What to do with 1k

[zheng]

u can pm me

 

[BBCWatcher]

why are these idiots buying car.

I never said car buyers are idiots.

Is buying a 40 meter yacht financially sensible? No, it's not. (With extremely rare, esoteric exceptions.) It's a luxury, and many people like luxuries. All I said is that buying a private automobile in Singapore is financially idiotic. So are many other ways people spend money, such as drinking a $500 glass of whiskey. If you can afford it, there's nothing wrong with that! Financial idiocy can be great fun.

I was sharing a hotel shuttle once a few years ago with some workers, and they observed me using a particular expensive object. One of them asked, "Does that help your business? Do you make more money that way?" (Paraphrasing, but that was the gist of his questions.) My honest answer: "Oh hell no. But I enjoy it." Well, some people "enjoy" sitting inside a hunk of highly taxed metal, the risk of psychological and/or financial ruin for running over a pedestrian, waiting in traffic, and the other "joys" of driving. And if that's how they want to spend their money, I have no objection.

....And if you want more cash to pay for luxuries, then you'll need to be a lot smarter about how you exploit the financial opportunities you have available, including CPF's extraordinary yields. If you need to save less money for housing because you took maximum advantage of CPF, you get to spend more money on luxuries.

 

[dork32]

Also correct, but that's an excellent reason to put your first dollars (after emergency funds) into CPF OA, and to then, later on, hold your last dollars in other savings vehicles to accumulate the 5% cash component for your 20% down payment (for example).

....Do the math! It is correct. Compare a strategy of first dollars into CPF OA versus last dollars into CPF OA. The former approach gets you to your down payment faster, and with less cash required for your down payment. It's the simple power of higher and longer compound interest -- basic financial math here. CPF OA pays the highest rate, so if your goal is to save for housing -- and most people have that goal -- then that's exactly where your first dollars should go so they can "run" the longest. You want your 15% CPF OA dollars to run the marathon, and you want your 5% cash downpayment component to run a sprint, relatively speaking. Do the reverse and you're poorer -- you've lost interest earning power.

All after paying off interest-bearing debt and setting aside enough emergency funds -- and the latter could potentially be via proxy (i.e. a family member).

this guy only has 1k. it is his first and last 1k. the way he puts it he does not have anything other than this 1k. it is quite common for someone that is still in poly. it is clear that he does not have the any emergency funds. this is why all the people are asking him to do all those crazy things.

 

[dork32]

All after paying off interest-bearing debt and setting aside enough emergency funds -- and the latter could potentially be via proxy (i.e. a family member).

this statement is also not exactly correct. eg, i have an interest bearing debt, my home loan, still running. i still put my money into cpf. but for every dollar i put into cpf, i have another five available in liquid assets.

 

[dork32]

I never said car buyers are idiots.

Is buying a 40 meter yacht financially sensible? No, it's not. (With extremely rare, esoteric exceptions.) It's a luxury, and many people like luxuries. All I said is that buying a private automobile in Singapore is financially idiotic. So are many other ways people spend money, such as drinking a $500 glass of whiskey. If you can afford it, there's nothing wrong with that! Financial idiocy can be great fun.

I was sharing a hotel shuttle once a few years ago with some workers, and they observed me using a particular expensive object. One of them asked, "Does that help your business? Do you make more money that way?" (Paraphrasing, but that was the gist of his questions.) My honest answer: "Oh hell no. But I enjoy it." Well, some people "enjoy" sitting inside a hunk of highly taxed metal, the risk of psychological and/or financial ruin for running over a pedestrian, waiting in traffic, and the other "joys" of driving. And if that's how they want to spend their money, I have no objection.

....And if you want more cash to pay for luxuries, then you'll need to be a lot smarter about how you exploit the financial opportunities you have available, including CPF's extraordinary yields. If you need to save less money for housing because you took maximum advantage of CPF, you get to spend more money on luxuries.

it is the aspiration of every young sg kids to own a car. if you are going to put every 1k into the cpf, you will never get your car.

 

[FP_IFA]

I'm 18 and studying second year in poly , just received 1.4k bursary, what would be the best use of this money?

At your age, education is what you should focus on now. Put that money aside in the bank and if possible try to aim for a degree. The money should be spent on improving your education. Higher qualification will later get you a much better starting pay.

 

[BBCWatcher]

it is the aspiration of every young sg kids to own a car. if you are going to put every 1k into the cpf, you will never get your car.

Nobody suggested putting every $1K of savings into CPF. (The government won't let you do that even if you wanted to, at least once you reach a certain income level. CPF contributions are capped to an annual limit, currently $37,740.) Please go back and re-read what I wrote. It's very clear.

If you don't understand how to maximize the financial opportunities you have, including CPF, then you're never going to get all (or any of) the luxuries you want. Those who understand (and understood) how to maximize and optimize CPF have prospered.

Do we have a forum full of people who make money on sales commissions in the private financial sector? I'm beginning to wonder! There's nothing wrong with that, but there's really no justification for this irrational criticism of CPF. CPF is a powerful tool to help you achieve your financial goals. I recommend maximizing every financial opportunity.

 

[Mecisteus]

I think this discussion is derailing like as though TS is asking a super complicated question.

If TS has to ask what to do with 1. 4k, there is a good chance that 1. 4k is all he has.

If he has 20k already, he wouldn't be asking what to do with 1. 4k.

TS is a bursary awardee. There is also a good chance that he is coming from a lower income family.

He probably needs to spend a few hundreds for his school stuff and allowances. Use this money there.

 

[BBCWatcher]

this statement is also not exactly correct. eg, i have an interest bearing debt, my home loan, still running. i still put my money into cpf. but for every dollar i put into cpf, i have another five available in liquid assets.

Some contributions to CPF are compulsory, and you have to make those contributions even if you have lots of high cost debts. That's not the original poster's situation. MediShield Life premiums are also compulsory.

Also, occasionally it's possible to have a debt that either does not accrue interest or that carries a lower interest rate than the return you can get on savings. In such rare cases it makes sense to maintain that debt or even to add to it. For example, in the U.S. it's often possible for university students to take out federally guaranteed student loans even if they don't need the money. Those loans do not start to accrue interest until 6 months after leaving university. In that case, it's wise to borrow the money (up to the maximum limit) and put it into a savings vehicle with zero or very low principal risk, then pay off the loan in full just before interest starts to accrue. Students (and their parents) who can pull off that financial maneuver -- and there are some -- end up pocketing the interest and dividends thanks to the U.S. federal government's generosity. Not bad! If a government or anybody else wants to be so generous my advice is to take the deal and enjoy the free ride.

As that example demonstrates, there's nothing wrong with debt per se. If the debt is incurred in order to fund a true investment, with a high likelihood of success, then that's terrific. (That U.S. federal student loan example is one such case.) Going into debt to finance a NUS or Harvard or Oxford education is probably a very good idea, to pick another example. Going into debt to fund a casino gambling habit, not so much.

 

[BBCWatcher]

I think this discussion is derailing like as though TS is asking a super complicated question.

Everybody has emphasized the need to take care of (a) emergency funds; (b) paying off high cost debt; and (c) prudent educational investment needs (textbooks, etc.) first. There's no confusion on that point, and it's not complicated.

That said, basic financial education is important, and there's no minimum age for that. I reject the suggestion that the original poster is "too young" for such advice. If you're in university, you're certainly not too young to acquire financial acumen.

 

[Aaron_soh80]

I'm 18 and studying second year in poly , just received 1.4k bursary, what would be the best use of this money?

Now bursary got some much?

 

[jeswiz]

Pay off your debts first before saving
Save first before investing
Invest first before regretting

 

[lohsenglte]

Now bursary got some much?

Up to $2.9k, depending on eligibility.

Sent from Sony E5653 using GAGT

 

[shared]

nus have bursaries that can cumulatively give u up to 5k or more i think

 

[dork32]

Nobody suggested putting every $1K of savings into CPF. (The government won't let you do that even if you wanted to, at least once you reach a certain income level. CPF contributions are capped to an annual limit, currently $37,740.) Please go back and re-read what I wrote. It's very clear.

If you don't understand how to maximize the financial opportunities you have, including CPF, then you're never going to get all (or any of) the luxuries you want. Those who understand (and understood) how to maximize and optimize CPF have prospered.

Do we have a forum full of people who make money on sales commissions in the private financial sector? I'm beginning to wonder! There's nothing wrong with that, but there's really no justification for this irrational criticism of CPF. CPF is a powerful tool to help you achieve your financial goals. I recommend maximizing every financial opportunity.

the guy is only a student. he will never max the 37k

i know how to utilize cpf. that is why i am putting money into it although i still have big debt.

i did not criticize cpf. i just say ts should not put his 1000 there.

i not selling any product. where ts put the money will not affect my money.

 

[dork32]

Some contributions to CPF are compulsory, and you have to make those contributions even if you have lots of high cost debts. That's not the original poster's situation. MediShield Life premiums are also compulsory.

Also, occasionally it's possible to have a debt that either does not accrue interest or that carries a lower interest rate than the return you can get on savings. In such rare cases it makes sense to maintain that debt or even to add to it. For example, in the U.S. it's often possible for university students to take out federally guaranteed student loans even if they don't need the money. Those loans do not start to accrue interest until 6 months after leaving university. In that case, it's wise to borrow the money (up to the maximum limit) and put it into a savings vehicle with zero or very low principal risk, then pay off the loan in full just before interest starts to accrue. Students (and their parents) who can pull off that financial maneuver -- and there are some -- end up pocketing the interest and dividends thanks to the U.S. federal government's generosity. Not bad! If a government or anybody else wants to be so generous my advice is to take the deal and enjoy the free ride.

As that example demonstrates, there's nothing wrong with debt per se. If the debt is incurred in order to fund a true investment, with a high likelihood of success, then that's terrific. (That U.S. federal student loan example is one such case.) Going into debt to finance a NUS or Harvard or Oxford education is probably a very good idea, to pick another example. Going into debt to fund a casino gambling habit, not so much.

my compulsory contribution is done by my company. i put in more money with my cash because i happy.

you are so right that there are cases where debt carries a lower interest. this sort of debt is not rare. it is called housing loan. many people in sg have this sort of debt including me.

another type of loan that is available is called tuition fee loan scheme by dbs. it is open to students in polys and uni. you do not have to quote US examples. it is not relevant to us.

 

[dork32]

If TS has to ask what to do with 1. 4k, there is a good chance that 1. 4k is all he has.

If he has 20k already, he wouldn't be asking what to do with 1. 4k.

you are so right man. this is what i am trying to say. he should not put this 1.4k in cpf.

 

[fluxos]

Nobody suggested putting every $1K of savings into CPF. (The government won't let you do that even if you wanted to, at least once you reach a certain income level. CPF contributions are capped to an annual limit, currently $37,740.) Please go back and re-read what I wrote. It's very clear.

If you don't understand how to maximize the financial opportunities you have, including CPF, then you're never going to get all (or any of) the luxuries you want. Those who understand (and understood) how to maximize and optimize CPF have prospered.

Do we have a forum full of people who make money on sales commissions in the private financial sector? I'm beginning to wonder! There's nothing wrong with that, but there's really no justification for this irrational criticism of CPF. CPF is a powerful tool to help you achieve your financial goals. I recommend maximizing every financial opportunity.

You are clearly out of context. Why are you even talking about the annual limit here? To win the argument? It only shows how out of touch you are.

The thread-starter is 1) 18 years old. 2) studying in poly. 3) comes from a low income family (bursary). 4) only has 1.4k (if he has 10k, he won't be asking about 1.4k).

In those circumstances, it is irresponsible of you to advise the TS to put it into CPF. Period.

 

[Maeda_Toshiie]

I already posted on page 3 what I thought (even though the CIMB Fast Saver will not work for sums below $1000). A student asking what to do with a sum of $1400 and it turned into a CPF cum financial planning thread.


A student asking what to do with $1400 probably doesn't have much in the way of savings. Even by any financial planning POV, first building up a stash of emergency cash takes precedence over contributing to CPF, especially for one with little or no savings.

 

[dork32]

Now bursary got some much?

now bursary is very generous especially in poly. it goes by per capita income.

<950 - $2000 bursary
<1400 - $1500 bursary
<1900 - $750 bursary

if you have 4 fella in your family and the dad is earning 7600 a month, you still get bursary.

7600 per month is quite well to do already. many of these students use the money to buy new phones.