CPF Accounts Value thread

[SkyNinja]

If you say as long as don't sell the house, the accrued interest is not a problem. May I clarify what happens after the house owner passed away? The accrued interests also get write off?

 

[dork32]

Thanks for the explanation

Another question, some people advice paying off housing loan fully ASAP (wipe out as much of our OA as possible), but some people say should go for the longest tenure loan. Which one is a better option if we want to make good use of the CPF system?

i will go longest tenure, min OA downpayment.

if use hdb loan, the difference is only 0.1%. it is not going to hurt me too much. there is an insurance in hdb loan. you sway sway die after one year. your wife get the whole hdb without having to pay anymore installments.

if use bank loan, lock it in for 3 years. it is abt 2% now. your oa earns 0.5% more than bank loan. keep the money in the oa. at the end of 3 years, if bank interest rates rises above 2.5%, do partial repayment with oa. if bank interest remains low, continue to drag the loan.

 

[dork32]

BUT lets say u finance your house with just cash. You buy at 300k and sell at 350k. U get a profit of 50k PLUS your cpf is in ur account which generated another 20k (this the interest the govt paid u that we call accrued interest if u had used cpf to finance your house). So in my opinion u have made 70k (50+20k cpf interest).

this does not sound correct

case 1
before you buy house, you have 300k cpf, 0 cash
after you sell house, you have 320k cpf, 30k cash
you made 50k over 300k

case 2
before you buy house, you have 300k cash, 300k cpf
after you sell house, you have 350k cash, 320k cpf
you made 70k over 600k.

the principal is different for the two cases. with a larger principal, it is natural that the absolute profit is larger.

 

[Dividends Warrior]

i will go longest tenure, min OA downpayment.

if use hdb loan, the difference is only 0.1%. it is not going to hurt me too much. there is an insurance in hdb loan. you sway sway die after one year. your wife get the whole hdb without having to pay anymore installments.

if use bank loan, lock it in for 3 years. it is abt 2% now. your oa earns 0.5% more than bank loan. keep the money in the oa. at the end of 3 years, if bank interest rates rises above 2.5%, do partial repayment with oa. if bank interest remains low, continue to drag the loan.

I should be going for HDB loan.
Considering whether to transfer some funds from OA to SA.

 

[madtari]

Your example doesn't sounds right too. Let's assume same starting point (eg 300k cpf 300k cash), and assume house was kept for 10yrs, buy price = 300k, sell price = 400k. Accured interest exclude compounding would be 2.5% x 300k x 10 = 75k. Let's also assume cash is earning insignificant interest at 0.05% to showcase the significance of accured interest for those who do not invest with their cash.

case 1
After you buy house, you have 300k cpf, 0 cash
after you sell house, you have 375k cpf, 400k cash

case 2
After you buy house, you have 0 cpf, 300k cash
after you sell house, you have 375k cpf, 325k cash

This example showcase the significance of accured interest. In case 1, after selling house u have a total of 775k for ur next house. For case 2, u can only afford a 700k house. The difference is bcos for a good 10yrs, govt is paying u the interest for the amt u have inside ur cpf. If u have used all that for housing, not only govt doesn't pay u interest, u need to cough back the accured interest after the sales of ur house.

Choose to use cpf for ur house only if u r invest-savvy, can get better returns from ur investment than cpf, and if u don't think u will be selling ur hdb.

Correct me if I'm wrong?

this does not sound correct

case 1
before you buy house, you have 300k cpf, 0 cash
after you sell house, you have 320k cpf, 30k cash
you made 50k over 300k

case 2
before you buy house, you have 300k cash, 300k cpf
after you sell house, you have 350k cash, 320k cpf
you made 70k over 600k.

the principal is different for the two cases. with a larger principal, it is natural that the absolute profit is larger.

 

[hwmook]

Your example doesn't sounds right too. Let's assume same starting point (eg 300k cpf 300k cash), and assume house was kept for 10yrs, buy price = 300k, sell price = 400k. Accured interest exclude compounding would be 2.5% x 300k x 10 = 75k. Let's also assume cash is earning insignificant interest at 0.05% to showcase the significance of accured interest for those who do not invest with their cash.

case 1
After you buy house, you have 300k cpf, 0 cash
after you sell house, you have 375k cpf, 400k cash

case 2
After you buy house, you have 0 cpf, 300k cash
after you sell house, you have 375k cpf, 325k cash

This example showcase the significance of accured interest. In case 1, after selling house u have a total of 775k for ur next house. For case 2, u can only afford a 700k house. The difference is bcos for a good 10yrs, govt is paying u the interest for the amt u have inside ur cpf. If u have used all that for housing, not only govt doesn't pay u interest, u need to cough back the accured interest after the sales of ur house.

Choose to use cpf for ur house only if u r invest-savvy, can get better returns from ur investment than cpf, and if u don't think u will be selling ur hdb.

Correct me if I'm wrong?

300k cash 10 years earn nothing. Sound about right for all those silly people hoarding cash in their bank accounts.

 

[hwmook]

I should be going for HDB loan.
Considering whether to transfer some funds from OA to SA.

Take HDB loan, go for longest tenure. Use CPFIS to invest OA for maximum gains.

 

[peacefulday]

I should be going for HDB loan.
Considering whether to transfer some funds from OA to SA.

Take HDB loan, go for longest tenure. Use CPFIS to invest OA for maximum gains.

go for longest tenure HDB loan, but use OA clear up asap if possible, then make the last laugh into OA to SA all the way. Investment wise, I preferred use hard cash and opt for 2nd time bto after 1st bto MOP will likely boost your wealth if you can make it there

 

[henrylbh]

this one could be seow.

it is depends on whether you have withdrawn from your cpf for your previous properties.

if you have not, paying by cash may not be seow. it really depends if you are able to get better returns on your cash. so people just dont want to take risk.

but if you still owe cpf money, and you are paying by cash, yes, you are seow.
eg
you withdrew 200k + accrued interest from cpf.
you have 440k cash
you buy hdb for 440k.

you can use your cash to pay up everything such that you do not have anything left and still owe cpf 200k
or
you can take a loan of 200k, and pay the rest of the 240k with cash.
your remaining cash is paid back to cpf.
which is better?

then again, this is a hdb. so you would not have any property other than this. you would not have withdrawn anything. so you are not seow.

I have used CPF for housing. Recently refunded $144,639.36 to CPF including accrued interest after selling off my property.

For my current resale flat, I am using full cash, leaving CPF untouched cause I dunno what to do with the cash

Accumulated interest earned on CPF over the years came to $381,050.53 to end 2018 excluding dividends on CPFIA.

 

[dork32]

Your example doesn't sounds right too. Let's assume same starting point (eg 300k cpf 300k cash), and assume house was kept for 10yrs, buy price = 300k, sell price = 400k. Accured interest exclude compounding would be 2.5% x 300k x 10 = 75k. Let's also assume cash is earning insignificant interest at 0.05% to showcase the significance of accured interest for those who do not invest with their cash.

case 1
After you buy house, you have 300k cpf, 0 cash
after you sell house, you have 375k cpf, 400k cash

case 2
After you buy house, you have 0 cpf, 300k cash
after you sell house, you have 375k cpf, 325k cash

This example showcase the significance of accured interest. In case 1, after selling house u have a total of 775k for ur next house. For case 2, u can only afford a 700k house. The difference is bcos for a good 10yrs, govt is paying u the interest for the amt u have inside ur cpf. If u have used all that for housing, not only govt doesn't pay u interest, u need to cough back the accured interest after the sales of ur house.

Choose to use cpf for ur house only if u r invest-savvy, can get better returns from ur investment than cpf, and if u don't think u will be selling ur hdb.

Correct me if I'm wrong?

you are not right because, you are not using his numbers.

he already say accrued interest is 20k, so why do you want to calculate his interest.

he did not mention 10 years so why are making this assumption.

he already mention that he sold his house of 350k. why are you saying that he sold it for 400k.

he mentioned that he would have made a profit of 70k and not 50k. why are you replacing it with your own profit.

you have switched his numbers all over the place. it has become your own calculations, not his.

 

[madtari]

THEMIKOS was just stating arbitrary figures to explain why he thinks the incurred interest (from using CPF to by house) equates to 'loss of interest', and that you will stand to profit more if you use cash (due to govt paying you interest in ur CPF simply).

You were the one who started drifting off course by stating Case 1 & Case 2 with different principal. And since you think you are right, where do you infer from his post that he was comparing between different scenarios with different principal? I simply used my own sets of arbitrary figures to further reinforce his views on the incurred interest resulting in a loss of interest by correcting on your flawed assumption of comparing 2 cases with different principal.

Although I used different figures, but so what? As long as it illustrate the point fairly and correctly, anything goes. This is not an exam. There's no model answer, it is not the case where there is only 1 right answer.

you are not right because, you are not using his numbers.

he already say accrued interest is 20k, so why do you want to calculate his interest.

he did not mention 10 years so why are making this assumption.

he already mention that he sold his house of 350k. why are you saying that he sold it for 400k.

he mentioned that he would have made a profit of 70k and not 50k. why are you replacing it with your own profit.

you have switched his numbers all over the place. it has become your own calculations, not his.

this does not sound correct

case 1
before you buy house, you have 300k cpf, 0 cash
after you sell house, you have 320k cpf, 30k cash
you made 50k over 300k

case 2
before you buy house, you have 300k cash, 300k cpf
after you sell house, you have 350k cash, 320k cpf
you made 70k over 600k.

the principal is different for the two cases. with a larger principal, it is natural that the absolute profit is larger.

I dont think its a bad thing. Its ur own money anyway.

Lets say if u buy a property worth 300k and use cpf to pay, when u sell, u needa put back into ur own cpf the accrued interest (pay ur ownself the interest since govt dont pay u).

Scenario 1: Lets say u sell your house for 350k and accrued interest is 20k, u refund into ur cpf 320k (lets negate all the loans and interest etc for this maths). U get cash profit of 30k.

Scenario 2: u sell your house for 320k. 320k goes into your CPF and u get $0 cash proceeds.

Scenario 3: you sell your house for 270k. 270k goes into your cpf (you lose 30k out of the 300k initial house price.) you also lose out on the interest the govt would have paid u which is the "accrued interest" which is 20k.

Now some might argue that in scenario 3 you lose only 30k and not 50k so depends on how u see it.

BUT lets say u finance your house with just cash. You buy at 300k and sell at 350k. U get a profit of 50k PLUS your cpf is in ur account which generated another 20k (this the interest the govt paid u that we call accrued interest if u had used cpf to finance your house). So in my opinion u have made 70k (50+20k cpf interest).

Hopefully u understand better

 

[hwmook]

go for longest tenure HDB loan, but use OA clear up asap if possible, then make the last laugh into OA to SA all the way. Investment wise, I preferred use hard cash and opt for 2nd time bto after 1st bto MOP will likely boost your wealth if you can make it there

Using cash and CPF OA for investment are not mutually exclusive. You can use both to gain more.

 

[blue_line]

I should be going for HDB loan.
Considering whether to transfer some funds from OA to SA.

My current plan is to max out my SA for the 4% interest.

Empty remaining OA to pay for property (top up cash if needed).

Get max loan tenure.

Use remaining cash to invest which should give me >2.5% interest in the long run.

Use CPF to pay monthly loan repayment.

Considerations:

4-5% "risk free" SA interest is attractive and I would want to maximise it.

Use OA to fund property so that I can free up my cash to invest outside CPF due to lower transaction costs and more liquidity.

Accrued CPF interest is payable to myself. I'm not "losing" it.

Comments?

 

[iMac]

Take HDB loan, go for longest tenure. Use CPFIS to invest OA for maximum gains.

LOL....yes...invest in those super high return product like BITCOINS......everyone sure HUAT big time....

 

[luei74]

LOL....yes...invest in those super high return product like BITCOINS......everyone sure HUAT big time....

BITCOWS just gotten approval for CPFIS?? THANKS for inform!! Tonight ALL IN!!!

Sent from Xiaomi MI MAX 3 using GAGT

 

[iMac]

BITCOWS just gotten approval for CPFIS?? THANKS for inform!! Tonight ALL IN!!!

Sent from Xiaomi MI MAX 3 using GAGT

If can use CPF for Bitcoin investment, I think most of us here can really really retire early.

 

[dork32]

Choose to use cpf for ur house only if u r invest-savvy, can get better returns from ur investment than cpf, and if u don't think u will be selling ur hdb.

Correct me if I'm wrong?

this statement is very wrong. cpf can only be used for your home. cash can be used to buy car, go europe, go casino, go plastic surgery....

it should be choose to use cash only have you have set aside enough cash to buy car, go europe, go casino, go plastic surgery.

 

[dork32]

THEMIKOS was just stating arbitrary figures to explain why he thinks the incurred interest (from using CPF to by house) equates to 'loss of interest', and that you will stand to profit more if you use cash (due to govt paying you interest in ur CPF simply).

You were the one who started drifting off course by stating Case 1 & Case 2 with different principal. And since you think you are right, where do you infer from his post that he was comparing between different scenarios with different principal? I simply used my own sets of arbitrary figures to further reinforce his views on the incurred interest resulting in a loss of interest by correcting on your flawed assumption of comparing 2 cases with different principal.

Although I used different figures, but so what? As long as it illustrate the point fairly and correctly, anything goes. This is not an exam. There's no model answer, it is not the case where there is only 1 right answer.

i did not drift

in my case 1 and his scenario 1
there is 300k, 350k, 320k, 20k
these are the exact numbers he used. there is no drift.
though he did not explicitly state the principal is 300k, he is going to refund 320k into his cpf, 300k principal, 20k accrued interest.
he did not state that he has any case in this scenario.

in my case 2 and his scenario 3
there is 300k, 350k and 20k again.
themiokos made oa profit of 50k by selling his home for 350k. he has to have a principal of 300k cash to make this profit.
he made another profit of 20k by collecting interest from cpf. he has to have a principal of 300k in the cpf in his cpf to earn this interest.

so my assumption of different principal is wrong?

 

[peacefulday]

Hope you know what you are talking. Anyway, your cpf profit will still lock in till 55.

If can use CPF for Bitcoin investment, I think most of us here can really really retire early.

 

[LexusIS]

If can use CPF for Bitcoin investment, I think most of us here can really really retire early.

Errrrr retire to heaven Har, cause puke blood Everyday ...... bitcoin value drop and drop after almost hitting us$20k to us$4k now....