CPF Easy Info Thread. :)

[Sourbear]

Does anyone know if a DBS SRS account can be linked to a SCB trading account?

If not, which is the lowest cost brokerage we can use to invest SRS funds?

 

[highsulphur]

Does anyone know if a DBS SRS account can be linked to a SCB trading account?

If not, which is the lowest cost brokerage we can use to invest SRS funds?

FSMOne is cheapest for me

 

[BBCWatcher]

Using a 4% SWR, the portfolio replacement amount is $600k per $2k income lost, that is a large gap to fill in order to keep the same income level in the event that only one spouse survives.

Yes, insert my usual plea for a CPF LIFE “Partner Plan” (an escalating joint/contingent life annuity) here.

 

[celtosaxon]

Yes, insert my usual plea for a CPF LIFE “Partner Plan” (an escalating joint/contingent life annuity) here.

Yes, it will be interesting to see how CPFL evolves over time. Seems like joint survivorship should at least be an option, and I dare say that inflation protection should be standard, not optional, given the intents and purposes. It has always struck me as odd that you can opt out, but then having a flat 2% escalating instead of actual inflation is also a bit odd. I guess they want absolute predictability on that aspect, or maybe it’s so that standard and escalating can be actuarially identical, no gaming it?

 

[DriftKing]

If considering tax relief on VC , is it good to top up MA first? (Can I also top up wife's MA for tax relief?)

So BHS applies to everyone? i.e 63,000 is the max you can see in your MA?

 

[reddevil0728]

If considering tax relief on VC , is it good to top up MA first? (Can I also top up wife's MA for tax relief?)

So BHS applies to everyone? i.e 63,000 is the max you can see in your MA?

In the early days of your career, when your CPF balance and salary being lower, top-up MA instead of 3 accounts VC might be more preferred (in addition to SA). But if you are in latter career when your cpf balance is higher and salary is higher, your room for MA top-up may not be there, so you need to go check if you still got room

Your wife can top-up her own MA and get tax relief for herself. you cannot get tax relief for yourself by topping up for her. that's only possible for SA, but then even with SA, got certain criteria, like your wife cannot earn more than x amount per year.

BHS applies to everyone yes. but for those turning 65, it will be fixed for life for their cohort, so may not be 63k depending on when they turn 65.

 

[DriftKing]

In the early days of your career, when your CPF balance and salary being lower, top-up MA instead of 3 accounts VC might be more preferred (in addition to SA). But if you are in latter career when your cpf balance is higher and salary is higher, your room for MA top-up may not be there, so you need to go check if you still got room

Your wife can top-up her own MA and get tax relief for herself. you cannot get tax relief for yourself by topping up for her. that's only possible for SA, but then even with SA, got certain criteria, like your wife cannot earn more than x amount per year.

BHS applies to everyone yes. but for those turning 65, it will be fixed for life for their cohort, so may not be 63k depending on when they turn 65.

Thanks!

Halfway mark to current BHS cap, max CPF contribution (no VC), excluding interest maybe will take another 4+ years to reach cap. So maybe in this case should just leave it be unless expect to utilise some MA in the next 4-5 years?

 

[reddevil0728]

Thanks!

Halfway mark to current BHS cap, max CPF contribution (no VC), excluding interest maybe will take another 4+ years to reach cap. So maybe in this case should just leave it be unless expect to utilise some MA in the next 4-5 years?

It depends on what your objective is.

 

[dork32]

In the early days of your career, when your CPF balance and salary being lower, top-up MA instead of 3 accounts VC might be more preferred (in addition to SA). But if you are in latter career when your cpf balance is higher and salary is higher, your room for MA top-up may not be there, so you need to go check if you still got room

my ma hit bhs when i was 33 years old (or somewhere around there)

my sa hit frs at 45 years old.

lets say i am 70k away from frs and 20k away from bhs. i have 10k to top up every year for tax relief.

i can top choose to top up 7k sa and 3k ma
in this way, i can continue to topup 10k a year for 7 years.
after that i can only top up 7k sa every year

or i can choose to top up my ma first, all my 10k goes into ma
in this way, i can top up 10k for 2years.
it will be down to 7k per year after that.

hence sa should be first

 

[Okenba]

Once you earn about 6k/mth, you would prob hit the max CPF annual limit with a decent bonus. At that point, VC to MA is no longer a realistic option.

In that sense, VC to MA should take place when one is younger and not yet hitting the CPF annual limit.

 

[BBCWatcher]

my ma hit bhs when i was 33 years old (or somewhere around there)

my sa hit frs at 45 years old.

lets say i am 70k away from frs and 20k away from bhs. i have 10k to top up every year for tax relief.

i can top choose to top up 7k sa and 3k ma
in this way, i can continue to topup 10k a year for 7 years.
after that i can only top up 7k sa every year

or i can choose to top up my ma first, all my 10k goes into ma
in this way, i can top up 10k for 2years.
it will be down to 7k per year after that.

hence sa should be first

The game has changed/is changing, though, in at least these respects:

1. MediShield Life and Integrated Shield premiums are higher and climbing;

2. Medical costs are rising rather quickly, with more opportunities (or requirements) to spend more from MediSave;

3. The Basic Healthcare Sum (BHS) is rising faster than the BRS/FRS/ERS;

4. CareShield Life premiums are compulsory from age 30 for younger cohorts;

5. Since compensation is generally rising, it's getting tougher sooner to squeeze a MediSave voluntary contribution within the CPF Annual Limit;

6. Some people work for Additional MediSave Contribution Scheme (AMCS) employers, which also effectively limits MediSave top up opportunities.

"It's complicated." My fundamental view is that the tax relief is nice, but it shouldn't be the only consideration. I do see some value in MediSave's relative liquidity for a typical early to mid working career individual. So I like leaning into MediSave at the beginning, to a degree.

 

[Value.Matrix]

Once you earn about 6k/mth, you would prob hit the max CPF annual limit with a decent bonus. At that point, VC to MA is no longer a realistic option.

In that sense, VC to MA should take place when one is younger and not yet hitting the CPF annual limit.

But when you are young, ideally to invest more aggressively than to save on tax, even with 22% tax rate.

The difference between 22% and 4% is 18%.

If you are able to invest to gain 7% returns, and 4% being the standard, the difference is 3%.

Just by simple maths, that 18% reduces by 3% per year, resulting in a 6 years whereby the opportunity cost is better to just invest than for tax savings purely.

Of course, if the amount is a "bond" type subsitute instead of the full equities investment (which meets your risk appetite and asset allocation), then it may make sense.

SRS makes more sense because there is less restriction than CPF.

 

[reddevil0728]

Once you earn about 6k/mth, you would prob hit the max CPF annual limit with a decent bonus. At that point, VC to MA is no longer a realistic option.

In that sense, VC to MA should take place when one is younger and not yet hitting the CPF annual limit.

“Decent” bonus is like 5 months bonus with 6k salary haha

 

[Okenba]

But when you are young, ideally to invest more aggressively than to save on tax, even with 22% tax rate.

The difference between 22% and 4% is 18%.

If you are able to invest to gain 7% returns, and 4% being the standard, the difference is 3%.

Just by simple maths, that 18% reduces by 3% per year, resulting in a 6 years whereby the opportunity cost is better to just invest than for tax savings purely.

Of course, if the amount is a "bond" type subsitute instead of the full equities investment (which meets your risk appetite and asset allocation), then it may make sense.

SRS makes more sense because there is less restriction than CPF.

I don't disagree. But I have found that there are people who are willing to put money into CPF but not so willing to invest on their own. Others may appreciate the relative safety of money in CPF before they risk their assets on the market.

In any case, the question was about VC to MA or RSTU to SA first. Between the two, I think it makes more sense to VC to MA first.

 

[Kaypohji]

How does medisave has any liquidity ?

The game has changed/is changing, though, in at least these respects:

1. MediShield Life and Integrated Shield premiums are higher and climbing;

2. Medical costs are rising rather quickly, with more opportunities (or requirements) to spend more from MediSave;

3. The Basic Healthcare Sum (BHS) is rising faster than the BRS/FRS/ERS;

4. CareShield Life premiums are compulsory from age 30 for younger cohorts;

5. Since compensation is generally rising, it's getting tougher sooner to squeeze a MediSave voluntary contribution within the CPF Annual Limit;

6. Some people work for Additional MediSave Contribution Scheme (AMCS) employers, which also effectively limits MediSave top up opportunities.

"It's complicated." My fundamental view is that the tax relief is nice, but it shouldn't be the only consideration. I do see some value in MediSave's relative liquidity for a typical early to mid working career individual. So I like leaning into MediSave at the beginning, to a degree.

 

[Arcticangel]

How does medisave has any liquidity ?

Medisave can be used for medishield payments or approved medical or hospital payments. You cannot use that for SA

 

[Kaypohji]

I think should just top up MA. Once MA full any VC goes to SA+ OA only

Once you earn about 6k/mth, you would prob hit the max CPF annual limit with a decent bonus. At that point, VC to MA is no longer a realistic option.

In that sense, VC to MA should take place when one is younger and not yet hitting the CPF annual limit.

 

[DriftKing]

Actually what are the situation you'll end up utilising the full BHS? From what I read touch wood anything happen, it seems every category of payout has a cap. But of course to have BHS than not is always a better choice.

 

[reddevil0728]

Actually what are the situation you'll end up utilising the full BHS? From what I read touch wood anything happen, it seems every category of payout has a cap. But of course to have BHS than not is always a better choice.

When you are chronically sick.

 

[IronMan123]

Anyone here top up SA to get tax relief?