CPF Accounts Value Thread 2020

[dork32]

Accelerating repayment on a low cost mortgage decreases liquidity too, and that's the point. It seems like a paradox, but it's really not: if you dive into buying out your home's equity too quickly, then you run a bigger risk of losing your home. Yes, this seems difficult for many people to grasp, but it's really true.

.

by paying down my home loan, i run a risk of losing my home

by putting money into sa, i dont run the same risk?

 

[dork32]

to the people out there.

i am not asking you do pay down your home loan. i myself do not do so.

 

[BBCWatcher]

by paying down my home loan, i run a risk of losing my home

by putting money into sa, i dont run the same risk?

As I wrote, in both cases you reduce liquidity. You should maintain adequate liquidity, and you should be well rewarded whenever you voluntarily reduce liquidity. (If possible.)

 

[dork32]

As I wrote, in both cases you reduce liquidity. You should maintain adequate liquidity, and you should be well rewarded whenever you voluntarily reduce liquidity. (If possible.)

this is wat i meant bbc is very very one sided in his argument.

yes by paying down the loan, your installment reduces by 35 per month

by topping up the sa, you get $280 per month or $22 per month of interest, which you cannot touch till you are very old.

the problem here is not with the 22 or 35. it is with the 7000. it is quite a small sum. it does not make much difference on either side.

 

[BBCWatcher]

this is wat i meant bbc is very very one sided in his argument.

yes by paying down the loan, your installment reduces by 35 per month

by topping up the sa, you get $280 per month or $22 per month of interest, which you cannot touch till you are very old.

And you also get $490 in near immediate tax savings if it's a $7,000 top up while you're in the 7% tax bracket. And, since your future age 55+ self is that much wealthier faster, you can safely, prudently, slightly reduce your monthly retirement savings flow in compensation.

AND you're effectively forced to add housing liquidity (OA compulsory savings) as long as you work for an employer in Singapore. You cannot tap OA dollars for general liquidity until age 55+. Every month this housing-specific liquidity increases, already.

If you're going to take the liquidity reduction -- and either way you will -- you should make every dollar work as hard for you as possible. Manage well, and good luck.

 

[dork32]

And you also get $490 in near immediate tax savings if it's a $7,000 top up while you're in the 7% tax bracket. And, since your future age 55+ self is that much wealthier faster, you can safely, prudently, slightly reduce your monthly retirement savings flow in compensation.

AND you're effectively forced to add housing liquidity (OA compulsory savings) as long as you work for an employer in Singapore. You cannot tap OA dollars for general liquidity until age 55+. Every month this housing-specific liquidity increases, already.

If you're going to take the liquidity reduction -- and either way you will -- you should make every dollar work as hard for you as possible. Manage well, and good luck.

490 is a one time deduction. $35 is every month for the next 20 years

 

[gold_eagle36]

Let's define liquidity as physical cash flow.

If the argument is about liquidity and housing loan, the key should be whether cash is being used to finance the loan or its just cpf OA.

For loan fully paid by monthly cpf Oa:
The $35 per month saved is merely a reduction of OA payment for the home loan.
The $490 is however a one time cash "rebate".

Nevertheless, both usage of $7000 is an immediate loss of short term liquidity.

 

[crimsontactics]

Just won $17k gambling before CNY. Pumped all into CPF.

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[elf108]

What happens if contribution exceeded the
Annual limit ?

Q
What is the CPF Annual Limit?
A
The CPF Annual Limit is the maximum amount of mandatory and voluntary contributions* to all three CPF Accounts that a CPF member can receive in a calendar year. The current CPF Annual limit is $37,740.

https://ibb.co/rcy6cBq

Separately I also top up $7k to SA. Will they refund me the excess ? Interest earned how ? Confused.

 

[BBCWatcher]

Cash top ups into Special and Retirement Accounts are not subject to the CPF Annual Limit.

 

[livingcharsiew]

Just won $17k gambling before CNY. Pumped all into CPF.

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why pump into sa, rather go oa can buy property at least
sa maybe wont even live till that old

 

[BBCWatcher]

why pump into sa, rather go oa can buy property at least

One reason is that it's not possible. You cannot deposit cash into an Ordinary Account only, not unless you're repaying funds (plus accrued interest) that already came out of OA.

....Need I go on?

sa maybe wont even live till that old

According to Singapore's official 2017 life tables, the probability a male celebrating his 30th birthday today will see his 55th birthday is over 96%. And the bigger and more secure that male's future retirement income is, the more that male can safely spend and enjoy life before then.

 

[crimsontactics]

why pump into sa, rather go oa can buy property at least
sa maybe wont even live till that old

I am staying with my parents right now, why would I need a property when I don't even know if I am getting married?

Many people get trapped because they believe in the lie that everyone need to own a house to have a good life.

Maybe true in the past when home prices are reasonable, but definitely not today when everything is over-inflated.

Of course, if circumstances changes, I am willing to change my mindset to better face reality.

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[Okenba]

I am staying with my parents right now, why would I need a property when I don't even know if I am getting married?

Many people get trapped because they believe in the lie that everyone need to own a house to have a good life.

Maybe true in the past when home prices are reasonable, but definitely not today when everything is over-inflated.

Of course, if circumstances changes, I am willing to change my mindset to better face reality.

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Rental? If you qualify for the hdb singles scheme, I think it is worth finding out more.

Property allows for leverage and margin that isn't as easily obtained when you invest in the market. And BTOs are quite subsidised I think.

 

[BBCWatcher]

I am staying with my parents right now, why would I need a property when I don't even know if I am getting married?

Many people get trapped because they believe in the lie that everyone need to own a house to have a good life.

You don't really own it anyway. You just borrow it for 99 years.

Cash also works, we should point out. There are many lucky people who enjoy a great line of credit with the Bank of Mom & Dad, and they just don't need OA as OA. So they might as well shove every OA dollar into SA as early as they can, and use cash (and OA after they hit the FRS) whenever they wish for their housing.

The "rules" are different for reasonably wealthy families.

 

[Thoreldan]

Just won $17k gambling before CNY. Pumped all into CPF.

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What did u bet on ?

 

[crimsontactics]

Rental? If you qualify for the hdb singles scheme, I think it is worth finding out more.

Property allows for leverage and margin that isn't as easily obtained when you invest in the market. And BTOs are quite subsidised I think.

I have a conservative risk appetite. I don't think property speculation is for me.

As for a home to stay, my current plan is to stay with my parents till they pass on, then stay till the HDB lease is over and then buy a 2-room flat.

Of course, this plan is subject to changes in the future.

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[crimsontactics]

You don't really own it anyway. You just borrow it for 99 years.

Cash also works, we should point out. There are many lucky people who enjoy a great line of credit with the Bank of Mom & Dad, and they just don't need OA as OA. So they might as well shove every OA dollar into SA as early as they can, and use cash (and OA after they hit the FRS) whenever they wish for their housing.

The "rules" are different for reasonably wealthy families.

My thought process is this:

"Do I need to own a home to have a good quality of life?"

No.

"Do I need to have a steady source of income in my older years to have a good quality of life?"

Yes.

With this, its pretty easy to decide where to put my money in.

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[decibel.]

Rental? If you qualify for the hdb singles scheme, I think it is worth finding out more.

Property allows for leverage and margin that isn't as easily obtained when you invest in the market. And BTOs are quite subsidised I think.

There are people who exceed the cap for BTO and can't buy HDB but only private condo. In this case, better to put in SA.

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[crimsontactics]

What did u bet on ?

Casino lor.

Table games like Sic Bo, Baccarat and Blackjack.

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