatever inversion with market interest rate.

The only "gotcha" is that CPF OA is not generally liquid. For example, you can't buy a refrigerator with CPF OA dollars if you need to replace one when it breaks. However, if you maintain at least adequate general liquidity then you can tolerate a reduction in unrestricted cash liquidity. And it sounds like you've got gobs of unrestricted cash liquidity, so that's not your problem at the moment.

Liquidity in generalized way is overrated. People need liquidity. But how much? In Singapore, liquidity can come in many ways. cash, credit cards, borrow from friends and/or relatives, load from banks etc.

Do you need buy a refrigerator? do you need buy it now? These questions are more important than whether you can use CPF OA to buy it.

 

[fr33d0m]

I used the term bond in between this thread as i thought it’s a common term ppl use (bond:equity ratio).

so im sorry if i confuse anyone here.
Maybe next time we standardise industry to use

cash:mmf:bond:equity ratio

use cash and cash equivalent. MMF is liquid enough to be cash equivalent.