How much are you earning per annum?

[lazyplane]

On pt 2 and 4,

Can you give some idea on when will be a good time to make a decision to transfer OA to SA ? Eg what age , what are the considerations you took into consideration before making the transfer ?

I have been considering transferring from OA to SA but held back this because i think the SG property market may provide some nice opportunities in the near term. I also feel that the OA allows me to invest in some interesting equity plays when the time is right (hopefully my target price will come soon !)

Also the OA -SA i/r spread of 1.5% is not very attractive difference and i understand that these are guaranteed but there maybe some nice investment opportunities out there that will be better served keeping the funds in OA.

And i noted you are recommending repayment of the "housing loan" back to CPF. This one has really puzzled me cos a simple FD these days give around 2% i/r. Unless you are very near retirement say 5 years away ie age 60, i thought it will not be so good to funnel this into CPF just to earn the additional spread of interest. Locking these funds at 50 means that funds are locked in for 15 yrs.

Have you considered getting bonds or endowment plans instead ? Understand the usual transaction fees , fund expense ratios, but at least the funds are not locked in and there is room for wiggle and getting better returns.

Originally Posted by Unregistered

As I didn't get any negative response from my last post on the CPF statement, I thought I would share the rest of the "tricks" that I used to achieve over a $1m in my overall CPF account in my 30+ years of working life.

1. First, you must have continuous contribution. This one is a no brainer. No work means no salary. No salary means no CPF contribution. Don't quit especially when you are reaching your peak in your earning capacity at age 50 to 60. I see some forummers trying to convince people to quit early - this is a wrong move which is very detrimental to your CPF build up. Not only that, people often forget the employer's contribution. Over many years, this can be a substantial amount which goes directly into your CPF.

2. As early as possible in your working life, and whenever you can afford it, transfer funds from your OA to your MA and SA. MA and SA attracts 4-5% interest pa and is compounding yearly. Again, over 30 years, it will bring you a princely sum. We started transferring our spare OA funds into our SA and MA in our late 40s. After a short while, we found that the interest earned each year was able to keep up with the yearly limit adjustments set by the government, meaning we didn't need to transfer to the 2 accounts any more. Not only that, the excess interest from MA actually flows back to our OA.

3. As mentioned in my previous post, top up your CPF contribution to the maximum allowed ($37k+ this year). Your top up attracts tax relief.

4. As we reached our 50s, and after paying off our condo loan, we found we could save more money. The period 50 to 65 is the golden period to save money, so don't quit your job just yet. Your income peaked while your expenses decline. With the extra money saved, we decided to return the money which we withdrew from our CPF to pay our housing loans. This portion is represented in the CPF statement pie-chart in red color. We since returned over $350k to our CPF this way.

Oops, need to go to work. That's all for now.

Originally Posted by Unregistered

First, thank you for the teachings. Appreciate people for sharing. I am in my late 40s(so I am not your younger co-Singaporeans of the general, well even older mostly think likewise-this is the Singaporean and safe path most take). I am in late 49s and have "walked the path" (means a bit qualified to give comments in this context). What I am trying to say is simply 2points 1) cpf is as good as for investment or housing or draw-down after 65. (Can't withdraw totally at all. Though it is your money, some can't be used unlike other more flexible liquid assets you have 2)apart from cpf, one can build up money in other ways that provide even higher (and safe) returns with due diligence done. For eg. Though my cpf amount is around 670,000 now, my other portfolios stand at 1.5 mil. Still, it's about comfort level as well as taking some courage to take on a less traditional conservative (yet safe) way of savings. I think I am but one of many many others who are doing v well by not relying on just cpf or other conventional way of savings. Work hard buddy-yes I realise you are back to work

Having amassed a networth of more than $2M, are you now considering retirement?

You know, in Australia there is no retirement age-one retires when one is ready-could be before 60, or even after 70(why not? These days we are physically n mentally more agile than our parents' generation). I like this policy. My aunt herself who is 78 this year and emigrated with family to Australia, is still helping out once weekly in the hospital she used to work. And I rmb even after before 68, she was still working full time. She finds satisfaction in that.(when she could more than live comfortably with her pension and her two professional sons' care).
So, instead of retiring (without any other plans for non-structured work that might bore my days, make me restless) i have now resolved to have a full time pay, adopt a 'part-time' mentality. This means a full-time life outside work. Now, I am into building up rships/networking/up keeping hobbies for life after retirement.

The 5 Things People Regret Most On Their Deathbed

Susie Steiner, The Guardian
Dec. 5, 2013

There was no mention of more sex or bungee jumps.

A palliative nurse who has counselled the dying in their last days has revealed the most common regrets we have at the end of our lives. And among the top, from men in particular, is "I wish I hadn't worked so hard."

Bronnie Ware is an Australian nurse who spent several years working in palliative care, caring for patients in the last 12 weeks of their lives. She recorded their dying epiphanies in a blog called Inspiration and Chai, which gathered so much attention that she put her observations into a book called "The Top Five Regrets of the Dying."

Ware writes of the phenomenal clarity of vision that people gain at the end of their lives, and how we might learn from their wisdom. "When questioned about any regrets they had or anything they would do differently," she says, "common themes surfaced again and again."

Here are the top five regrets of the dying, as witnessed by Ware:

1. I wish I'd had the courage to live a life true to myself, not the life others expected of me.

"This was the most common regret of all. When people realise that their life is almost over and look back clearly on it, it is easy to see how many dreams have gone unfulfilled. Most people had not honoured even a half of their dreams and had to die knowing that it was due to choices they had made, or not made. Health brings a freedom very few realise, until they no longer have it."

2. I wish I hadn't worked so hard.

"This came from every male patient that I nursed. They missed their children's youth and their partner's companionship. Women also spoke of this regret, but as most were from an older generation, many of the female patients had not been breadwinners. All of the men I nursed deeply regretted spending so much of their lives on the treadmill of a work existence."

3. I wish I'd had the courage to express my feelings.

"Many people suppressed their feelings in order to keep peace with others. As a result, they settled for a mediocre existence and never became who they were truly capable of becoming. Many developed illnesses relating to the bitterness and resentment they carried as a result."

4. I wish I had stayed in touch with my friends.

"Often they would not truly realise the full benefits of old friends until their dying weeks and it was not always possible to track them down. Many had become so caught up in their own lives that they had let golden friendships slip by over the years. There were many deep regrets about not giving friendships the time and effort that they deserved. Everyone misses their friends when they are dying."

5. I wish that I had let myself be happier.

"This is a surprisingly common one. Many did not realise until the end that happiness is a choice. They had stayed stuck in old patterns and habits. The so-called 'comfort' of familiarity overflowed into their emotions, as well as their physical lives. Fear of change had them pretending to others, and to their selves, that they were content, when deep within, they longed to laugh properly and have silliness in their life again."

Originally Posted by Unregistered

You know, in Australia there is no retirement age-one retires when one is ready-could be before 60, or even after 70(why not? These days we are physically n mentally more agile than our parents' generation). I like this policy. My aunt herself who is 78 this year and emigrated with family to Australia, is still helping out once weekly in the hospital she used to work. And I rmb even after before 68, she was still working full time. She finds satisfaction in that.(when she could more than live comfortably with her pension and her two professional sons' care).
So, instead of retiring (without any other plans for non-structured work that might bore my days, make me restless) i have now resolved to have a full time pay, adopt a 'part-time' mentality. This means a full-time life outside work. Now, I am into building up rships/networking/up keeping hobbies for life after retirement.

This chap can quote & regurgitate but cannot really communicate. Like a parrot and an old one-posting and reposting reposting.

Let me continue my story where I left off this morning and perhaps it will somewhat answer your queries.

5. Top up your RA (with cash). This obviously applies to people who are 55 and above as the RA is only created upon your reaching 55. Both my wife and I turned 55 early last year. The minimum sum (RA limit) was then $155k. CPF took the $155k out of our SA leaving whatever that is left there in the SA. In other words, at 55, you will have 4 accounts in your CPF : OA, MA, SA and RA.

In July last year, the RA limit was raised to $161k. We promptly topped our RA to that amount. The $6k cash we put into the RA attract tax relief. Then in Jan (2016) this year, the ERS (Enhanced Retirement Sum) was implemented and the sum was set at $241k. Again my wife and I topped our RA up to the ERS amounts, and again with cash. Unfortunately topping your RA to ERS with cash does not come with tax relief.

6. Don't pay your housing loan with CPF money, if the housing loan interest rate is lower than 2.5%. When we were 50, we saw that our CPF OA combined was quite a tidy sum. It was sufficient for us to buy a condo for investment and pay for it outright. With itchy hands we went and book a new condo under development. We paid the compulsory down payment with cash, intending to pay the rest at TOP using our OA funds. But the loan interest rate was 1.03% and stayed below 1.8% till this day (6 years straight). Thus up till today, we are paying the housing loan with the rental collection, and have not used our OA funds.

As we are now 56, CPF is now like a "bank" to us. With 2 months' notice, we could make a withdrawal albeit once a year if you're still working or every month if you are retired. In this scenario, it thus makes sense to us to put money into our CPF, when and where we can, with the knowledge that we could draw out the money when needed. In the meantime, the money is earning reasonable interest (compounding).

If FD rates ever increase beyond 2.5%, we might decide to withdraw our CPF money and put them into FDs. If you are referring to SSB, their 10 year rate is still below the CPF 10 year compounded rate, which is 2.8%. SSB rates technically cannot be more than CPF OA rates as they are both government "bonds". It will hard for the government to explain to people why they are not paying better rates for people CPF which are forced on them with no way to withdraw the money till they are 55.

7. Don't use your CPF to buy shares as shares are volatile. You could lose it all or see your CPF funds diminish just when you are about to retire. Having said that, we hold a substantial amount of shares accumulated over our working career, all bought with cash and giving dividends of $50k pa. The shares value have declined $250k in the recent 2.5 months. We do feel the pain, but not as much as if we were not to have the strong CPF pillar to fall back on.

Originally Posted by lazyplane

On pt 2 and 4,

Can you give some idea on when will be a good time to make a decision to transfer OA to SA ? Eg what age , what are the considerations you took into consideration before making the transfer ?

I have been considering transferring from OA to SA but held back this because i think the SG property market may provide some nice opportunities in the near term. I also feel that the OA allows me to invest in some interesting equity plays when the time is right (hopefully my target price will come soon !)

Also the OA -SA i/r spread of 1.5% is not very attractive difference and i understand that these are guaranteed but there maybe some nice investment opportunities out there that will be better served keeping the funds in OA.

And i noted you are recommending repayment of the "housing loan" back to CPF. This one has really puzzled me cos a simple FD these days give around 2% i/r. Unless you are very near retirement say 5 years away ie age 60, i thought it will not be so good to funnel this into CPF just to earn the additional spread of interest. Locking these funds at 50 means that funds are locked in for 15 yrs.

Have you considered getting bonds or endowment plans instead ? Understand the usual transaction fees , fund expense ratios, but at least the funds are not locked in and there is room for wiggle and getting better returns.

Work hard. You need to save more. Maybe one day you will be able to retire. If you can't retire at 65, then retire at 70 or 75.

Originally Posted by Unregistered

Let me continue my story where I left off this morning and perhaps it will somewhat answer your queries.

5. Top up your RA (with cash). This obviously applies to people who are 55 and above as the RA is only created upon your reaching 55. Both my wife and I turned 55 early last year. The minimum sum (RA limit) was then $155k. CPF took the $155k out of our SA leaving whatever that is left there in the SA. In other words, at 55, you will have 4 accounts in your CPF : OA, MA, SA and RA.

In July last year, the RA limit was raised to $161k. We promptly topped our RA to that amount. The $6k cash we put into the RA attract tax relief. Then in Jan (2016) this year, the ERS (Enhanced Retirement Sum) was implemented and the sum was set at $241k. Again my wife and I topped our RA up to the ERS amounts, and again with cash. Unfortunately topping your RA to ERS with cash does not come with tax relief.

6. Don't pay your housing loan with CPF money, if the housing loan interest rate is lower than 2.5%. When we were 50, we saw that our CPF OA combined was quite a tidy sum. It was sufficient for us to buy a condo for investment and pay for it outright. With itchy hands we went and book a new condo under development. We paid the compulsory down payment with cash, intending to pay the rest at TOP using our OA funds. But the loan interest rate was 1.03% and stayed below 1.8% till this day (6 years straight). Thus up till today, we are paying the housing loan with the rental collection, and have not used our OA funds.

As we are now 56, CPF is now like a "bank" to us. With 2 months' notice, we could make a withdrawal albeit once a year if you're still working or every month if you are retired. In this scenario, it thus makes sense to us to put money into our CPF, when and where we can, with the knowledge that we could draw out the money when needed. In the meantime, the money is earning reasonable interest (compounding).

If FD rates ever increase beyond 2.5%, we might decide to withdraw our CPF money and put them into FDs. If you are referring to SSB, their 10 year rate is still below the CPF 10 year compounded rate, which is 2.8%. SSB rates technically cannot be more than CPF OA rates as they are both government "bonds". It will hard for the government to explain to people why they are not paying better rates for people CPF which are forced on them with no way to withdraw the money till they are 55.

7. Don't use your CPF to buy shares as shares are volatile. You could lose it all or see your CPF funds diminish just when you are about to retire. Having said that, we hold a substantial amount of shares accumulated over our working career, all bought with cash and giving dividends of $50k pa. The shares value have declined $250k in the recent 2.5 months. We do feel the pain, but not as much as if we were not to have the strong CPF pillar to fall back on.

My advice to younger forumers here is to choose your course of study and careers carefully. Avoid low paying sectors and jobs, especially engineering. If you work in these low paying sectors, you will have to work until you're 65 or older.

Choose high paying sectors and careers which will allow you to earn a lot. Then invest wisely with your huge salaries. Be a top performer in these high paying sectors. You can become a multi millionaire, retire early and become your own boss.

I'm 50 and happily retired. No longer need to report every morning to some bossy bosses. LOL.

[lazyplane]

Ok. I think i know where you are coming from. From what i gather, you basically have sufficient excess cash to bank for new investments in shares, 2nd or 3rd ? property and your CPF. Hence your need to bank into CPF for further risk free returns. That makes sense.

But i am much younger than you at 40+ and i dont have so much excess cash that i can plonk on new 2nd property which i think will set me back around by estimated S$2m , do new share investments (another S$1m ) and still have more CPF to play around. Hence a more "risker" approach for use of my CPF money and cash.

I think you are doing well in this interest arbitrage game and will consider your strategy when i am also above 55 .

By the way, max tax relief for CPF cash top up is $7 k not S$6k.

Originally Posted by Unregistered

Let me continue my story where I left off this morning and perhaps it will somewhat answer your queries.

5. Top up your RA (with cash). This obviously applies to people who are 55 and above as the RA is only created upon your reaching 55. Both my wife and I turned 55 early last year. The minimum sum (RA limit) was then $155k. CPF took the $155k out of our SA leaving whatever that is left there in the SA. In other words, at 55, you will have 4 accounts in your CPF : OA, MA, SA and RA.

In July last year, the RA limit was raised to $161k. We promptly topped our RA to that amount. The $6k cash we put into the RA attract tax relief. Then in Jan (2016) this year, the ERS (Enhanced Retirement Sum) was implemented and the sum was set at $241k. Again my wife and I topped our RA up to the ERS amounts, and again with cash. Unfortunately topping your RA to ERS with cash does not come with tax relief.

6. Don't pay your housing loan with CPF money, if the housing loan interest rate is lower than 2.5%. When we were 50, we saw that our CPF OA combined was quite a tidy sum. It was sufficient for us to buy a condo for investment and pay for it outright. With itchy hands we went and book a new condo under development. We paid the compulsory down payment with cash, intending to pay the rest at TOP using our OA funds. But the loan interest rate was 1.03% and stayed below 1.8% till this day (6 years straight). Thus up till today, we are paying the housing loan with the rental collection, and have not used our OA funds.

As we are now 56, CPF is now like a "bank" to us. With 2 months' notice, we could make a withdrawal albeit once a year if you're still working or every month if you are retired. In this scenario, it thus makes sense to us to put money into our CPF, when and where we can, with the knowledge that we could draw out the money when needed. In the meantime, the money is earning reasonable interest (compounding).

If FD rates ever increase beyond 2.5%, we might decide to withdraw our CPF money and put them into FDs. If you are referring to SSB, their 10 year rate is still below the CPF 10 year compounded rate, which is 2.8%. SSB rates technically cannot be more than CPF OA rates as they are both government "bonds". It will hard for the government to explain to people why they are not paying better rates for people CPF which are forced on them with no way to withdraw the money till they are 55.

7. Don't use your CPF to buy shares as shares are volatile. You could lose it all or see your CPF funds diminish just when you are about to retire. Having said that, we hold a substantial amount of shares accumulated over our working career, all bought with cash and giving dividends of $50k pa. The shares value have declined $250k in the recent 2.5 months. We do feel the pain, but not as much as if we were not to have the strong CPF pillar to fall back on.

A correction to note in point no. 6 below. You only need to give 2 weeks notice to make withdrawal from your CPF money, that is, money in excess of the RA and BHS (Basic Healtcare Sum - currently at $49,800).

Originally Posted by Unregistered

Let me continue my story where I left off this morning and perhaps it will somewhat answer your queries.

5. Top up your RA (with cash). This obviously applies to people who are 55 and above as the RA is only created upon your reaching 55. Both my wife and I turned 55 early last year. The minimum sum (RA limit) was then $155k. CPF took the $155k out of our SA leaving whatever that is left there in the SA. In other words, at 55, you will have 4 accounts in your CPF : OA, MA, SA and RA.

In July last year, the RA limit was raised to $161k. We promptly topped our RA to that amount. The $6k cash we put into the RA attract tax relief. Then in Jan (2016) this year, the ERS (Enhanced Retirement Sum) was implemented and the sum was set at $241k. Again my wife and I topped our RA up to the ERS amounts, and again with cash. Unfortunately topping your RA to ERS with cash does not come with tax relief.

6. Don't pay your housing loan with CPF money, if the housing loan interest rate is lower than 2.5%. When we were 50, we saw that our CPF OA combined was quite a tidy sum. It was sufficient for us to buy a condo for investment and pay for it outright. With itchy hands we went and book a new condo under development. We paid the compulsory down payment with cash, intending to pay the rest at TOP using our OA funds. But the loan interest rate was 1.03% and stayed below 1.8% till this day (6 years straight). Thus up till today, we are paying the housing loan with the rental collection, and have not used our OA funds.

As we are now 56, CPF is now like a "bank" to us. With 2 months' notice, we could make a withdrawal albeit once a year if you're still working or every month if you are retired. In this scenario, it thus makes sense to us to put money into our CPF, when and where we can, with the knowledge that we could draw out the money when needed. In the meantime, the money is earning reasonable interest (compounding).

If FD rates ever increase beyond 2.5%, we might decide to withdraw our CPF money and put them into FDs. If you are referring to SSB, their 10 year rate is still below the CPF 10 year compounded rate, which is 2.8%. SSB rates technically cannot be more than CPF OA rates as they are both government "bonds". It will hard for the government to explain to people why they are not paying better rates for people CPF which are forced on them with no way to withdraw the money till they are 55.

7. Don't use your CPF to buy shares as shares are volatile. You could lose it all or see your CPF funds diminish just when you are about to retire. Having said that, we hold a substantial amount of shares accumulated over our working career, all bought with cash and giving dividends of $50k pa. The shares value have declined $250k in the recent 2.5 months. We do feel the pain, but not as much as if we were not to have the strong CPF pillar to fall back on.