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  #2551 (permalink)  
Old 01-02-2017, 04:52 PM
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Quote:
Originally Posted by Unregistered View Post
Putting money in CPF SA is about the dumbest thing an educated person can do.
Why? Please explain.

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  #2552 (permalink)  
Old 04-03-2017, 11:53 PM
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If by age 31, net worth is 300K excluding cpf, by what age can hit 1M? Assuming returns on investment is at a modest 2.0%. Frugal lifestyle and saves 3K pm.

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  #2553 (permalink)  
Old 06-03-2017, 12:03 PM
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klarkkent is on a distinguished road
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All so successful, read already feel so depressed.

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  #2554 (permalink)  
Old 08-03-2017, 03:34 PM
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Quote:
Originally Posted by Unregistered View Post
If by age 31, net worth is 300K excluding cpf, by what age can hit 1M? Assuming returns on investment is at a modest 2.0%. Frugal lifestyle and saves 3K pm.
At 2 % compounded returns over 20 years , you will get extra 151k from investments . Savings of 3 k per m will give you 36 k per year . In 20 years you will get 720k .
Making it over 1 m by 51 . However with inflation . The pv of that 1 m is only 670k thereabouts .
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  #2555 (permalink)  
Old 08-03-2017, 11:27 PM
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Quote:
Originally Posted by Unregistered View Post
Why? Please explain.
I must qualify that I was not the poster who claimed that "Putting money in CPF SA is about the dumbest thing an educated person can do." But I would like to offer some perspectives to the issue. There is also no right or wrong here.

Money in the CPF SA enjoys a guaranteed 4% interest per year from the government which means its practically risk free. But in exchange for that, you have to forgo the option of ever touching the money until you are 55 or 65.

Why 55 or 65?

At 55, a portion of the SA will be automatically placed in the RA (retirement account). In 2017, the RA full retirement sum is $166k. (This amount increases every year to keep pace with inflation). So at 55, if your SA amount was higher than the FRS of $166k, you will be able to withdraw the excess left over in your SA. If not, you will have to wait till you are 65 to ever see your money. And at 65, you will be paid monthly a certain amount till your last day. So you see, even at 65, you cannot withdraw your full amount!

So when you are young, just getting married and looking to purchase your first home and starting a family, it may not be the wisest thing to "lock up" money in the SA. This money could help you reduce your home loan and mortgage payment burden.

On the other hand, when you are more settled in your career, family home is set up, and having extra savings, it would make sense to shore up your SA. This has to be money you dont need to use for a very long time!

Sharing my own experience, I didnt put extra money into SA when I was young. I only contributed what they deducted monthly from my salary. This went on till I was 50 yo. At 50, after my home loan was fully paid and with extra savings, I then contributed to the max what was allowed in the SA. By 55 yo, I had $230k in my SA, from which they took away $166k to put into my RA leaving about $70k in my SA. This $70k is the amount that I can withdraw at 55, if I so choose to. But since I am still working, I leave the money in SA to earn that 4% pa.


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  #2556 (permalink)  
Old 09-03-2017, 09:09 AM
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Wise man!!

I am mid-40's and currently, SA account has $193K. I am not able to top up to gain the tax incentive as the capped is $166K.

If I can continue to till age 55, it would be great to hit the then ERS limit estimated $354K. This is easily achievable with the annual contribution and 4% compound interest. And have not factor in the extra amount sitting in the OA that would be transferred to meet the shortfall.

I feel that SA ERS is a safe retirement plan as I have encountered huge investment losses in the past.

CPF life would be my safety net at age 65. Alternatives are the SRS which I have been contributing. However, besides investing the SRS on UT (global market yield 8%), I am not willingly to take the risk in buying shares. So there is a large amount sitting in SRS account earning low interest. Some banker recommended buying into insurance which gives an estimated guarantee of 2.25%. I feel the insurance yield is too low to consider.

May I ask what would be a safer bet using SRS money? Perhaps waiting for good time to buy into the blue chip shares such as bank, SIA, or ST gov-linked coy?

Of course, besides depending on SRS and CPF Life, I have annuity insurance and cash saving to depend on.

I am not sure when the poster claimed "Putting money in CPF SA is about the dumbest thing an educated person can do.", does he has any other good suggestion that has worked for himself or proven to be safe and yield better and guarantee for life as CPF Life?

Thanks



Quote:
Originally Posted by Unregistered View Post
I must qualify that I was not the poster who claimed that "Putting money in CPF SA is about the dumbest thing an educated person can do." But I would like to offer some perspectives to the issue. There is also no right or wrong here.

Money in the CPF SA enjoys a guaranteed 4% interest per year from the government which means its practically risk free. But in exchange for that, you have to forgo the option of ever touching the money until you are 55 or 65.

Why 55 or 65?

At 55, a portion of the SA will be automatically placed in the RA (retirement account). In 2017, the RA full retirement sum is $166k. (This amount increases every year to keep pace with inflation). So at 55, if your SA amount was higher than the FRS of $166k, you will be able to withdraw the excess left over in your SA. If not, you will have to wait till you are 65 to ever see your money. And at 65, you will be paid monthly a certain amount till your last day. So you see, even at 65, you cannot withdraw your full amount!

So when you are young, just getting married and looking to purchase your first home and starting a family, it may not be the wisest thing to "lock up" money in the SA. This money could help you reduce your home loan and mortgage payment burden.

On the other hand, when you are more settled in your career, family home is set up, and having extra savings, it would make sense to shore up your SA. This has to be money you dont need to use for a very long time!

Sharing my own experience, I didnt put extra money into SA when I was young. I only contributed what they deducted monthly from my salary. This went on till I was 50 yo. At 50, after my home loan was fully paid and with extra savings, I then contributed to the max what was allowed in the SA. By 55 yo, I had $230k in my SA, from which they took away $166k to put into my RA leaving about $70k in my SA. This $70k is the amount that I can withdraw at 55, if I so choose to. But since I am still working, I leave the money in SA to earn that 4% pa.
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  #2557 (permalink)  
Old 11-03-2017, 10:51 AM
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Here are my thoughts on the following topics:

1. CPF SA & RA

Both the CPF RA & SA attracts 4% interest pa. The government gives 6% interest for the first $30k in your RA and 5% interest for the next $30k and 4% interest for the rest of the amount in the RA. RA is only applicable to people who are 55 and above.

Question is, is it wise to top up the RA to ERS using your SA money? We know currently the SA earns the same interest (4%) as the RA, so should you move your SA money to top up the RA to ERS?

Considerations- at 55, any extra money left over in your SA after they moved the full retirement sum (FRS) to the RA, can be withdrawn. On ther other hand, money in your RA cannot be touched until you are 65. So in my case, what I did was, I used cash to top up my RA to ERS - $249k. I left the excess money in my SA untouched to earn the 4% interest pa.

2. SRS

The SRS was introduced to help people save on income tax and at the same time save up for retirement. So I treat my SRS money (currently at $200k) as a form of standby money to be available for drawdown when I turn 62. I thus don't use my SRS money for shares investment which come with higher risk. Using the SRS money to invest in shares exposes you to the risk that the money may not be there when you need it (from 62 onwards) in an economic downturn or when the stock markets are depressed. I mainly used the SRS money to buy single premium insurances with guaranteed returns and payouts. In return for the guaranteed payout, I am willing to accept a lower return.

3. CPF as a steady source of income in retirement

The CPF can be a steady source of income in your retirement if you build it up steadily and carefully. Many people either dont have the means to build it up or didnt realise it can be a good source of income in retirement.

In our case, the CPF is one of 3 key sources (not counting the SRS) of passive income for our retirement sustenance. Here is what the CPF will provide us:

1. CPF Life (payout at 65): $3.2k pm (for both of us) or $38k pa
2. CPF OA (just the yearly interest) : $4k pm or $48k pa

These two already provide us a total of $86k pa

The other two sources are dividend income and rental income. The two sources are more volatile and very dependent on market/economic conditions. In good years, we can expect $90k from them, while in bad years, we could have no tenant!

So we plan our lifestyle based on the CPF income alone so that we wont have drastic changes between good and bad years.


Quote:
Originally Posted by Unregistered View Post
Wise man!!

I am mid-40's and currently, SA account has $193K. I am not able to top up to gain the tax incentive as the capped is $166K.

If I can continue to till age 55, it would be great to hit the then ERS limit estimated $354K. This is easily achievable with the annual contribution and 4% compound interest. And have not factor in the extra amount sitting in the OA that would be transferred to meet the shortfall.

I feel that SA ERS is a safe retirement plan as I have encountered huge investment losses in the past.

CPF life would be my safety net at age 65. Alternatives are the SRS which I have been contributing. However, besides investing the SRS on UT (global market yield 8%), I am not willingly to take the risk in buying shares. So there is a large amount sitting in SRS account earning low interest. Some banker recommended buying into insurance which gives an estimated guarantee of 2.25%. I feel the insurance yield is too low to consider.

May I ask what would be a safer bet using SRS money? Perhaps waiting for good time to buy into the blue chip shares such as bank, SIA, or ST gov-linked coy?

Of course, besides depending on SRS and CPF Life, I have annuity insurance and cash saving to depend on.

I am not sure when the poster claimed "Putting money in CPF SA is about the dumbest thing an educated person can do.", does he has any other good suggestion that has worked for himself or proven to be safe and yield better and guarantee for life as CPF Life?

Thanks
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  #2558 (permalink)  
Old 13-03-2017, 09:23 AM
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Thank you again for your advise.

I am in the same line of thinking as you except that I don't have rental income and good dividend.

My other source of passive income besides CPF Life and SRS would be from premium financing insurance policy.

Aiming to buy another property thus working and saving hard for it.


Quote:
Originally Posted by Unregistered View Post
Here are my thoughts on the following topics:

1. CPF SA & RA

Both the CPF RA & SA attracts 4% interest pa. The government gives 6% interest for the first $30k in your RA and 5% interest for the next $30k and 4% interest for the rest of the amount in the RA. RA is only applicable to people who are 55 and above.

Question is, is it wise to top up the RA to ERS using your SA money? We know currently the SA earns the same interest (4%) as the RA, so should you move your SA money to top up the RA to ERS?

Considerations- at 55, any extra money left over in your SA after they moved the full retirement sum (FRS) to the RA, can be withdrawn. On ther other hand, money in your RA cannot be touched until you are 65. So in my case, what I did was, I used cash to top up my RA to ERS - $249k. I left the excess money in my SA untouched to earn the 4% interest pa.

2. SRS

The SRS was introduced to help people save on income tax and at the same time save up for retirement. So I treat my SRS money (currently at $200k) as a form of standby money to be available for drawdown when I turn 62. I thus don't use my SRS money for shares investment which come with higher risk. Using the SRS money to invest in shares exposes you to the risk that the money may not be there when you need it (from 62 onwards) in an economic downturn or when the stock markets are depressed. I mainly used the SRS money to buy single premium insurances with guaranteed returns and payouts. In return for the guaranteed payout, I am willing to accept a lower return.

3. CPF as a steady source of income in retirement

The CPF can be a steady source of income in your retirement if you build it up steadily and carefully. Many people either dont have the means to build it up or didnt realise it can be a good source of income in retirement.

In our case, the CPF is one of 3 key sources (not counting the SRS) of passive income for our retirement sustenance. Here is what the CPF will provide us:

1. CPF Life (payout at 65): $3.2k pm (for both of us) or $38k pa
2. CPF OA (just the yearly interest) : $4k pm or $48k pa

These two already provide us a total of $86k pa

The other two sources are dividend income and rental income. The two sources are more volatile and very dependent on market/economic conditions. In good years, we can expect $90k from them, while in bad years, we could have no tenant!

So we plan our lifestyle based on the CPF income alone so that we wont have drastic changes between good and bad years.
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  #2559 (permalink)  
Old 21-03-2017, 05:35 PM
JustAGirl
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Default Stock take

32 years old now

Investment ppty: ~$1mil
Debt: $750k
Shares/SRS: $116k
Cash: $120k
CPF: $126k

Total: $612k


Quote:
Originally Posted by JustAGirl View Post
26 years old, graduate with no honours, worked for 3 years in banking industry
1st job 2.6K/mth + Bonus
Current job 4.5K/mth + Commission

Networth:
Shares and cash = $110K
CPF (OA only) = $40K
Some insurance, not sure what's the value

No debts - I take public transport and properties prices are too out of reach for me now.

Accumulated most of my wealth through good investments during the 2008/2009 stock crash, bonuses and commissions.

Not the best among my peers but I think I'm doing okay.


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  #2560 (permalink)  
Old 01-04-2017, 12:24 PM
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42 years old single uncle

earning less than 8K per month

Cash 493K
CPF 403K
1 rolex watch worth 5K

no house
no car
no women
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