[GPGT]The power of compounding

[dork32]

when every buttie start doing it more and more then they will change it. but don't think they will change it in the near future because they themselves are trying to promote this everywhere to make it known to more ppl.. if they then change it sure a lot of ppl shoot them gao gao.

but if afraid that they will change it, all the more shld faster make use of this chance while the high interest rate is still available

if you are 25 now, confirm there will be many more changes before you can even smell your cpf.

 

[simon_84]

The problem is rules keep changing, 62 liao SA cannot take out at all how?

you can take out some at 55 provided you meet the minimum sum, plus your property can be used as collateral to meet half of the minimum sum.

CPF issue: 15 per cent use properties to meet up to half of Minimum Sum - Singapore More Singapore Stories News & Top Stories - The Straits Times

as the minimum sum level keep moving upwards, property price will also do the same.

 

[Tango62]

If one started this year with $148k (CPF minimum sum beginning Jul 2013) in SA, the interest earned in 2014 can offset most part of the increase in minimum sum of $155k beginning Jul 2014.

$148k x 4% = $5,920
$60k x 1% = $600 (additional 1% for $20k from OA and $40k from SA)
Balance in SA at the end of 2014 = $148k + $5,920 + $600 = $154,520.

If that amount is allow to roll till end of 2015, the interest earned will cover the increase in minimum sum of $161k beginning Jul 2015.

Hence the interest compounded can, mostly or completely, take care of the yearly increase in minimum sum.

In addition, if one continue to contribute monthly, the balance in SA can exceed the minimum sum.

 

[Sinkie]

If one started this year with $148k (CPF minimum sum beginning Jul 2013) in SA, the interest earned in 2014 can offset most part of the increase in minimum sum of $155k beginning Jul 2014.

$148k x 4% = $5,920
$60k x 1% = $600 (additional 1% for $20k from OA and $40k from SA)
Balance in SA at the end of 2014 = $148k + $5,920 + $600 = $154,520.

If that amount is allow to roll till end of 2015, the interest earned will cover the increase in minimum sum of $161k beginning Jul 2015.

Hence the interest compounded can, mostly or completely, take care of the yearly increase in minimum sum.

In addition, if one continue to contribute monthly, the balance in SA can exceed the minimum sum.

actually if cpf cannot be used for the purchase of hdb, almost everyone shd have enough cpf for minimun sum when they retire, and hdb wont be so expensive also.

 

[agentxq49]

Topping up CPF is like investing in stock market. You can only afford to topup/invest with money you can lose . =p

To me i felt that CPF is like buying bonds, and after hitting retirement, the portfolio becomes either a "passive income dividend portfolio with 4% per year" or an annuity, with 4% interest per year nonetheless. Still, the amount i put in is purely for retirement, meaning only if my immediate future is secured, then i'll put the cash in.

Of course i want to make full use of the 1% extra for your first 60k (like using my PSEA account to pay for uni fees, then top up the same amount to my cpf in cash instead)

 

[darkmatt]

To me i felt that CPF is like buying bonds, and after hitting retirement, the portfolio becomes either a "passive income dividend portfolio with 4% per year" or an annuity, with 4% interest per year nonetheless. Still, the amount i put in is purely for retirement, meaning only if my immediate future is secured, then i'll put the cash in.

Of course i want to make full use of the 1% extra for your first 60k (like using my PSEA account to pay for uni fees, then top up the same amount to my cpf in cash instead)

cpf is just one half of retirement income.

the other half comes from self investment and savings.

 

[agentxq49]

cpf is just one half of retirement income.

the other half comes from self investment and savings.

yup yup. Main thing i was concerned with was how the interest was calculated. So it's monthly, so the earlier i put in the better~ rather than trying to 'game' it by putting into a fixed deposit then contribute over.


Of course CPF can be used to buy shares mah~ so if i'm investing for retirement, some can go into CPF, at least won't be tempted to look at it for years.

 

[darkmatt]

yup yup. Main thing i was concerned with was how the interest was calculated. So it's monthly, so the earlier i put in the better~ rather than trying to 'game' it by putting into a fixed deposit then contribute over.


Of course CPF can be used to buy shares mah~ so if i'm investing for retirement, some can go into CPF, at least won't be tempted to look at it for years.

SA cannot buy shares right?

 

[agentxq49]

SA cannot buy shares right?

Can, it's called "CPFIS-SA"

Who are eligible to participate under the CPF Investment Scheme (CPFIS)?
A:
All CPF members who

• are at least 18 years old;
• are not undischarged bankrupts; and
• have more than $20,000 in their Ordinary Account (for investment under CPFIS-OA) and/or more than $40,000 in their Special Account (for investment under CPFIS-SA).​

For me, i'm going to treat CPF as bonds, like re-balancing my portfolio between stocks and bonds, keeping a 80-20 ratio (for the amounts above the initial 60k since that extra 1% is really worth it), and just carry on from there. It would mostly be blue chips that have saturated the market, paying a good dividend ratio from their profits (~5%) like some of the telcos and banks.

Good plan? (although i'm far far away from actually doing it...... money in CPF? lol, student nia no money.)

 

[WindBoi]

you can purchase unit trust or endowment life insurance with CPF SA. the question is whether if its good enough. there used to be endowments yielding 5%

since 2009 if i remember the government have already said the SA rate in the future will be pegged to 1% + 10 year SGS. they have been giving us the 4% for some time but if they really want its 3% based on the sgs rate of 1.9%.

 

[Tango62]

SA cannot buy shares right?

What you can use for CPFIS-OA and CPFIS-SA:

http://mycpf.cpf.gov.sg/Members/Gen-Info/FAQ/CPFInvestmentSchemes.htm

http://mycpf.cpf.gov.sg/NR/rdonlyre...-322687316646/0/INV_InstrumentsunderCPFIS.pdf

http://mycpf.cpf.gov.sg/NR/rdonlyres/55FC3AED-97EF-47A3-AEE3-89DA8E5C49C5/0/INV_AnnexA.pdf

 

[WindBoi]

Saving early is just one of the immutable laws to be wealthy. there are a few more and one involves understand you don't have to take the most risk if you understand your human earnings potential. you don't have to chase the hardest return just because your friend is doing it.

The Wealthy Formula that I use to Build Wealth | Investment Moats - Stock Market Investing

 

[agentxq49]

Saving early is just one of the immutable laws to be wealthy. there are a few more and one involves understand you don't have to take the most risk if you understand your human earnings potential. you don't have to chase the hardest return just because your friend is doing it.

The Wealthy Formula that I use to Build Wealth | Investment Moats - Stock Market Investing

Good point, no need to increase risk to chase returns. My counter-argument would be that i have a pretty long horizon (like 40 years to go till retirement ) and i can stomach the risks.

Then again, i'm thinking a little too far ahead

 

[platopus]

transfer the first few years of your OA to SA if you not intending to use it to buy house, will pay off in the long run as long as CPF survives

 

[Dividends Warrior]

Entrepreneurship is another way to get rich.

 

[darkmatt]

honestly, saving early is just so you can retire at 62 and stop working totally.

 

[knightdreamer]

haiz seem like our cpf going to have some changes again. Pray that the changes is for a better one

 

[aqf]

Einstein the best