CPF Questions (minimum sum)

[lcp2000]

Most of us peasants after age 65 probably won't think about topping up. If at all, we may be thinking of how to extract more money from CPF after age 65.

I am not good in Investment and lazy to study it.
I don't spend much.
I am also worry when I am old, can my mind still remain clear?
CPF top-up is ideal for me
Of course I will reserve some emergency fund.

 

[RM2SSG]

I am not good in Investment and lazy to study it.
I don't spend much.
I am also worry when I am old, can my mind still remain clear?
CPF top-up is ideal for me
Of course I will reserve some emergency fund.

Same thinking for me.

When I am 65 and older, predictability is very important.

In any case, as long as the top up is part of the scheme and earning excellent interests, why not?

 

[~sabaisabai~]

At 55 if cannot meet the min sum one still can withdraw $5000

Yeah. There after they lock the money till age 65.

 

[BBCWatcher]

If gov can invest long life fund to earn at least 5-7% return and then give you back these return, what is stopping them from investing your CPF money directly to earn at least 5-7% return directly and then giving you back these 5-7% return....?

Who said CPF isn't already doing that?

What so many people forget (or ignore?) is that CPF is double Singapore tax free. This is a massive, unique tax break (set of tax breaks, actually). The government also pumps lots of free money into CPF, for example the free Medisave funds that every Singaporean newborn receives. These unique aspects of the system must properly be factored into any yield estimates.

 

[havetheveryfun]

Who said CPF isn't already doing that?

What so many people forget (or ignore?) is that CPF is double Singapore tax free. This is a massive, unique tax break (set of tax breaks, actually). The government also pumps lots of free money into CPF, for example the free Medisave funds that every Singaporean newborn receives. These unique aspects of the system must properly be factored into any yield estimates.

cos people always only think about themselves..

always complain say want CPF monies back instead of having it "stuck inside"..

then when used up already when they reach retirement age then complain CPF no $ and government don't wanna help them...

 

[BBCWatcher]

cos people always only think about themselves..

I suppose so.

If you're looking at total Singapore government finances, trying to find anything "nefarious," here's one important point to keep in mind: Singaporean citizens are net financial "burdens," on average. The cohort of foreigners working in Singapore heavily subsidizes citizens, as a cohort. Foreigners pay a lot of tax and consume very few government services. This pattern holds in many countries, but it's particularly true in Singapore.

 

[BBCWatcher]

Why are are talking about something else when we are talking about the interest people are getting for their CPF money (which is less than 5-7%)?

No, it's not that simple. You cannot only look at the "declared" interest rate, which is as high as 6%. You must also look at all factors that contribute to net effective yield in order to have any sort of reasonable assessment of the true yield.

For example, if somebody offers you a 12 month fixed deposit that pays 5% interest on a placement of S$10,000, but you have to pay a "signing fee" of S$400, that's really a 1% interest fixed deposit.

CPF happens to be chock full of returns that are not included in the "headline" interest rates, including (as one example) the $4,000 in free money that every Singaporean newborn now receives in their Medisave Accounts. As another example, many/most members of the "Pioneer Generation" have received/are receiving free money into their Medisave Accounts, in some cases as much as $1,250/month. As another example, some CPF members (about 140,000) are receiving Silver Support kickers to their CPF LIFE payouts. As yet another example, the CPF LIFE Bonus is up to $1,200 in free Special Account top-up money.

It's all real money, and it all counts. If you're not counting it, then you're simply not calculating yield correctly (if that's what you want to do).

 

[elnewbie]

Cpf interest is monthly rest based on lowest balance of each month, but credited only at end of year.

 

[LiteHouse]

You talk as though you are portraying yourself as an expert, but in reality either you are ignorant or refuse to tell all of us here that:

(1) CPF 6% p.a. interest is only for $30,000 of your CPF money, the rest 4% for SA account and 2.5% for OA account nia!

(2) CPF interest is calculated just like yearly rest, not monthly rest (which is how banks' interest are calculated for your money in bank account).

(1) There's 1% bonus for first 60k in SMRA (up to 20k in OA)

(2) Interest in CPF is calculated monthly based on lowest balance of the month. Interest is given at the end of the year.

 

[BBCWatcher]

OK, now let's suppose that you've figured out how to calculate a real net effective CPF yield, accurately. And let's suppose it's 5%, for sake of argument, and that the government's sovereign wealth fund is at 6%, also for sake of argument....

...."So what?" It's perfectly reasonable, a matter of a sound and logical public policy, for the government's sovereign wealth fund to be endowing a better, more financially secure Singapore for future generations. (Or do you want to argue that today's Singaporeans should be consuming every possible dollar of additional national wealth as soon as it's received, and kids and grandkids be damned?) For one thing, how will Singapore cope with rising sea levels over the next several decades and beyond? That challenge will require tremendous resources, and it's a terrific idea for Singapore's national government to accumulate wealth in preparation for those (and other) future needs.

But start with the correct math.

 

[BBCWatcher]

Yes, very good, congratulations: you can read CPF's Web site and find their "headline" interest rates....

....You're not done, not by a long shot. You then must factor in all the free money (the examples I mentioned, and others) and the special tax reliefs. And that math isn't easy, but it's very real.

....And then, "So what?" Temasek is not CPF (or HDB, MOH, LTA, etc.), and it must not be, at least not if you're a sensible, rational government acting in the long-term national interest.

 

[LiteHouse]

That is even worst than annual rest!
Give you an analogy:
If you deposit $1,000,000 for 29 days and withdraw $1,000,000 for just 1 day before putting back again you earn $0 interest for the whole month!
If you do this with bank account you will earn interest for 29 days for your $1,000,000 for that whole month!

How does your example apply in CPF context? Will the user have the choice to withdraw large amount and then put back the next month?

 

[BBCWatcher]

Ok, so from what I understand of what you are writing, you are telling us that:
CPF long life fund will not give you 5-7% return!

Am I right?

I don't know, but I do know that the actual, net effective CPF yield is higher than the headline/advertised CPF interest rates, because of the factors I have already mentioned.

You're the one trying to make some sort of argument that CPF ought to yield more. Well, start with the correct calculation before you try to make that argument. I'm not the one trying to make that argument.

 

[BBCWatcher]

If you say CPF interest rate is higher than what CPF Board is telling us on their website, then either you are saying that CPF Board is lying.

Ervino, are you trying to be deliberately obtuse?

CPF's Web site will also tell you about (as examples):

* The $4,000 in free money that every Singaporean newborn now receives in their Medisave Account.
* The up to $1,250/month in free money that Pioneer Generation Singaporeans receive in their Medisave Accounts.
* The Silver Support payouts (more free money) that increase CPF LIFE payouts for certain members.
* The CPF LIFE Bonus top-up (yet more free money) of up to $1,200 that are added to certain members' accounts.
* The generous tax reliefs available.

Now, please factor those sums in your net effective yield calculation, carefully. If you refuse to, then you're not being honest. CPF is, though.

 

[BBCWatcher]

Can CPF Board factor in all those you mentioned?

Yes, of course!

 

[elnewbie]

That's the way its been calculated for the last 30 years. You can google and will find that others also mention about this.

So if i refund $200k today, none of this will earn interest in the month of October, but will start earning interest in the month of November onwards.

Based on this method, each deposit you put in only loses a max of 30 days interest.

Why not? Many use CPF to pay off housing loans, especially many who pay-off a chunk in lump sum once a year, and they lost so much interest because of the way CPF interest is calculated (and they don't even know)!

 

[01asdf]

Keep losing this thread.

Why this thread does not appear here
http://forums.hardwarezone.com.sg/eat-drink-man-woman-16/
when somebody post here?

Because this is a money mind thread? Stick to EDMW if you are looking for the irrational trolling anti anything "gahmen" thread.

 

[Localborn]

I suppose so.

If you're looking at total Singapore government finances, trying to find anything "nefarious," here's one important point to keep in mind: Singaporean citizens are net financial "burdens," on average. The cohort of foreigners working in Singapore heavily subsidizes citizens, as a cohort. Foreigners pay a lot of tax and consume very few government services. This pattern holds in many countries, but it's particularly true in Singapore.

This is a new insight. Any facts/evidence to back this up?

 

[BBCWatcher]

Really?

Really. CPF publishes an Annual Report with lots of facts and figures. The 2016 edition is available here. To start your calculation journey, take a look at table 13 on page 92: "Government Grants to Members." Do some careful math, then report back to us what CPF's actual return is.

Somebody else did that math recently for CPF LIFE (separately) and determined that that leg of CPF offers a 7.1% net effective nominal yield, which is damn good of course. Anyway, see what you can figure out, and let us know....

....And then, "So what?" You're apparently trying to argue that CPF ought to have a net effective yield comparable to the government's sovereign wealth fund. Why? That's bonkers from a public policy point of view, unless you believe Singapore and future Singaporeans don't have much of a future?

 

[Perisher]

Really. CPF publishes an Annual Report with lots of facts and figures. The 2016 edition is available here. To start your calculation journey, take a look at table 13 on page 92: "Government Grants to Members." Do some careful math, then report back to us what CPF's actual return is.

Somebody else did that math recently for CPF LIFE (separately) and determined that that leg of CPF offers a 7.1% net effective nominal yield, which is damn good of course. Anyway, see what you can figure out, and let us know....

....And then, "So what?" You're apparently trying to argue that CPF ought to have a net effective yield comparable to the government's sovereign wealth fund. Why? That's bonkers from a public policy point of view, unless you believe Singapore and future Singaporeans don't have much of a future?