You and your wife have reached FRS in SA and BHS in MA and CPF annual limit? Otherwise, a dumb thing to top up
It's a little confusing, but it appears that's exactly Merg91's situation (the adult couple has already maxed out their CPF tax relief opportunities for voluntary top ups)....
....But the tax relief isn't necessarily
everything. It's still
reasonable to value bonus interest (5%) running for the next 50+ years higher than regular interest (4%) running for the next decade or two, plus tax relief. "Not crazy."
55 is minimum, not maximum for newborn. Possibly 70 or more if child's SA does reach FRS by then
I used the phrase "reasonable assumptions," and that's surely correct. It's most unlikely that these lucky children will have any challenges at all reaching their FRSes. This is a 55 year lock for a Singaporean newborn, with "reasonable assumptions."
BBC, refunding of CPF money used for housing at 54 is a hefty amount. Most sane people will not that or put it this way, between choosing topping up child Special Account vs repaying housing CPF money, I will pick the latter. At least those money can still be redeploy to buy another BTO or 5 years old resale flat at 54 (lease renewal)
You might pick the latter -- that's up to you -- but wealthy/high income people who are rational most probably wouldn't, unless they're specifically short of OA dollars for purposes of RA funding/"SA shielding."
OA is really, really not important to genuinely wealthy people. It's paying 2.5% interest, which isn't insulting, but it just doesn't compare to the 5% a child enjoys with the first $60,000 of MA and SA top ups.
Wealthy people don't rely on OA as OA, a point I think many people -- especially those who aren't wealthy -- don't grasp. Wealthy people don't struggle to muster 20% or 25% down payments on homes they want to buy and don't struggle to service the low interest rate mortgages they can easily get. They simply don't need OA as OA, so they don't need to repay themselves into a restricted account that "only" earns 2.5% interest. That's not anywhere near their game, at least not if they're playing it well and per their substantial means.
OA is really a "great middle class" feature of CPF.
Yes, if you have the financial means to do so, it is indeed a very decent choice to make
I have friends in their 20s and 30s who topped up their young kids account to the prevailing ceiling, some even did it for their 2-3 kids. Of course, for these people, they are ultra high earners/wealthy, and that few hundred k is nothing to them, that's why they don't feel anything by locking it in for the next few decades. Just imagine the compounding effect decades later, purely on this amount.
I'm not a huge fan of this idea even when wealthy, but it's definitely not crazy. I can
understand it.
Yes, the near ironclad asset protection aspects of CPF are appealing.
both my wife and my CPF are maxed FRS and we are planning to give 100K each to our children into their SA account.
In the event we are no longer around and they anyhow wasted all our money ... the SA would come in handy for them when they are old ...
Yes, and obviously you fully expect them to grow "old," with high probability. Wealthy people can make multiple, big bets on their children (and even grandchildren, nieces, nephews, etc.) that span the short, medium,
and long term.(*) And that's certainly not crazy.
For what it's worth, I have particular, effectively "locked" assets arrayed across the following minimum payout/withdrawal ages:
* 55
* 59.5
* 62
* 65
Plus some other "bets" that I locked for 20+ years. And there's absolutely nothing wrong with that! I'm being well and reliably compensated for all these locks, and at the same time I fortunately have no liquidity concerns whatsoever.
(*) A famous, real world example is that of Joseph P. Kennedy, the original Kennedy patriarch who died in 1969. He was U.S. President John F. Kennedy's father. He created and structured the original Kennedy Family trusts in some
very long-term financial planning. Various living members of the Kennedy Family are comfortable for life based largely on Joseph P. Kennedy's careful planning.
