CPF SA

[iCube00]

I wanna top-up but no money

 

[BBCWatcher]

a person with a 1 mil property and 0 cpf is as good as a person with 0 property and 1 mil cpf.

Is that a given? I don’t think that’s true. What if the property is a 5 room HDB flat — there are some $1 million resale HDB flats — with 4 years of M.O.P. remaining while at the same time the $1 million CPF holder is age 55+ — a reasonable assumption since it’s quite mathematically difficult to get to $1 million in CPF before age 55? Moreover, the $1 million in CPF is more stable (real estate valuations can fluctuate dramatically), predictably growing, requires no upkeep (no property tax for example), has no potential liability, has no vulnerability to hostile creditors and courts (or termites for that matter), and can be tapped in penny increments if desired.

Ah, but you might say you cannot live in a CPF account balance, and the CPF Board won’t let you bunk in their offices. That’s true, but liquid Singapore dollar cash always works in Singapore. If you need housing, dollars can get it. If you need food, dollars can get it. If you need medicine, dollars can get it. An actual house only gets you housing. You cannot swallow a brick to keep your blood pressure under control, for example.

I’d say that the hypothetical CPF dude/dudette wins this particular comparison.

 

[dork32]

Uncle Kenny shared that he holds gold before.

I will argue: CPF after 55 is a lot more liquid than property. Not sure also if 1 mil property rental yield hits 4%.

1 mil CPF is just a PayNow transaction away.

wat i am saying is if i have used up my 1 mil to buy a home vs i stay in rental forever, which is better? or 300k in a 3 room hdb and 700k cpf vs 1 mil cpf in rental

yes, uncle kenny may have other assets. this is why i say we must evaluate all his assets in total, not just his cpf portion.

eg i have only 500++k in the cpf, but if i do a housing refund, which i have the ability, i would have close to 900k in the cpf. i have still a few more years to go before 55. but i choose to keep cash. i hope to buy a property under my wife's name. money in the cpf oa is not very good for this because i am not 55 yet.

 

[BBCWatcher]

yes, uncle kenny may have other assets. this is why i say we must evaluate all his assets in total, not just his cpf portion.

Sure, but having $1 million or more in CPF accounts certainly ain’t a bad thing, right?

 

[addict951]

Just done 7k top up to SA using PayNow QR. It is instant !! Once the transaction is complete, it is updated in the CPF statement and balance immediately

I top up due to information given in this thread. My tax bracket is increasing until I can feel the pinch of paying $$$ to taxman. Top up SA 7k means I get some instant savings on next year tax which is like a return on investment and meanwhile this 7k is earning 4% for some time to come. Whether I can see this 7k in 2 decade time is another story altogether.

Next year looking at contributing 15k to SRS and another round of SA top up 7k again.

Why dun push another 7K into SRS 2day?

 

[zoneguard]

eg i have only 500++k in the cpf, but if i do a housing refund, which i have the ability, i would have close to 900k in the cpf. i have still a few more years to go before 55. but i choose to keep cash. i hope to buy a property under my wife's name. money in the cpf oa is not very good for this because i am not 55 yet.

I learned this from BBCW about the concept of good debt, https://forums.hardwarezone.com.sg/131612870-post19.html

Take a loan with low interest rate (but maintain adequate liquidity), he gave example of DBS 1.5% with 5 years rate lock so don't use cash for the property purchase. Do the housing refund (2.5%) or invest (4-5%?) and arbitrage the difference.

 

[OngHuatHuat]

A lot of people are doing that, but you have to make sure you fix the rate long enough for proper planning.

I learned this from BBCW about the concept of good debt, https://forums.hardwarezone.com.sg/131612870-post19.html

Take a loan with low interest rate (but maintain adequate liquidity), he gave example of DBS 1.5% with 5 years rate lock so don't use cash for the property purchase. Do the housing refund (2.5%) or invest (4-5%?) and arbitrage the difference.

 

[dork32]

I learned this from BBCW about the concept of good debt, https://forums.hardwarezone.com.sg/131612870-post19.html

Take a loan with low interest rate (but maintain adequate liquidity), he gave example of DBS 1.5% with 5 years rate lock so don't use cash for the property purchase. Do the housing refund (2.5%) or invest (4-5%?) and arbitrage the difference.

i am practicing this myself for close to 15 years. my loan is 1.2% (just refinanced). i have 500k loan and 250k oa. when i feel that i have a lot of money. i do a cpf housing refund instead of paying back the loan.

i use 100% cpf and 0 cash for my monthly installment. you mentioned liquidity. before 55 cpf is less liquid than property. i can always do a property refund to cpf when i am happy.

back to the point, it can be seen here that cpf value and property is very interchangable. hence i would value my home as much as i value my cpf holdings.

 

[highsulphur]

while i do respect uncle kenny, cpf is just one portion of our entire asset.

a person with a 1 mil property and 0 cpf is as good as a person with 0 property and 1 mil cpf.

People with 1m in CPF for sure will have much more outside cpf

 

[dork32]

A lot of people are doing that, but you have to make sure you fix the rate long enough for proper planning.

if the rate goes against me, i will down all my cpf and cash to redeem the loan.

 

[dork32]

People with 1m in CPF for sure will have much more outside cpf

i have 500k in cpf. i have 4 times what i have outside.

i have frens that just moved to sg not too long ago, he dont have much cpf coz they did not work long here. but he has 3 condo valued at 2 mil each.

 

[SBC]

People with 1m in CPF for sure will have much more outside cpf

Agree with this.

Guys who are financially-smart will be smart to manage both cash & CPF.
His results will be reflected well over long term.

 

[dork32]

i repeat this. value total assets rather than just cpf

if i have 500k cpf and 2 mil outside
and kenny has 1 mil cpf and 1 mil outside, i win.

and if kenny has 2 mil outside, he wins.

 

[addict951]

i have 4 times what i have outside.

Kaypoh mode on: Where are these 4X ar? In STi/Dow/Nasdaq? Or at 99y/999y brick&mortar 'facilities' that you lease to ppl?

 

[BBCWatcher]

I learned this from BBCW about the concept of good debt, https://forums.hardwarezone.com.sg/131612870-post19.html

Take a loan with low interest rate (but maintain adequate liquidity), he gave example of DBS 1.5% with 5 years rate lock so don't use cash for the property purchase. Do the housing refund (2.5%) or invest (4-5%?) and arbitrage the difference.

Dork32 is quite familiar with the advantages of cheap loans. Borrowing at low cost and prudently investing for reliably higher returns is an ancient, well known practice.

Such opportunities aren’t always or even very often available, but Singapore is very strange right now and has been for a while. There are banks willing to loan at 1.5% or less (thanks to crazy generous depositors, basically), and the government is paying 2.5% interest or more (CPF), for example. It’s pretty crazy, but it’s crazy in a good way for those who are very safely collecting money every month based on rate spreads like this one. As long as you’re reasonably responsible — you’re actually saving and prudently investing, and you’re not overextending yourself with a home that’s too lavish in the circumstances — it’s good stuff. This is the part where some people get in trouble, sometimes by steps. “Oh, the loan is cheap, so let’s save less and buy more champagne,” for example. Just because you become progressively wealthier when you borrow at X% then earn X+Y% on that money doesn’t give you carte blanche to party harder. Keep it reasonable.

 

[dork32]

take myself as an example.

i have 250k in oa. wah! not bad hoh!

but i tell you have a 500k home loan. you nett it off, i actually have -250k in oa. my cpf is inflated because i took a very large loan.

i say again. look at the total asset rather than just cpf.

 

[BBCWatcher]

i repeat this. value total assets rather than just cpf

if i have 500k cpf and 2 mil outside
and kenny has 1 mil cpf and 1 mil outside, i win.

Well, you probably “win” that comparison simply because your total net worth is $2.5 million to his $2.0 million (25% higher). But what if Kenny has $1 million in CPF and $1 million outside, while you have $500K in CPF and $1.5 million outside? Let’s assume the “outside” is the same type of asset. I say Kenny wins that alternative comparison. He can definitely copy your allocation if he wishes, at any time — just move $500K out of CPF to the other asset — but you probably cannot copy his. His portfolio is thus a perfect functional superset of yours in this example, so he likely wins, subject to a couple footnotes perhaps.

 

[zoneguard]

His portfolio is thus a perfect functional superset of yours in this example, so he likely wins, subject to a couple footnotes perhaps.

BBCW probably wins everybody here because besides CPF and outside monies, he also has Social Security with COLA benefits.

 

[Dividends]

Are we holding a net worth competition now?

 

[OngHuatHuat]

Older people normally have higher net worth ba?

Not so sure.

Are we holding a net worth competition now?