am not saying only a high flyer can achieve this.
OK....
Yes to get the balance is achievable less than 9 years after accounting for contribution ceiling per year without factoring in the high interest earned annually. If i understood correctly that if normal cpf (Employer/employee) contribution a year is 35,000. then can only top up 2,740 becoz CPF limit to 37,740 per year right?
No, wrong. You can top up your Special Account to the Full Retirement Sum in one go if you wish. You can even deposit $192,000 (the entire 2022 Full Retirement Sum) into any Singaporean citizen newborn's Special Account as long as you have the recipient's NRIC/birth certificate number.
Also, starting this year, you can deposit as many dollars as you wish into anyone's MediSave Account, in one go, as long as it fits within the Basic Healthcare Sum.
I don't think anything like these actions occurred in this case, and they certainly didn't with respect to MediSave since the CPF Annual Limit was a constraint prior to this year. But the CPF Annual Limit has never applied to SA top ups and now doesn't apply to MA voluntary contributions either.
So a high flyer would also have the same limitations.
Nope.
The only difference is the Cash balance after top up CPF will be different. A high flyer will have more capital balance to invest in assets.
Not really, not necessarily. First of all CPF is an asset too. I think you meant other assets. Second, one very effective way to jack up your Special Account very quickly is to transfer some or all OA dollars to your SA every month. Many people can do that while still chasing their housing in exactly the same way. Heck, HDB even encourages OA to SA transfers because you can only keep a maximum of $20,000 in your OA when you take a HDB loan and pick up the keys. The rest is swept into your leasehold purchase. The easiest way to prevent the sweep is to transfer OA dollars to SA...yours or someone else's (such as a spouse's).
Run the numbers, folks! I think you'll find OA to SA transfers in some amount can often be quite compelling — for the middle class, too. Isn't there that "$1 million in CPF" guy talking about this? And you can still get your house and accumulate a stock index fund, for example. Not always, situations vary, but this sort of scenario isn't surprising to me.
Nvm abt my enquiry already. I realized that there could be different interpretation of Investment Assets.
Home (Exclude a 2nd real estate), CPF, insurances are not Investment Assets to me becoz I cannot monetize my Home where will i stay.
Well, you typically can. You can rent out a room, and you can "downgrade." There's also the HDB Lease Buyback Scheme, but let's leave that one aside. I think it's reasonable to include the portion of your primary residence that's monetizable as, well, a monetizable asset.
CPF MA is reasonably liquid for medical care and premiums, and CPF OA is liquid for housing and education in Singapore. Even before 55. They count, maybe with asterisks. Insurance policies with surrender values are obviously monetizable assets, too. Just ring the insurance company (or a third party buyer) and get a check.
Lets not go the downgrade part.
Why not? Either it's possible or it isn't. You might be conflating value judgments with simple accounting. Value judgments can go anywhere, really. You might feel that you cannot possibly survive without Beluga caviar on your toast at least 3 times per week, and that's fine, but nobody else must feel the same way. You evidently prefer certain types of assets for whatever reasons, and that's probably fine. Others may prefer other types of assets, and that's probably fine, too. They're still assets. (Well, caviar probably isn't.)
Astute Parent shared about it eloquently. There are many other costs during a buy/sell transaction of a home which eats up return. He emphasized time period before some say earn a lot flipping real estates.
"So what?" Who brought up flipping real estate?
CPF i can only access when 65-70 since its locked and only through an annuity.
No, that's not correct, not as a generalization. CPF OA is liquid for housing and education in Singapore -- and this 31 year old has plenty of it, and more OA monthly cashflow since MA=BHS and SA>=FRS. CPF MA is liquid for medical care and medical premiums in Singapore, up to limits. CPF OA and SA in excess of the FRS (or often as low as the BRS) are liquid cash from age 55. $5,000 of RA is liquid at 55, and the rest of 20% liquid at 65...
...And so what? Liquidity constraints would be relevant if this 31 year old had insufficient liquidity. He clearly doesn't. He has a roof over his head, over $60K in his OA (never mind his spouse's), and extra OA landing every month and every year because his MA allocation and interest are in "double spillover." He's doing GREAT from all appearances. Bravo, really.
A Home's value is locked as I need a place to stay, CPF is locked until im very old, I didnt interpret them as Investment Assets.
OK, whatever you like I guess. You're planning to die before age 55 then? Sorry to hear that. Meanwhile this 31 year old and his spouse (I believe) have already locked down their age 55+ foundational financial security, and they have more power (not less) to accumulate and growth their wealth. Indeed, what else was he supposed to do? What grave sin did he commit? CPF compulsory contributions are, well, compulsory. He just worked, earned a decent (but not necessarily high) salary, probably did some/many OA to SA transfers, still got his house, and...seriously, what's not to like? It sure looks wonderful to me!
So coming back to a high flyer, with more capital balance, he can invest in more Investment Assets (additional saving/investing outside CPF) and thus the ratio of his Invesment Assets vs total Net Worth will be considered "healthy.
So you say, but those balances can be fully explained by compulsory contributions or, at most, modest additional voluntary ones (no doubt with tax relief, and tax savings can be invested outside CPF). And look at his OA, and the higher inflow to it. That's even after $18K used for housing, and he'll have no problem servicing his mortgage from OA alone for years even if all income ceases. AND he and his wife should be fine 65+. So all they gotta do is at least bridge to 65, but I suspect they'll crush it if they're even halfway responsible...and live happily ever after.
But a decent or below decent income earner, lets say he normal cpf contribution is 25k, he will topup 12,740 in cash to achieve that high CPF SA balance over time. Yup can be done but it means he has even lesser capital to invest in Investment Assets.
No, you're just wrong as an *assumption*. You can get to that 31 year old's balances (or close anyway) at $25K/year for 9 years if you simply transfer all OA dollars to SA along the way. Make it $30K per year (still $7.4K below the CPF Annual Limit), or add in the Additional MediSave Contribution Scheme and things like NSman grants, and that math is a slam dunk. No further explanation required.
You seem hung up on the *possibility* that he put a few voluntary dollars into CPF...to earn steady 5% interest (for the first $60K) and tax relief! And maybe to cycle dollars through MediSave that have to be spent on MediShield Life anyway. Or maybe a grandparent popped $10K into his Special Account when he was a kid. You have NO IDEA, you assume way too much, and then you criticize a decision he might not have even made -- a decision, as it happens, would have been a good one. (5%! Tax relief!)
No, I don't agree. He done GOOD.
So for me
(Shares + FD + Bonds + High interest accts etc)/(Net Worth)
Fixed deposits?!?! You're holding fixed deposits and criticizing this guy?!?!? "High interest accounts"?
but probably most other ppl
(CPF + Home + Shares + FD + Bonds + High interest accts etc)/(Net Worth)
I wasnt indicating that only high flyer can achieve high CPF SA
But at 31, did he sacrificed too much of his ability to accumulate liquid Investment Asset due to focusing on CPF SA.
In all probability no, he didn't. What part of life is he not enjoying now...and sitting pretty?
