Lets phrase it another way.

suppose one person has 100k in CPF OA as investable amount (after setting aside $20k, and taken 35% from the pool). The person decides to invest in SGX REITS and gets a regular dividend income.

In this case, would it be considered as Passive income?

Note that this person is foregoing the CPF OA regular 2.5% interest and taking a higher risk through buying of stocks.

Very good point.

For those above 55, like me, we have crossed this point where it is up to us if we want to take out the interest earned each year from our OA, SA and MA. The interest earned in RA will remain there till we are 65.

Just to share some intracies about the withdrawal of CPF monies (for those 55 and above)

The sequence of withdrawal goes like this:

First tier - withdrawing only interests.
1. The first thing to get withdrawn is interest earned in your SA for the year starting from each January. This is then followed by the interests earn from your OA (from Jan). The interest from your MA will flow over to your OA if you meet the BHS ($52k) and you can withdraw that. If you have not met the BHS, then the interest earned by your MA will remain in your MA.

Second tier - withdrawing the contribution you made for the year
2. Supposing the amount you wanted to withdraw exceeded the total interests earned by your 3 accounts, then the next thing that gets withdrawn is the contribution you made to your SA for the year. If this still not enough to cover the amount you wanted to withdraw, then they will take the contribution you made to your OA for the year.

Final tier - withrawal from your main savings
3. Supposing the amount you wanted to withdraw exceeded the amounts from the above 2 tiers, then they will deplete your SA first, followed by your OA.

In all the 3 tiers of withdrawal, the SA will always be withdrawn first.

Other points to note:
1. The interest for each preceding month is credited on the 5th of the following month
2. Best time to withdraw is thus on or after 5th of Dec each year (if you only want to withdraw the interests earned for the year)
3. You will notice that you can at most withdraw 11 months of interests because the Dec interest will only be credited on 5th Jan the following year.
4. If you go and withdraw in Jan, you will be withdrawing the principal amounts as they will be no interests!

For our case, we have been planning for $4k a month ($48k pa) of interests from our OA, SA and MA combined. But now we will have to make do with $44k pa of interest or 11 months.

As we are still working, we will let the interests snowball. Maybe by 60, we should be able to withdraw $48k pa of interest (based on 11 months).

Wow impressive $48k pa of interest earned in all 3 CPF accounts

For us we are 45, and I checked we only have $26k pa last year

Looks like Long way to build up for us for another 10 years

You will get there if you consistently contribute the max amount to your CPF yearly over the next 10 years.

The current max amount that an individual can contribute is $37,740 per year. So for both of you, over the next 10 years, that would be $750k!

Assuming just simple interest, you will get an additional $18.8k combined interests from CPF.

Thus together with current interest of $26k, you are looking at an interest (passive income) of at least $26k + $18.8k = $45k of interest! With compounded interest, it should be closer to $48k. Just like what we have now!

Oh but wait, when you turned 55, an amount of $166k from your SA will be transfered to your RA! The $166k is the current FRS. The limit will be raised by $5k each year.

For us the $48k interest is solely from our SA, OA and MA. Our RA earns $17k pa which cannot be touched till we are 65 and thats only through the monthly payout.

My CPF interest dropped from 34k to 18k plus last year due to deployment of OA for property investment.

How old are you?

If you are below 55, it is hard (if not impossible) for anyone to accumulate a combined amount across all accounts (OA, SA & MA) that will attract $34k in annual interest from CPF.

However, it is possible for a person to have used his CPF money to purchase properties, and yet grow his CPF OA back to $1m or more.

everyone sounds so rich in this forum

34yo

Celery 4K
Cash: 46K
Stocks: 7K
Ssb: 10K

3r hdb paid 100K out of 288K so far
No car

43 this year. Made some decent profits in flipping properties and stock trading. As I get older, the emphasis now is to own good properties long term to generate stable rental income. My intention is to retire once I hit ~12k per month rental income.

I suppose you are clueless about CPF and your story just falls apart.

CPF works like this. If you made money from property investments and liquidated them, CPF only takes back what you originally took out from your OA for the property purchase and any interest accrued from that amount. Profits from the sale go right into your pocket. Likewise rentals collected from property purchased with CPF money also goes into your pocket.

For CPFIS, only 35% of OA can be used for investment.

haha u actually believe any of the bs here is true in the first place? this thread is as credible as the how much you earn annually thread, 99% bs answer 1% serious question

Currently my passive income from investments is $5.5k pm. Hope to grow it to at least $8k pm by my targeted retirement age 44.

If my children give us allowance once they start work, it will be a bonus. I will not downgrade from my 4 bedder condo so that my children or even grandchildren in the future can visit us and use the spare rooms, gym, tennis court and swimming pool.

Oh well, I supposed you dont believe that people can actually amass more than $1m in their CPF accounts by their mid 50s?

My wife and I did. We are currently 56.

You can ask me how if you want to know.

Its always good to set goals. They provide motivation for us to strive for the better.

You didnt say how old you are, so cannot gauge how many years you have before you hit 44.

Sharing from my own investment journey, it took us a good many years to reach our current passive income level of $150k pa.

The average return from our investment is 5%. So you can imagine that for every extra $1k of passive income, we would need to inject an additional $20k of capital into our investment be it stocks or other instruments. Also as the investment size grow bigger, you tend to take less risks, meaning that some of your investment may not even give your 5% returns.

In your case, to go from $5.5k pm to $8k pm (or an additional $2.5k pm or $30k pa) at an average rate of return on investment of 5%, you will need to inject a capital of $600k into your investment holding. Assuming 5% returns, to achieve your current $5.5k pm (or $66k pa) passive income, your current invested capital would be $1.32m. It would be unwise to chase high returns without due considerations of the attendant risks.

How many years do you have before you reach 44, and how much savings you have each year will determine whether you can hit your target of $8k pm by that time. For us, our savings rate only started to accelerate after we turned 50. That was when our liabilities and financial obligations started to taper off while our salaries were peaking. Each year we kept setting "new records" in our yearly savings.

Thanks for the comments. I am quite confident of reaching at least $8k passive income goal by 44 as long as my working income is stable for the next 8 years, currently 36 yo. If all goes well might even be able to retire 1-2 years earlier.

My passive income is about $50k a year comprising $40k from stocks and $10k from property. Yield from property is very low. Would probably do better to liquidate the property and put the money in stocks. Hoping for property market to recover.

I don't spend much. Passive income more than covers annual expenses. Feeling lazy and very tempted to quit my job and do something part-time. But looking at the job market and how so many people who are laid off seem to have difficulty finding a similar-paying job, makes me think twice. Also thinking may be good to build a bigger buffer in case of inflation and unexpected needs.

You can retire in luxury in Malaysia NOW.

$50k gets you RM157k. You can rent a luxury condo, drive a luxury car and go holidays to Europe twice a year.

Size matters
 

When investing for passive income, the size of your investment capital matters. Here are the maths.

If the ROI is 10%, and you want to have $50k pa in passive income, you will need to invest $500k.

At 5% ROI, you will need $1m investment capital to get $50k pa in passive income
At 3% ROI, you will need $1.67m investment capital
At 2.5% ROI, you will need $2m investment capital

If you upped your passive income target to $100k pa, then

At 10% ROI, you will need $1m investment capital
At 5% ROI, you will need $2m investment capital
At 3% ROI, you will need $3.34m investment capital
At 2.5% ROI, you will need $4m investment capital

When you invest big big, you will tend to spread your investment basket so as to mitigate your risks. You will have some high returns and some lower returns (but lower risks). The average ROI will generally be around 5% for most people.

For us, our investment is spread over three main types of instruments - stocks, property and bonds/FDs/CPF which provide us a total passive income of $150k pa. The capital appreciation/ loss of our investment is not included.

Yes I would like to know. Can you share how both of you managed to hit $1mil in CPF accounts by Mid 50s?

Since age 29, we have been topping up our cpf OA SA with our full salary

Another clueless person spouting nonsense above.

People have a love-hate relationship with CPF. We have read that many people are accusing the CPF for "shifting the goal post" and preventing them from withdrawing their money at age 55. And on the other hand, we also have people trying to deposit more money into their CPF accounts for the risk free interests that CPF provides, but are unable to do so.

The CPF was set up primarily to ensure people have some money in their retirement both for normal expenses (through the OA, SA and RA) and medical expenses (through the MA). The SA money for a typical worker will be moved to the RA when he reaches 55. Those who can save more in their SA or those who continue working after 55 will continue to have the SA.

Each year, the CPF limits the amount that a person can contribute to his CPF accounts. The maximum amount for 2017 is $37,740. As you can see, the CPF Board is not a bank. People cannot just deposit any amount they like to their CPF.

Because of this contribution limit each year, and because the CPF will distribute the contribution each month/year to the 3 accounts (OA, SA & MA), there is only so much a person can grow his CPF to, at any point in time.

There is thus a maximum amount that a person can have in his CPF accounts at different points of his life. Thats why when a relatively young person (the 43 yo fake) claims he earns $34k of interests a year from CPF, alarm bells should be set off. To earn $34k of interest from CPF, you would need a minimum of

SA - $150k (interest earned = $6k @ 4%)
MA - $52k (interest earned = $2.08k @ 4%)
OA - $1.036m (interest earned = $25.92k @ 2.5%)

A person contributing the max of $37,740 each year for 20 years assuming the 43 yo starts work at 23, his total contributions will only amount to $754,800! This is way below the $1.036m needed to generate the $25.92k of interest, not taking into account that some of the amount contributed will actually be divided into the MA and SA.

Ok. I will stop here for now. I will continue in next post how a person can indeed grow his CPF amounts to more than a million dollars, not at a young age but in his mid 50s.

Currently getting close to 11k from two condo rentals & some blue chip stocks. 49 this year and hoping to retire by 52 once the last mortgage installment is pad off, but still haven't thought of what to do after retirement.

well done! your 11k pm or 130k pa of passive income is well enough to cater for basic needs in singapore. you can in fact retire now.

More or less so, but I'm currently trying to do basic prep work post retirement. Heard a lot of my friends early retirement then not much to do after the initial round of overseas holidays.

Richness can be relative (comparative) or absolute.

Relative (comparative) richness
When my neighbour saw that my wife and I have a car each, they said we were rich, even though both our cars were the mass market Jap cars. In absolute wealth terms, my neighbour could be the richer one. Likewise, I told my other neighbour he was rich as his home was a double storey penthouse in our condo but in actual fact, I really dont know his net worth.

Then there is the networth comparison. You see a guy having a higher networth than you and you say he is rich. The correct term to use should be that he is richer - because there is a quantitative measure for richness. See below

Absolute measure by networth
> $1bn. : billionaire club
$500m to $1bn : Uber rich
$100m to $500m : super rich
$50m to $100m : very rich
$10m to $50m : rich
< $10m : general masses

To qualify to be called "rich", you need to have an individual networth of $10m and above. All the rest of us are the general masses. Each one is either richer or poorer than you but are not rich.

Many years ago (30 years), you can be called rich if you have $5m in networth but not now. Similarly in another 20 years, you may need to have $15m networth to join the "rich" league.

So everyone may appear richer than you, but they are certainly not rich - unless their networth hit $10m and above.

In this day and age I am surprise there are some degree educated PMEs out there who cannot even reach their first million net worth by 40. Some are even worse, relying on just downgrading from condo to HDB at 62-65 just to unlock that miserable 700k for retirement for both couple, i.e. 350k per pax is their main retirement fund. Crazy...

For singles is very easy to achieve millionaire by 40 yo, but most people have other financial expense like parents, kids, housing, car etc. For most sg couple if can reach 4-5mil by retirement should be enough to get by, anything extra can consider bonus.

By the time we retire at 55, we have cash savings of $750k. We calculated that from 55 to 65 years old, our total retirement expenses will be $500k. This takes into account inflation.

At age 65 onwards we will receive $48k pa from our CPF Life and another $12k pa from stocks dividends. In total our passive income from 65 onwards is $60k pa.

We will be retiring in place in our paid up 3 bedroom condo (worth $1 million). We do not need to downgrade to retire. We are now 46 & 48 years old.

At age 55, this is our expected expenses per month

Food, groceries, utilities & condo fees $1500
Public transport (our condo is near an MRT station) $200
Medical insurance & fees $800
Entertainment & holidays $500
Miscellaneous $500
Total $3500 pm or $42k pa

Not to side with anyone, but it is possible to get $20 k CPF interest at age around 40s...

See this post :

AK showing off his CPF-OA and MA (2017). | A Singaporean Stocks Investor (ASSI)

Hello, $20k is a big world of difference from $34k. And dear AK71 is 46 yo not 43.

Why is $20k a big world of difference from $34k?

Assuming the fake 43yo has $215k in his SA, he will have the same interest from SA as AK71 at $8,800

His MA, lets say is $52k, will give him an interest of $2.08k

That means the rest of his interest has to come from his OA. ($34k - $8.8k - 2.08k = $$23.12k)

With the CPF interest for OA at 2.5%, this means he has to have $924k in his OA.

I already showed that a person contributing to max ($37,740) each year for 20 years will only have $750,800 - below the $924k needed to generate the $23.12k of interest.

Dont forget this $750,800 has to be distributed to the other accounts (SA and MA) as well.

AK71 figures are real. And if he continues to make maximum contribution of $37,740 each year till he is 55, he will likely achieve more a than $1million in his CPF.

AK has 9 more years to go. So he can contribute 9 x $37,740 = $339,660

Adding to his current amount of $457.4k (OA) + $215.8k (SA) + $52k (MA) will give him a total of $1.064m. With 9 years of interest at $20k per year = 9 x $20k = $180k

So at 55, AK should have $1,244m!

And AK's case validates my point that an individual can have more than $1m in his mid 50s.

My CPF amount, total of all accounts, is slightly higher than that. Even if we want to contribute more, CPF does not allow.

Maybe he had a cash cpf infusion at young age and that was transferred from OA to SA.

Agree that maybe unlikely someone to have so much cpf interest now but I think not the same next time as I have heard of well off parents giving up to FRS for their toddler.

So never say never

It is of course possible to give your offspring a cash infusion amounting to FRS in his SA.
Read that again - SA. We did that for our children by the way.

Now, go and read post #45 again. The fake 43 yo said he used his CPF money to buy property thereby reducing his CPF interest from $34k to $18k. This money has to come from his OA not his SA. That is $16k of OA interest or $640k of OA money. And I am already assuming he is contributing the max every year since day 1 of working life. Most people dont even earn that much per year in their early years of working, not to mention contribute $37,740 to their CPF!

Go figure if the numbers add up!

Have you reached 40 years old? Most Singaporean men who graduate with a degree will have about 15-16 years of working before he reach 40 years old. To accumulate $1m in 15 years, he needs to accumulate $66.7K per year of savings for 15 years. How many people can do that unless he has been very successful or lucky in investing - be it stock market or property investment. You are either an impressionable young man who believes that having a degree will automatically make you a successful millionaire at the young age of 40. If that is the case, you will probably feel miserable and sore when you grow up in the real world. If you had already accumulated $1m before 40, it is either you had some luck or success in your investment or career. Good for you and there is no need to brag or "feel surprised" why some PMEs cannot reach. The reality is most people will not reach their $1m by 40.

what about a successful singaporean couple by age 40?

You need to define what is "successful".

My take is that you dont need to be "successful" to attain some wealth, you just need the following (or to be more precise, to attain a $1m by your 40s):-

1. Upon graduation, start work immediately in a company that pays you a decent salary (eg. $4k pm)
2. Do not have any employment gap. That is, work continuously from 23 or 25 to your 40s.
3. Save at least 25% to 40% of your salary each year.
4. Get married early, and to a working wife. Here, you will realise why "1 + 1 > 2". Here if you both work, you will find that you can save much more, take less loan etc..
5. Enjoy the subsidies and grants of a BTO
6. Invest your savings

My and wife did all the above 6 steps and our networth hit $2.5m when we were in our early 40s. We dont consider ourselves as successful in any way. If I had remained single I doubt I could even accumulate $1m in my 40s.

When we were in our late 40s, we were able to just survive on one salary, meaning we could save the other person full salary every year!

Now in our mid 50s, we are able to survive on just our passive incomes, meaning both our salaries are saved!

Your advice is good but the above 6 steps is not enough.

To save 30% of salary from age 24 to 40 for 16 years, you need to make $200K from Year 1 -16 to save $960K.

If we just look back 25 years ago, starting salary is only $2K pm.

You probably achieve your net worth through property gain, good career (makes >$100k in your early 30s, 25 years ago) or been successful in investing your $. (Not those safe 3-4% return type of investment but riskier one.

Well done!

Singapore is a famous playground for the rich. There are so many investment opportunities be it properties, stocks, derivatives, alternatives, online businesses etc. If one has as stable and decent well paying job, it shouldn't be hard to reach at least 1 mil before 40 at all.

The problem is many people are just too lazy too care. They either spend most of their money with little savings or worse still, save money diligently every month but too lazy to even figure out what to do with the savings. Either leave it to rot in the banks or just dump everything to garbage like life insurance, endowments or mutual funds.

Then when they are fired in their 40s and 50s, go around whining about foreigners, "stupid HR/boss", uncaring government and default to another brain dead overwork underpaid option like driving Uber/Grab. Worse still some get jealous and lash out at similar people like them who have succeeded by labeling them as just simply lucky in investment or have rich parents.

It shouldn't be hard to reach at least 1 min is very subjective. For those who reach (10%?), it is not hard at all. For those who couldn't reach (90%?), it is very hard. If more than half (50%) can reach 1 mil, what do you think will happen?

What crap logic is this? Might as well say it's very easy to be PM is subjective since it is not hard at all if you happen to be Lee Hsien Loong.