CPF hack #11?

[mummy1234]

To me, hack #11, is using CPF to buy freehold private property for investment ie rental and capital appreciation.

 

[henrylbh]

That's not a CPF hack. Most know but don't have the means for a second property especially now with ABSD that makes it less attractive.

Already many are complaining the cost of their primary residence. So where got enough for another one?

 

[mummy1234]

That's not a CPF hack. Most know but don't have the means for a second property especially now with ABSD that makes it less attractive.

Already many are complaining the cost of their primary residence. So where got enough for another one?

That is where good debt comes in. But true that ABSD is a dampener.

I spent only S$50k with another S$50k from inheritance and S$150k from hubby to buy my terrace which has appreciated from S$1.1 mil to S$2 mil then now S$1.64 mil trending upwards slowly after these few years of decline. Leverage is great. If I can, I would like to buy a bigger landed property in a better location. My agent keeps asking me to sell at S$1.7 mil.

 

[edwinttt1978]

That is where good debt comes in. But true that ABSD is a dampener.

I spent only S$50k with another S$50k from inheritance and S$150k from hubby to buy my terrace which has appreciated from S$1.1 mil to S$2 mil then now S$1.64 mil trending upwards slowly after these few years of decline. Leverage is great. If I can, I would like to buy a bigger landed property in a better location. My agent keeps asking me to sell at S$1.7 mil.

I think Mummy can be Wonder Woman!

 

[mummy1234]

I think Mummy can be Wonder Woman!

LOL..... property investment in landscarce Sg with projected increased population should be a safe bet.... that is why need so many cooling measures....
I dunno about Ageing HDB but freehold private property should be good for capital appreciation or at least rental.
Latest news says HDB transaction vol and prices down but private up. SRX just increased my properties values too.

 

[a4973]

I done it in 6 weeks. No money lost in the process. Still gain some in the process.

did you mean you did the use SA to buy some safe product just before 55 then use OA to create RA then dispose the product & funds returned to SA to earn 4%?

 

[a4973]

The idea is: 3 months before u turn 55, you invest your SA balance in a ". At age 55, cpf will then take money from your OA to form the RA account balance.

The hack is basically to fund the RA using funds from OA instead of SA. Then once the RA is formed, liquidate the investment and the proceeds then go back to SA. Its basically to extract an additional 1.5% interest out of your OA balance.

hi elnewbie
i know of someone wishes to try this hack.
his 55th is in dec 2019 is it too early to start looking at this?
can give some ideas of "low risk fund" & quote sources please

 

[a4973]

Further to this Hack 11 theory
i just read at http://www.sgs.gov.sg/Individual-Investors/Bonds-and-Treasury-Bills/FAQs.aspx

FAQ 14. Can My CPF Funds Be Used To Buy SGS Bonds/T-bills?
Answer : Under the CPF Investment Scheme (CPF-IS), you can use the full balance in your Ordinary and Special Account savings to buy SGS Bonds/T-bills. Applications using CPF funds have to be made in person at applicable bank branches. For more information about CPF-IS rules, go to http://mycpf.cpf.gov.sg/Members/home.htm.

then further below

FAQ 20. Can I Sell My SGS Bonds/T-bills Before Maturity?
Answer : Yes. From 8 July 2011, you can sell SGS bonds (bought either with cash or CPFIS-OA funds) on the Singapore Exchange (SGX). Please ensure your holdings are first custodised with CDP before transacting on SGX. T-bills can be sold over the counter with any Primary or Secondary Dealer. Prices may change from day to day according to market conditions, and it is important to note that you may not be able to sell your SGS for the same price that you paid for them.

strangely the answer to FAQ 20 has omitted mention of CPFIS-SA funds, only mentioning cash or CPFIS-OA funds.
so what happens to SGS Bonds/T-bills bought with CPFIS-SA funds?

 

[RoLanTo]

NIKKO AM SHENTON SHORTTERM BOND(S$)

LIONGLOBAL SPORE FIXED INC-A

above are examples of fund that can use cpf-sa to buy.
choose 1 that is lowest risk, lose the least amount of money within days..

if your SA got 171k now, u can buy 131k worth of investment @ 54yo11m.
at 55yo, RA created and got funded from 40k(sa) and 131k(oa) to make up FRS.
55yo1m, sell investment, 131k refunded back into sa

so u will have 131k sa, 171k ra, xxx oa
every year, u can withdraw interest(4%) earned on SA like atm.
above hack pre-requsite, u have enough OA to cover the balance

if u have been servicing house loan from cash or high income earner, shouldnt be a problem

 

[a4973]

NIKKO AM SHENTON SHORTTERM BOND(S$)

LIONGLOBAL SPORE FIXED INC-A

above are examples of fund that can use cpf-sa to buy.
choose 1 that is lowest risk, lose the least amount of money within days..

if your SA got 171k now, u can buy 131k worth of investment @ 54yo11m.
at 55yo, RA created and got funded from 40k(sa) and 131k(oa) to make up FRS.
55yo1m, sell investment, 131k refunded back into sa

so u will have 131k sa, 171k ra, xxx oa
every year, u can withdraw interest(4%) earned on SA like atm.
above hack pre-requsite, u have enough OA to cover the balance

if u have been servicing house loan from cash or high income earner, shouldnt be a problem

going by your example, what if

cohort FRS = $176k in 2019
OA at 54y11m = $120k
SA at 54y11m = $185k
MA at 54y11m = $xxxK (not relevant i think)
can you show how it would be?

 

[kehyi4]

going by your example, what if

cohort FRS = $176k in 2019
OA at 54y11m = $120k
SA at 54y11m = $185k
MA at 54y11m = $xxxK (not relevant i think)
can you show how it would be?

hmm, so you want someone to work out the sums for you? sure, i'll do it:

Nov 2019
Action: Use CPFIS-SA to buy 145k worth of Nikko AM Shenton Short Term Bond Fund (or any fund you like really)
Result:
OA = 120k
SA = 40k
Fund = 145k

Dec 2019
Action: RA is created
Result:
OA = 0
SA = 0
RA = 160k
Fund = 145k

Jan 2020
Action: Sell the whatever fund, get back 145k (more or less) in SA
Result:
OA = 0
SA = 145k
RA = 160k
Fund = 0

this should be what it looks like. I'm open to corrections if i'm wrong though...

 

[a4973]

hmm, so you want someone to work out the sums for you? sure, i'll do it:

Nov 2019
Action: Use CPFIS-SA to buy 145k worth of Nikko AM Shenton Short Term Bond Fund (or any fund you like really)
Result:
OA = 120k
SA = 40k
Fund = 145k

Dec 2019
Action: RA is created
Result:
OA = 0
SA = 0
RA = 160k
Fund = 145k

Jan 2020
Action: Sell the whatever fund, get back 145k (more or less) in SA
Result:
OA = 0
SA = 145k
RA = 160k
Fund = 0

this should be what it looks like. I'm open to corrections if i'm wrong though...

hi kehyi4
thanks for the illustration.
actually what threw me off was how RA would be created if OA + SA (after buying into a fund) is less than $176k which is the FRS for 55 in 2019
so the the hard limit for CPFIS SA withdrawal for investment is must leave 40K in SA & that's it & RA can be created from OA & bal of SA though less than cohort's FRS?

 

[oceanicmanta]

what happens if dont do the hack ?

Jan 2020
OA = 120k
SA = 9k
RA = 176k

Correct ?

 

[henrylbh]

Sad to say the hack of using my OA to earn no less than 4% have ended. My OA was returned within 2 days!!! With no interest from Jan to date of refund. But I am 111k richer.

 

[zuppeur]

Sad to say the hack of using my OA to earn no less than 4% have ended. My OA was returned within 2 days!!! With no interest from Jan to date of refund. But I am 111k richer.

Pls elaborate? Does it mean the SA money you park with an instrument.when you sell,it goes back to yr OA?

 

[RoLanTo]

hi kehyi4
thanks for the illustration.
actually what threw me off was how RA would be created if OA + SA (after buying into a fund) is less than $176k which is the FRS for 55 in 2019
so the the hard limit for CPFIS SA withdrawal for investment is must leave 40K in SA & that's it & RA can be created from OA & bal of SA though less than cohort's FRS?

if you didnt meet FRS after all these actions.. it just mean u cant do atm withdrawal, the atm withdrawal needs the person to meet FRS requirement..

probably u can find some cash to top up the RA difference..

i not 100% sure.. thats y best only do it if u got enough to hit FRS requirement

 

[RoLanTo]

Sad to say the hack of using my OA to earn no less than 4% have ended. My OA was returned within 2 days!!! With no interest from Jan to date of refund. But I am 111k richer.

is it because your investment purchased using OA?
i read on cpf web, the money will refund into whichever it comes from..
OA to OA, SA to SA.

 

[RoLanTo]

what happens if dont do the hack ?

Jan 2020
OA = 120k
SA = 9k
RA = 176k

Correct ?

if yourcpf number as above.. how to do the hack when ur RA already created?
u only earn 4% interest on your 9k and 2.5% on 120k lor

 

[a4973]

if you didnt meet FRS after all these actions.. it just mean u cant do atm withdrawal, the atm withdrawal needs the person to meet FRS requirement..

probably u can find some cash to top up the RA difference..

i not 100% sure.. thats y best only do it if u got enough to hit FRS requirement

so you are saying that in spite of doing the hack & the result is :
Jan 2020
Action: Sell the whatever fund, get back 145k (more or less) in SA
Result:
OA = 0
SA = 145k
RA = 160k
Fund = 0
still cannot withdraw from SA = 145k because RA = 160k ie not meeting FRS $176K?
what about meet BRS with property pledge?

 

[a4973]

What if the member's intention is not to withdraw like ATM but to keep as much as possible in SA to earn 4%? The hack can still be done?