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Any1 explore into optimizing cpf various account at different stage of life?

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Old 19-11-2018, 01:33 AM   #1
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Any1 explore into optimizing cpf various account at different stage of life?

Say u already purchased a hdb & loan is all cleared and expect to reach 55 before u sell off your hdb or no intention to sell off.
In this scenario would be optimal to move all OA to SA for better interest. Since in theory u have no other area to use ur OA.

Any1 already explored and made various conclusions?
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Old 19-11-2018, 06:03 AM   #2
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I moved all my OA to SA early this year (32 yo), when I realised I am ok to pay my hdb loan mostly in cash, and there is no immediate use of OA.

It is nice to have 4-5% compounding interest for the next 23 years...
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Old 19-11-2018, 06:17 AM   #3
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It's a decision between moving your OA to SA versus topping up 7k to SA every year. I choose the latter because of tax reliefs. However, it can certainly be optimized by:
(1) calculating the total interests you would have gotten by moving OA to SA;
(2) calculate the tax reliefs you would have gotten by topping up + interests you get.

Compare (1) and (2) and see which gets you the most.
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Old 19-11-2018, 06:55 AM   #4
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Awesome, the sooner you get to FRS, the more years for the $ to compound.

I moved all my OA to SA early this year (32 yo), when I realised I am ok to pay my hdb loan mostly in cash, and there is no immediate use of OA.

It is nice to have 4-5% compounding interest for the next 23 years...
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Old 19-11-2018, 08:09 AM   #5
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It's a decision between moving your OA to SA versus topping up 7k to SA every year. I choose the latter because of tax reliefs. However, it can certainly be optimized by:
(1) calculating the total interests you would have gotten by moving OA to SA;
(2) calculate the tax reliefs you would have gotten by topping up + interests you get.

Compare (1) and (2) and see which gets you the most.

Why not both ?
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Old 19-11-2018, 08:15 AM   #6
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It's a decision between moving your OA to SA versus topping up 7k to SA every year. I choose the latter because of tax reliefs. However, it can certainly be optimized by:
(1) calculating the total interests you would have gotten by moving OA to SA;
(2) calculate the tax reliefs you would have gotten by topping up + interests you get.
Compare (1) and (2) and see which gets you the most.
You can do both, for a period of time anyway. It’s also often possible to claim the full $14K ($7K times 2) of SA/RA-related tax relief when you top up qualified family members’ accounts. If your own SA has reached or will reach the FRS, you haven’t necessarily reached the end of the SA/RA tax relief party.

In terms of one’s own CPF accounts, my general thinking is that early career adults ought to top up their MediSave Accounts first since MA dollars can be useful at any age (for you and for family members), MA top-ups qualify for tax relief, MA funds earn attractive interest (and fully qualify for bonus interest), and it gets tougher to squeeze in MA top-ups as your income rises over the course of a career due to the CPF Annual Limit. Anybody who doesn’t need OA for housing, at whatever age(s), should transfer OA funds to SA. That could be a partial transfer if you need some OA funds, or it could be full transfers every month if you don’t need OA for housing at all. (Cash works for housing too, remember.) Then you give SA some love with those $7K top-ups. That’s the sort of prioritization that seems to make the best financial sense, broadly speaking.

If you do all that then OA funds start to pile up, and you still don’t need OA dollars for housing, I would consider the CPF Investment Scheme (OA), provided you’ve reached that point with a long time horizon ahead. Or you use those OA dollars that are piling up to pay off your mortgage (if you have one), and save/invest that much more outside CPF. I don’t think the CPF Investment Scheme (SA) makes much sense at this point in time, except for very short-term/tactical “SA shielding” at age 54.9 across your 55th birthday.

DON’T accelerate repayment of a cheap mortgage, cheap meaning a low interest rate — assuming you are actually saving and prudently investing.

Last edited by BBCWatcher; 19-11-2018 at 08:25 AM..
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Old 19-11-2018, 09:06 AM   #7
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Moving over OA to SA at a young age might be too early as the minimum sum keep increasing & u might need to use them for your housing in year to come as there unknown stages were u might get jobless etc, this will help u tide over.

some-more u not able to withdraw from SA once it in & only when u reach the prime age as state then u allow to draw out ,for SA 4% to OA 2.5%, it a difference of only 1.5%, u might well do some investment using u OA excess money and u might rip better yield.

Last edited by foxer77; 19-11-2018 at 09:09 AM..
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Old 19-11-2018, 09:30 AM   #8
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Moving over OA to SA at a young age might be too early as the minimum sum keep increasing...
I don't see how the increases in the BRS/FRS/ERS (there's no "Minimum Sum" any more) have anything to do with this decision.

...& u might need to use them for your housing in year to come as there unknown stages were u might get jobless etc, this will help u tide over.
Sure, you might. But that's already been stated. If you don't need every OA dollar for housing, then move the ones you don't need into SA. There are plenty of Singaporeans who don't need any OA dollars for housing. There are many who need every dollar, and there are many in between. "It depends."

some-more u not able to withdraw from SA once it in & only when u reach the prime age as state then u allow to draw out ,for SA 4% to OA 2.5%, it a difference of only 1.5%, u might well do some investment using u OA excess money and u might rip better yield.
That "only" 1.5 percentage point difference compounded -- and it's more than that due to bonus interest actually -- is a huge difference over years and decades.

Look, the less you have to save for retirement because you have more CPF dollars working harder and longer, the more money you can spend or save in the present. If you can manage this time shifting optimally -- and many, many people can -- then great, fantastic.

If you cannot make this math work because you need every dollar of OA for housing (and perhaps more), OK, fair enough, that's your situation. For other people, there is this real opportunity.
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Old 19-11-2018, 11:29 AM   #9
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I will think that it is prudent to keep 20k OA dollars (3.5% interest) and the rest to be transferred to SA.

0.5% isn't that big of a deal and you get to have some comfort in knowing that your OA isn't 0.

Sent from Ilovennp using GAGT
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Old 19-11-2018, 11:39 AM   #10
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I will think that it is prudent to keep 20k OA dollars (3.5% interest) and the rest to be transferred to SA.

0.5% isn't that big of a deal and you get to have some comfort in knowing that your OA isn't 0.

Sent from Ilovennp using GAGT
If I have 60k in SA, does my first 20k in OA still earn 3.5%?

I don't quite understand what cpf mean by 'with up to 20k from OA'. It sounds like balance in SA take precedence
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Old 19-11-2018, 11:55 AM   #11
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If I have 60k in SA, does my first 20k in OA still earn 3.5%?

I don't quite understand what cpf mean by 'with up to 20k from OA'. It sounds like balance in SA take precedence
Below 55:

1. OA 20k 3.5%, the rest come from SA then MA
2. SA
3. MA

If OA above 20k, the rest earn 2.5%. If OA less than 20k, then take from SA then MA.
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Old 19-11-2018, 12:10 PM   #12
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You can do both, for a period of time anyway. Itís also often possible to claim the full $14K ($7K times 2) of SA/RA-related tax relief when you top up qualified family membersí accounts. If your own SA has reached or will reach the FRS, you havenít necessarily reached the end of the SA/RA tax relief party.

In terms of oneís own CPF accounts, my general thinking is that early career adults ought to top up their MediSave Accounts first since MA dollars can be useful at any age (for you and for family members), MA top-ups qualify for tax relief, MA funds earn attractive interest (and fully qualify for bonus interest), and it gets tougher to squeeze in MA top-ups as your income rises over the course of a career due to the CPF Annual Limit. Anybody who doesnít need OA for housing, at whatever age(s), should transfer OA funds to SA. That could be a partial transfer if you need some OA funds, or it could be full transfers every month if you donít need OA for housing at all. (Cash works for housing too, remember.) Then you give SA some love with those $7K top-ups. Thatís the sort of prioritization that seems to make the best financial sense, broadly speaking.

If you do all that then OA funds start to pile up, and you still donít need OA dollars for housing, I would consider the CPF Investment Scheme (OA), provided youíve reached that point with a long time horizon ahead. Or you use those OA dollars that are piling up to pay off your mortgage (if you have one), and save/invest that much more outside CPF. I donít think the CPF Investment Scheme (SA) makes much sense at this point in time, except for very short-term/tactical ďSA shieldingĒ at age 54.9 across your 55th birthday.

DONíT accelerate repayment of a cheap mortgage, cheap meaning a low interest rate ó assuming you are actually saving and prudently investing.
The tax relief is me top up 7k to another family member annual income below 4k, then i get to enjoy 7k of tax relief?

how much would you suggest to top up into MA before considering moving SA?

beyond age 55 , we would be given a Retirement Account(RA) which transfers all fund from Savings from your Special Account and Ordinary Account, up to the Full Retirement Sum (FRS), will be transferred to your RA to form your retirement sum which will provide you with monthly payouts.

I guess even after 55, MA money can't be utilize for other purpose besides medical bills.

Since the RA account earns same interest as MA. The advantage in SA ,which later become RA, is monthly cash payout still can be use to pay medical bill.
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Old 19-11-2018, 10:13 PM   #13
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Why not both ?
Simply because there's the FRS limit.
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Old 19-11-2018, 10:17 PM   #14
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The tax relief is me top up 7k to another family member annual income below 4k, then i get to enjoy 7k of tax relief?

how much would you suggest to top up into MA before considering moving SA?

beyond age 55 , we would be given a Retirement Account(RA) which transfers all fund from Savings from your Special Account and Ordinary Account, up to the Full Retirement Sum (FRS), will be transferred to your RA to form your retirement sum which will provide you with monthly payouts.

I guess even after 55, MA money can't be utilize for other purpose besides medical bills.

Since the RA account earns same interest as MA. The advantage in SA ,which later become RA, is monthly cash payout still can be use to pay medical bill.
There's only income-limit if your family member is sibling or spouse. For parents/grandparents/in-laws, you can always top up $7k to their SA (or RA) regardless of their income level.

Medisave can be used to pay your MSL premiums, your spouse/parents/grandparents MSL premiums, your bills, your spouse/parents/child/grandparents bills.
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Old 20-11-2018, 04:40 PM   #15
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SA doesnt compound at 4% forever. Once you hit the minimum sum it flows to OA and compounds at 2.5%.
Why you got info? Only applies to MA.
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