CPF Accounts Value Thread 2020

[dork32]

You found 2.5% interest via OA repayment appealing -- even though you cannot tap as cash it without drawing down 4.0% interest earning SA first -- but not ~3.X% yielding RA? That's...interesting.

you like to insult people. when i insult you, you cannot tahan.

notice the amount in the ra? 600k, it is good enuf for a 1 bedder in the suburbs.

he transfer 100k to the ra, he will have only 500k left. not much 500k can buy.

 

[Gitaro]

Whatever in my OA is a portion of my retirement passive income.

the FRA is also a part of which.

 

[BBCWatcher]

Can explain why you said RA yield is ~3.X% instead of 4%?

RA earns 4.0% interest. If you choose the CPF LIFE Basic Plan and happen to die in the precise month when the yield (to you and your nominees) is lowest that’s a yield somewhere above 3.0% on incremental dollars added to your RA — what’s known as “YTW” (yield to worst).

you like to insult people. when i insult you, you cannot tahan.

notice the amount in the ra? 600k, it is good enuf for a 1 bedder in the suburbs.

Actually he has about $190K in his RA, but a fat SA is precisely the point. I’m asking why he settled for a 2.5% yield on incremental dollars instead of the >3.0% available to him.

he transfer 100k to the ra, he will have only 500k left. not much 500k can buy.

He didn’t transfer. He repaid cash into his OA which only earns 2.5% and cannot be tapped as cash without exhausting 4.0% interest earning SA first.

 

[Gitaro]

be

Actually he has about $190K in his RA, but a fat SA is precisely the point. I’m asking why he settled for a 2.5% yield on incremental dollars instead of the >3.0% available to him.

He didn’t transfer. He repaid cash into his OA which only earns 2.5% and cannot be tapped as cash without exhausting 4.0% interest earning SA first.

I opted for FRS only as I would venture into riskier ventures knowing fully well that my FRS would have hedged me somewhat as age is no longer on my side. I can decide how to spend or invest the amount beyond FRS. For now, 2.5% risk free is good enough.
Like I said before, I have other ventures that potentially brings in around 5%.

 

[Gitaro]

I considered the SA 4% as bonus and I only used 2.5% in my passive income consideration.

 

[BBCWatcher]

The same “risk free” entity is offering >>3.0%. I’m just curious why you preferred that entity’s 2.5% offer ahead of their >>3.0% offer, and for every incremental dollar to boot.

 

[Gitaro]

The same “risk free” entity is offering >>3.0%. I’m just curious why you preferred that entity’s 2.5% offer ahead of their >>3.0% offer, and for every incremental dollar to boot.

Why do I need to put into my RA an amount beyond FRS? No, I do not. I want the flexibility to "play" with the amount (FRS instead of ERS) and decide how I want to spend that amount. A 0.5% or even 1% difference is not significant a difference though.

 

[starlight318]

I will also choose FRS in RA and keep remaining in OA/SA for liquidity sake.

 

[semiret]

I will also choose FRS in RA and keep remaining in OA/SA for liquidity sake.

I'm also done that, only kept FRS in RA. For the past few years, the interest earned from OA/SA can covered my yearly expense. I let the interests earned remains inside my CPF and living on my savings currently. Treats OA/SA as FD accounts. If only I found something that will generate more returns than CPF or I really need the cash than I will withdrew it. Currently plan was to withdraw the full OA/SA balance at 65yrs to add on to the CPFLife payouts which will starts at that time.

 

[dork32]

Why do I need to put into my RA an amount beyond FRS? No, I do not. I want the flexibility to "play" with the amount (FRS instead of ERS) and decide how I want to spend that amount. A 0.5% or even 1% difference is not significant a difference though.

ers vs frs is 100k. 1% difference is 1000 a year. ignoring the effects of compounding and withdrawals, in 25 years, you lose 25k in interest. this amount is small compared to the 1 mil you have in your cpf.

to me unless, i want to buy property, otherwise i will not be able to finish spending 600k. hence topping up to ers is a good idea if you are just on retirement expenses.

 

[andyhtc]

If my SA itself is more than ERS, since both SA and RA pay 4% interest, is there any difference up to about 85 years old if I were to keep to FRS and continue to earn 4% interest on the remaining SA i.e. (SA-ERS)? My preference is to have more say over the interest earned rather than subject to future CPF payout policies.

 

[BBCWatcher]

I will also choose FRS in RA and keep remaining in OA/SA for liquidity sake.

It's SA/OA, actually. OA cannot be withdrawn until SA is. You have liquidity with OA repayments, but the price of that liquidity is quite high. You have to tap the 4.0% interest earning dollars first, before you can tap the 2.5% interest earning dollars.

There are obviously different ways to play this game, but I happen to think if you've got gobs of liquidity already -- many hundreds of thousands in this case -- then the >>3.0% offer usually easily outranks the 2.5% offer. In addition to being higher yielding, the >>3.0% offer generates more cashflow from as early as age 65, reducing the need to tap your 4.0% interest earning dollars.

The "interest only" withdrawal approach is possible, of course, but interest that stays in SA still earns 4.0% interest. Those are "expensive" dollars to tap, too. Ideally you would reduce and defer SA withdrawals, including interest, in order to let that sweet juicy 4.0% interest work its magic.

I think what I've described is pretty basic cashflow and liquidity management, but just let me know if I haven't explained it well enough.

 

[SBC]

CPF inadequacy is a failure on MOM's part, and is again, a reflection of Josephine Teo's capability.

Despite a high-level committee's recommendations, we still dont have a gd, low cost passive globally diversified fund to invest excess CPF OA money. That's why people like me are considering letting Endowus earn 0.4% for my CPF OA.

NTUC Fairprice is earning good money from Covid-19, so its quite shocking to hear a suggestion on cutting CPF from Sean Kian Peng's mouth. Somemore, their property tax/rent rebates and JSS support must be huge.

Can help to provide that SKP quote?
V interesting

 

[reddevil0728]

Can help to provide that SKP quote?
V interesting

https://www.straitstimes.com/politics/no-plans-to-reduce-rates-for-cpf-contributions

 

[SBC]

https://www.straitstimes.com/politics/no-plans-to-reduce-rates-for-cpf-contributions

He probably had multiple income streams to tide him through.
Lowering CPF rates is a very short-term fix to improve short term cash flow encountered by many during **.

 

[mcylo]

Here. GPGT. Finally reached the milestone.

https://postimg.cc/7JSnysJ1

respect.

 

[FT_FTW]

I got RA set up already, hence, I am >55.

I paid back my housing amount + accrued interests.

What other assets do u own? Can u share also?

congrats on the 1mil cpf

 

[azeris10]

is this strategy correct? In order of funding

1. Top up MA to CPF Limit (37.7k) or BHS Limit (63k)
2. Top up SA RSTU 7k
3. Transfer OA to SA (if house paid off)
4. ???

 

[RedsYWNA]

Can I ask what happens if you hit your SA and MA limit while working?

Does the excess money go to OA? Initially I thought if you hit MA limit, excess is supposed to go to SA, and not OA.... Thanks!

 

[Okenba]

Can I ask what happens if you hit your SA and MA limit while working?

Does the excess money go to OA? Initially I thought if you hit MA limit, excess is supposed to go to SA, and not OA.... Thanks!

Excess MA contributions will overflow to SA/RA or OA depending on whether you hit FRS.
Excess SA contributions stay in SA.