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Hi Valuebuddies
Recently, I found out it is possible to shift money from CPU OA to SA for better interest rate. (Yes, I am quite out of touch with CPF)
This transfer is irreversible, which means that the money gets stucked in SA until at least age 55.
I am now thinking of maxing out my SA account to get the nice 4% interest income provided by SA.
As I understand, OA can be used for investment, housing, education, and insurance.
- I think investment with CPF is not so attractive compared to a riskfree rate of 4% in SA.
- Education is not an issue for me.
- Paying for insurance premium with the remaining money in my OA should not be a problem even after maxing out SA.
So I think the only consideration is whether or not I intend to buy a house from now until 55.
Are there any other considerations that I have overlooked?
Thanks!
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Additional Qn from me: Does the OA-SA shift affect the CPFIS stock limit??
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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10-07-2014, 10:42 AM
(This post was last modified: 10-07-2014, 10:43 AM by corydorus.)
(10-07-2014, 09:20 AM)gzbkel Wrote: Hi Valuebuddies
Recently, I found out it is possible to shift money from CPU OA to SA for better interest rate. (Yes, I am quite out of touch with CPF)
This transfer is irreversible, which means that the money gets stucked in SA until at least age 55.
I am now thinking of maxing out my SA account to get the nice 4% interest income provided by SA.
As I understand, OA can be used for investment, housing, education, and insurance.
- I think investment with CPF is not so attractive compared to a riskfree rate of 4% in SA.
- Education is not an issue for me.
- Paying for insurance premium with the remaining money in my OA should not be a problem even after maxing out SA.
So I think the only consideration is whether or not I intend to buy a house from now until 55.
Are there any other considerations that I have overlooked?
Thanks!
Yes i did the shift a year ago i think. The process is so easy that raise some concerns for myself. Be careful you have truly no plan for those money in OA. IIRC, there is no reminder on caution and re-confirmation pop-up warning box on irreversible action and SA cannot be use for housing etc.
Secondly considering is irreversible, the security is a little lacking. I would expect something like a signed confirmation such as CPF will sends a self-reply paper letter to be signed for confirmation. And again the up and down sides of the action.
Maybe i am asking too much but i thought the relationship is to work close together between Gov and Citizen.
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(10-07-2014, 09:20 AM)gzbkel Wrote: Hi Valuebuddies
Recently, I found out it is possible to shift money from CPU OA to SA for better interest rate. (Yes, I am quite out of touch with CPF)
This transfer is irreversible, which means that the money gets stucked in SA until at least age 55.
I am now thinking of maxing out my SA account to get the nice 4% interest income provided by SA.
As I understand, OA can be used for investment, housing, education, and insurance.
- I think investment with CPF is not so attractive compared to a riskfree rate of 4% in SA.
- Education is not an issue for me.
- Paying for insurance premium with the remaining money in my OA should not be a problem even after maxing out SA.
So I think the only consideration is whether or not I intend to buy a house from now until 55.
Are there any other considerations that I have overlooked?
Thanks!
CPF savings can be used to invest in SPDR Straits Times Index ETF. The ETF returned 8.4% on an annualised basis over the past 10 years, with dividends included.
Sources:
http://mycpf.cpf.gov.sg/Members/CPFSchem...nd_SDS.htm
http://www.fool.sg/2014/03/25/straits-ti...-10-years/
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If you know how to invest with good returns, do not transfer money to SA.
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If you buy a second property using CPF (meaning 1st property also use CPF), you have
to set aside the Mimimum Sum before you can use the remaining CPF balance for the second
property.
In that case, might as well, transfer to SA to max out the Minimum Sum.
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
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If u do the transfer u are forsaking the tax shield for SA top up $7k annual
I use cash meant for retirement to top up SA instead, earning 4% annual and tax shield, using it as a pseudo bond component of my retirement portfolio.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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(10-07-2014, 10:59 AM)chern Wrote: (10-07-2014, 09:20 AM)gzbkel Wrote: Hi Valuebuddies
Recently, I found out it is possible to shift money from CPU OA to SA for better interest rate. (Yes, I am quite out of touch with CPF)
This transfer is irreversible, which means that the money gets stucked in SA until at least age 55.
I am now thinking of maxing out my SA account to get the nice 4% interest income provided by SA.
As I understand, OA can be used for investment, housing, education, and insurance.
- I think investment with CPF is not so attractive compared to a riskfree rate of 4% in SA.
- Education is not an issue for me.
- Paying for insurance premium with the remaining money in my OA should not be a problem even after maxing out SA.
So I think the only consideration is whether or not I intend to buy a house from now until 55.
Are there any other considerations that I have overlooked?
Thanks!
CPF savings can be used to invest in SPDR Straits Times Index ETF. The ETF returned 8.4% on an annualised basis over the past 10 years, with dividends included.
Sources:
http://mycpf.cpf.gov.sg/Members/CPFSchem...nd_SDS.htm
http://www.fool.sg/2014/03/25/straits-ti...-10-years/ You are correct. But there is one disadvantage or danger. That's if you need the money urgently now but it happens that STI Index is like in March 2009, (SPDR Straits Times Index ETF.) then you may lose out.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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I recently did the top up to get the higher interest, with the understanding that we need half the minimum sum to buy second property anyway.
Also, I don't think the transfer from OA to SA uses up the 7k tax relief quota.
Do note that it's possible to invest from your SA account, but the products and service providers are limited. I have a problem identifying the service providers and products for SA even though I am corresponding with the CPF customer service...
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^^ there is a limit on SA for u to top up, currently at $155k, many in THIS forum will hit the limit sooner or later 
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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