I am for topping up your SA especially if you have "spare" money lying in your OA. This was what I did way back in 2003. You will see the compounding effect of the 4% interest working wonders for your SA. Because of the compounding effect, my SA amount always was ahead of the minimum sum, and now stands at $200K currently, way above the new minimum sum of $155K. On my retirement next year, they will transfer out the excess out to my retirement account - money which I could withdraw immediately if I so desire.
As a matter of fact, I wanted to top up for my children SA but was not allowed to do so. You just have to do the maths to see the compounding effect of 4% interest on $155K over 42 to 45 years. (My elder child is 23, while my younger is 20).
Here's what they will get when they reached 65 starting with $155k now: $804,882 after 42 years and $905,382 after 45 years! They would probably not need to worry about catching up with the rising SA amount!
Quote:
Originally Posted by Unregistered
Hi,
My husband and I are 28, 26 respectively with a combined income of 9k. We have no debt and a cash/asset position of $140k ($100k currently in OCBC 365 account earning 3.05%), $40k in low / medium risk equity.
We would be getting our BTO flat in 2016 and would need to start servicing a $500k loan.
We intend to save up $300k in cash position by 2021, by which our flat would have reach MOP and we could use that cash as a downpayment for our investment property. We budgeted $50k for renovation and furnishing, and does not have any debts currently.
We intend to take a 25 years HDB loan, and dump all our CPF OA into SA so that HDB cannot wipe out our OA for downpayment of the flat, and let our SA earn 4% interest. This effectively negates the 2.6% HDB loan interest. Our monthly OA contribution would be more than sufficient to pay for the monthly instalment. Whatever residue OA will go into SA. By doing so, we would build up quite a substantial SA, purely for retirement. Our salary goes towards household expenses, parents and savings towards the $300k goal. After 2021, we would purchase an investment property and use the rental yield to support the instalment on that property.
Please share your views on our strategy, especially the dumping of the entire OA into SA, as it is a irreversible process |