CPF Accounts Value thread

[maple96]

nope just the NAV as far as POEMS is concerned
what's this about CDP , CPF agent's cost?

edit
i have searched the above fees & all i have found are that they are levied on CPFIS OA trades.
for my purpose i am using SA

First u need to understand what are the risks and rewards in using this "hack".

1. Risk of capital loss should your investment turn negative, plus cost of buying/selling the investment. Interest loss on SA funds should not be a major criteria in making this decision because u are eyeing on the potential future rewards.
2. Rewards - potential future returns on the SA funds u shielded, ie 4% compounded interest.

Second, u need to confirm how (ie procedure) u can use SA funds to buy and sell the intended investment instrument.

From CPF website:

CPFIS-SA
There is no need to open any CPF Investment Account if you wish to invest your SA savings. Thereafter, you can approach the*product providers*directly to buy or sell your investments.

U need to approach the providers of the investment instrument u intend to buy/sell. Discuss and understand the procedures or steps involved and timelines. This is what u need to confirm. Once confrmed, before u reach 55, based on the timelines u obtained (maybe a mth or less before to minimise your capital loss risk), ask your provider to buy. After your RA funds had been setup at 55, approach your provided to sell.

Makes sense?

(disclaimer: I am not adopting this hack, just sharing my logical thinking)

 

[a4973]

First u need to understand what are the risks and rewards in using this "hack".

1. Risk of capital loss should your investment turn negative, plus cost of buying/selling the investment. Interest loss on SA funds should not be a major criteria in making this decision because u are eyeing on the potential future rewards.
2. Rewards - potential future returns on the SA funds u shielded, ie 4% compounded interest.

Second, u need to confirm how (ie procedure) u can use SA funds to buy and sell the intended investment instrument.

From CPF website:

CPFIS-SA
There is no need to open any CPF Investment Account if you wish to invest your SA savings. Thereafter, you can approach the*product providers*directly to buy or sell your investments.

U need to approach the providers of the investment instrument u intend to buy/sell. Discuss and understand the procedures or steps involved and timelines. This is what u need to confirm. Once confrmed, before u reach 55, based on the timelines u obtained (maybe a mth or less before to minimise your capital loss risk), ask your provider to buy. After your RA funds had been setup at 55, approach your provided to sell.

Makes sense?

(disclaimer: I am not adopting this hack, just sharing my logical thinking)

yes, very well summarised

 

[BBCWatcher]

If he completes the test within the month, at most he loses 1 month's interest on $1k and that is $3.33 only.

Right.

There is no compound interest as far as CPF is concerned.

On edit: OK, I think it's safe/equal now that I look at it. As Dork32 points out, if there is a difference it's going to be small over human lifespans in these amounts.

Even so, there's no harm in waiting until a couple months before one's 55th birthday to run the test. The test is a little more valid if it's closer to the date when you actually need it, because something in the system(s) could change in the meantime. Relax, no rush.

 

[rrr2015]

need to signup separate CPFIS SA?
which UT you wil be buying? sure no transaction fees? need to consider spread as well.

please share your test outcome … thanks!

i am turning 55 in 4Q19
i have got my POEMS account set up & linked to CPFIS OA & SA.
i would like to test the hack
should i just use 1k of SA & test how fast the full turn around time from SA > UT > SA?
any other suggestions how what i should test for?

 

[rrr2015]

was this the balance amount which you transfer to your father's RA?

so they refund back without needing any action on your part?

Last year, I had a refund of $110,875.84 from my father's RA to my OA.

 

[Arxxxx]

Hello, i have an important question. My mum is now 53 Year old. HDB fully paid for already, should i help her transfer all her OA balance into SA to earn higher interest? Will there be any downside for doing so? Her current OA+SA will not reach FRS by 55, ~80k OA,~40k SA,~50k MA.

 

[BBCWatcher]

should i help her transfer all her OA balance into SA to earn higher interest?

Yes, that looks like a great move.

Will there be any downside for doing so?

Not much. If she's going to go buy another home before her 55th birthday, then she wouldn't have OA funds to use toward that purpose.

At her dollar levels she has no concern about not being able to top up her SA (or eventually RA) to claim the $7,000/year for tax relief. Which is another thing that'd be nice to do, this month preferably.

Looks good!

 

[Arxxxx]

Yes, that looks like a great move.


Not much. If she's going to go buy another home before her 55th birthday, then she wouldn't have OA funds to use toward that purpose.

At her dollar levels she has no concern about not being able to top up her SA (or eventually RA) to claim the $7,000/year for tax relief. Which is another thing that'd be nice to do, this month preferably.

Looks good!

Ok Thanks! Will help her do the transfer now, if only i learned about this much sooner (10 yrs ago when they fully paid the HDB.) Might have been able to reach FRS now :/

Anyway regarding the top up, how come the interest differ by so much when the top up time differs by only 1 month? Say if i were to top up in Feb, or Mar? Interest will be same as top up in Dec?

"Be rewarded for topping up early

Top up early in the year to earn more interest on your CPF savings!

Top up in January each year rather than December, and you could earn 20% more interest on your CPF savings in just 10 years."

 

[tangent314]

Ok Thanks! Will help her do the transfer now, if only i learned about this much sooner (10 yrs ago when they fully paid the HDB.) Might have been able to reach FRS now :/

Transfering OA to SA and topping up SA is something more people should do, but unfortunately the advice often gets drowned out by the #returnourcpf crazies

Anyway regarding the top up, how come the interest differ by so much when the top up time differs by only 1 month? Say if i were to top up in Feb, or Mar? Interest will be same as top up in Dec?

The comparison is done between Jan and Dec of the same year, not the consecutive months. CPF interest is calculated monthly, but credited and compounded annually in December.

 

[henrylbh]

Hello, i have an important question. My mum is now 53 Year old. HDB fully paid for already, should i help her transfer all her OA balance into SA to earn higher interest? Will there be any downside for doing so? Her current OA+SA will not reach FRS by 55, ~80k OA,~40k SA,~50k MA.

Do it now. Transfer all to SA.

Otherwise, comes 55 all her OA will be transferred to SA automatically, like it or not. She only allowed to withdraw 5k at 55.

 

[henrylbh]

was this the balance amount which you transfer to your father's RA?

so they refund back without needing any action on your part?

Yes it's the balance of 161k transferred over a period to his RA. From RA, his monthly payouts came to $71,626.

No action needed. It will be transferred back to Giver's OA within 2 days in my case. Damn fast. Only 'loss' is the interest accrued from the beginning of year to month before death. That interest will go to nominee. The interest gone for good is the interest for the month that money was returned to my OA.

 

[cal3135]

Not too bad, at least close to 1000 /mth payout at 65yo

Ok Thanks! Will help her do the transfer now, if only i learned about this much sooner (10 yrs ago when they fully paid the HDB.) Might have been able to

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[JuniorLion]

Not too bad, at least close to 1000 /mth payout at 65yo

That's why everyone should aim for ERS

 

[madtari]

The illustrated difference is between 11 mths... instead of waiting till 2019 Dec, you should top up in Jan 2019.

Anyway regarding the top up, how come the interest differ by so much when the top up time differs by only 1 month? Say if i were to top up in Feb, or Mar? Interest will be same as top up in Dec?

"Be rewarded for topping up early

Top up early in the year to earn more interest on your CPF savings!

Top up in January each year rather than December, and you could earn 20% more interest on your CPF savings in just 10 years."

 

[BBCWatcher]

Not too bad, at least close to 1000 /mth payout at 65yo ******************

CAUTION: Real lifestyles matter, and inflation is real. That figure is nominal (2019 dollars), meaning it represents a progressively diminishing real living standard during one’s retirement.

As a reasonable forecast, $1,000 today (2019 dollars) probably will only have the purchasing power of $600 (2019 dollars) in 2049. And it could easily be worse than that — that’s just a simple projection based on Singapore’s past actual inflation experience.

You should have a plan to combat inflation in retirement! CPF offers an excellent one: the Escalating Plan. Other plans are possible, but you need a viable plan. This puzzle is probably the most important one to solve in retirement planning.

I very much disagree with the government in how they illustrate payouts, because it’s frankly nonsense unless there’s some incorporation of inflation into illustrations. Nobody actually cares about the number, in reality. They do care very much about the real goods and services they can buy.

 

[madtari]

Sorry if anyone has asked b4... but if i aim for ERS, how long I have to live until what I received will b more than the ERS amt? What happen if I die b4 that? Everything will be gone right?

That's why everyone should aim for ERS

 

[BBCWatcher]

Sorry if anyone has asked b4... but if i aim for ERS, how long I have to live until what I received will b more than the ERS amt?

That seems like a simple question, but the answer is complicated.

I’ll answer it this way, the truth. All CPF LIFE payout plans are actuarially fair, meaning they’re based on life tables and the actual mortality experience of members. And CPF has low overheads and is operated as a not-for-profit insurer. (Negative profit, actually. It’s effectively government subsidized.) So it’s the very best deal you can find in Singapore dollar denominated longevity insurance, more value for money than any private life annuity provider offers. Including all the way up to ERS level (the maximum allowed, and there is a maximum precisely because it is such a good deal for what it is).

If you can predict your lifespan with a relatively high degree of precision, then you probably don’t need longevity insurance. Can you do that?

What happen if I die b4 that? Everything will be gone right?

For you, everything will be gone. You’ll be dead, and your dead body (or ashes) won’t be able to spend any money, at least not on its own. That’s part of what death means. So who cares? You can’t take it with you.

But if you’re asking because you expect to have survivors that you care about, such as a wife, child, grandchild, etc., then I’ll explain how that works.

1. If you die before CPF LIFE payouts start, nothing happens except that your CPF nominated heir receives your full balances, including your Retirement Account balance. (If you like this, it’s another reason to start your CPF LIFE payouts at age 70.)

2. If you die while CPF LIFE payouts are underway, the nominal bequest amount steadily, progressively fades to zero (and the real, inflation-adjusted amount falls even faster because inflation is real). The payout plans vary in how fast they fade to zero in this respect, but none of them guarantee a bequest and all of them are decreasing, every month, once payouts start.

CPF LIFE is NOT well designed as a bequest vehicle. If you try to use CPF LIFE to deliver a bequest, that’s like using a screwdriver to hammer a nail. It can be done, badly, maybe, but it’s the wrong tool for the job. (Within CPF, your MediSave Account is actually the best bequest vehicle if you want one. Just keep your MediSave Account full and don’t touch it, and it ends up as a bequest.) However, CPF LIFE, particularly the Escalating Plan with payouts starting at age 70, is very, very well designed to defend a bequest from your other assets — or, much better yet, lifetime gifts.

 

[cal3135]

At this time, I’m towards FRS & 65 payout...
Cash(ERS-FRS) on hand n take the fruits while I’m still able to eat ...

That's why everyone should aim for ERS

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[JuniorLion]

At this time, I’m towards FRS & 65 payout...
Cash(ERS-FRS) on hand n take the fruits while I’m still able to eat ...

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Enjoy your fruit!

 

[madtari]

Thanks BBC for the detailed explanation! I can't quote you on my app as it exceed 2k char.

The main reason why I'm asking is bcos I'm on pension scheme. And we r given a choice to take lumpsum or monthly payout till death. For my case, pension will start at 62. If I choose monthly payment, I need to survive until 76.5 years old then only it will be more 'worthwhile' as compared to taking lumpsum. But bearing in mind this is not escalating, I should be better off taking lumpsum and parking it somewhere else to earn some interest. If I die anytime while on monthly payment, everything will be gone.

So my guess is CPF LIFE should be something like that, except that the value will be dropping progressively as you mentioned. But then again the rate at which it drops is unknown, so that's y I'm also contemplating if I should go for ERS or should I just get the minimum required...