CPF for retirement planning

[jackieatbtu]

I belong to the camp that views cpf as my bond portfolio to the point I will consider every opportunity to top up.

Cpf is better than a bond in a sense that's always trading at par. Bonds don't always trade above par during a downturn. If the market crashes, there's nothing to stop you from using CPF monies to buy shares.

Then, does that mean you do not use your CPF monies at all for mortgage payments? When you reach 55, what would you do with all the money? Total 100% FRS amount into CPF Life as you have not accumulated enough CPF accrued interest for the pledge?

 

[wts2013]

I belong to the camp that views cpf as my bond portfolio to the point I will consider every opportunity to top up.

Cpf is better than a bond in a sense that's always trading at par. Bonds don't always trade above par during a downturn. If the market crashes, there's nothing to stop you from using CPF monies to buy shares.

Agree with your view.

I belong to the camp who thinks this allocation of bond vs equity is all crap. I already have funds "invested" in various assets such as CPF, whole life or single premium insurance, high interest savings accounts, etc, all potentially earning higher returns than a bond portfolio. If I have spare cash/funds, I will just invest in equities with higher risk higher returns. If u know how to invest intelligently, there is no need for a bond portfolio.

Sorry if your thread is being hijack, shall end here.

 

[raven.tw]

I belong to the camp that views cpf as my bond portfolio to the point I will consider every opportunity to top up.

Cpf is better than a bond in a sense that's always trading at par. Bonds don't always trade above par during a downturn. If the market crashes, there's nothing to stop you from using CPF monies to buy shares.

So am i right in quoting you to say that my logic is not practical, and CPF will be better than a bond component in all aspect?

And if that is the case, pardon me again if i didn't read older posts, but how should i go about using CPF as a bond allocation? Topping up to specific accounts, volunteer contribute (which would automatically contribute specific amount according to CPF allocation rules to all three account)?

 

[highsulphur]

So am i right in quoting you to say that my logic is not practical, and CPF will be better than a bond component in all aspect?

And if that is the case, pardon me again if i didn't read older posts, but how should i go about using CPF as a bond allocation? Topping up to specific accounts, volunteer contribute (which would automatically contribute specific amount according to CPF allocation rules to all three account)?

Forget about topping up first. That's a separate discuss. You already contribute monthly to cpf.

How I see it is say if I have 300K cpf funds and 700K cash and I want to achieve a 30:70 bond/equity portfolio, I would consider cpf to be my bond and jus allocate the entire 700K to equities. Obviously your cpf may increase over time from interest and SA contribution, and so you will have to increase your equity to maintain the balance. Or do nothing and your balance will slowly skew towards bonds (which is probably ok as one gets older)

Voluntarily topping up cpf depends further on how your view cpf as a long investment and your liquidity situation.

 

[akwl88]

SINGAPORE (May 13): The four ETFs listed on Singapore Exchange included under the CP Investment Scheme - the ABF Singapore Bond Index Fund, SPDR® Gold Shares, Nikko AM Singapore STI ETF and SPDR® Straits Times Index ETF - have averaged a 3.3% total return this year, according to Singapore Exchange in a market report.

These four ETFs have also been among the 10 most active ETFs in the month to date, with SPDR® Gold Shares, ABF Singapore Bond Index ETF and SPDR® Straits Times Index ETF the most actively traded three ETFs.

The SPDR® Straits Times Index ETF and Nikko AM Singapore STI ETF have averaged a 3.7% decline in total return in 2016. In terms of year-to-date total returns the SPDR® Straits Times Index ETF has declined 3.6% and the Nikko AM Singapore STI ETF has declined 3.9%, SGX says.

In addition, the bourse operator notes that the 24 stocks within the STI that have recently reported an averaged 0.63% upside surprise in earnings and a 5.23% upside surprise in sales. This compares with the 608 stocks within the MSCI AC Asia Pacific Index that reported a 14.96% downside surprise in earnings while sales came in 0.01% below expectations.

 

[athulican]

My strategy is 1) take out as much as i can take at 55, 2) leave as little as i can leave for 65. Invest and beat CPF.

 

[kzonexx]

My strategy is 1) take out as much as i can take at 55, 2) leave as little as i can leave for 65. Invest and beat CPF.

at the age of 55, ur priority would probably be to preserve its value rather than going for higher risk higher return investments?

 

[athulican]

at the age of 55, ur priority would probably be to preserve its value rather than going for higher risk higher return investments?

That's why I said invest, not trade.

 

[henrylbh]

My strategy is 1) take out as much as i can take at 55, 2) leave as little as i can leave for 65. Invest and beat CPF.

I only invest what I can't put into CPF

 

[kzonexx]

That's why I said invest, not trade.

if u're 55 now, wat would u invest in?

I would rather do the opposite, invest as much as possible now so can time exit nearer to 55 then put as much to CPF SA/RA at the age or nearing 55.

 

[jackieatbtu]

if u're 55 now, wat would u invest in?

I would rather do the opposite, invest as much as possible now so can time exit nearer to 55 then put as much to CPF SA/RA at the age or nearing 55.

Interested to know that too. Does anybody know what will happen to RA account balance that is not earmarked for CPF Life? Can we slowly draw the money out instead of taking out one big lump at 55?

 

[henrylbh]

Interested to know that too. Does anybody know what will happen to RA account balance that is not earmarked for CPF Life? Can we slowly draw the money out instead of taking out one big lump at 55?

No such thing as RA balance not earmarked for CPF Life. At 55, money from SA and OA will be transferred to RA to meet the min sum. Whatever is left in SA and OA left after the transfer, you can do what you like. Only note the default for withdrawal.

 

[jackieatbtu]

No such thing as RA balance not earmarked for CPF Life. At 55, money from SA and OA will be transferred to RA to meet the min sum. Whatever is left in SA and OA left after the transfer, you can do what you like. Only note the default for withdrawal.

What is default for withdrawal?

So, we could do this: Transfer OA to SA up to FRS before 55, every year according to increasing FRS. At 55, pledge HDB and let CPF take BRS to RA (even though OA + SA > FRS). Leftover monies all left inside OA and SA to accumulate and can withdraw any time.

By the way, does CPF take money from SA first or OA first when creating RA?

 

[wts2013]

Interested to know that too. Does anybody know what will happen to RA account balance that is not earmarked for CPF Life? Can we slowly draw the money out instead of taking out one big lump at 55?

At 55, if SA dun have FRS, money from OA will be transferred to SA to meet FRS.

FRS in SA will then be transferred to RA. If u pledge property, then BRS will be transferred to RA.

If u meet FRS/BRS, all remaining balances in OA/SA can be withdrawn anytime, SA first then OA.

At 65, u can withdraw up to 20% of RA (see details at CPF website for how this is computed). Then u choose which CPF Life Plan u want to join, then the remaining balances in RA will be transferred to CPF Life. U can start payout at 65 or defer to 70.

 

[tiny]

Do note that FRS is being revised upwards on a yearly basis. So don't use current FRS to project your future amount at 55 years old. It will not be accurate.

Rough Ballpark is to use a 3-4% annual increment.

 

[Treewine23]

No such thing as RA balance not earmarked for CPF Life. At 55, money from SA and OA will be transferred to RA to meet the min sum. Whatever is left in SA and OA left after the transfer, you can do what you like. Only note the default for withdrawal.

So will the remaining cpf money left after the transfer still earns 4% interest?

 

[elnewbie]

Yes for SA. 2.5% for OA.

So will the remaining cpf money left after the transfer still earns 4% interest?

 

[Squaredot]

Seriously, a simple Google can find the answer. 37,740.

https://www.cpf.gov.sg/employers//e...tary-contributions-for-your-employees#Item671

Oh max 37,740 is 2220*17 months. Hit liao. I tot something else I duno mah.
Why the link is employers VC for your employees? Not VC by ourselves (employees)

 

[Squaredot]

At 55, if SA dun have FRS, money from OA will be transferred to SA to meet FRS.

FRS in SA will then be transferred to RA. If u pledge property, then BRS will be transferred to RA.

If u meet FRS/BRS, all remaining balances in OA/SA can be withdrawn anytime, SA first then OA.

At 65, u can withdraw up to 20% of RA (see details at CPF website for how this is computed). Then u choose which CPF Life Plan u want to join, then the remaining balances in RA will be transferred to CPF Life. U can start payout at 65 or defer to 70.

Good summary.
Near 55 then read again. I cannot remember well

 

[henrylbh]

Oh max 37,740 is 2220*17 months. Hit liao. I tot something else I duno mah.
Why the link is employers VC for your employees? Not VC by ourselves (employees)

I think it's not so simple as 2220*17 months.

If you get 5k pm x 12 and 8 month bonus you will still not reach the max for the year.

For those in age group 55 to 60, even 12 months' bonus will not reach the max.