Previously, when the profits could be withdrawn, I was actively investing my CPF funds to invest in stocks. Quite 'shiok' to have extra cash flow every year from the profits...
Once they stopped that practice, I decided it's not really worth the time and effort, especially since my investible amount kept getting lower (every time I do a sell, some funds will be sucked back into my untouchable CPF account) due to changing rules and increasing Minimum Sum. I sold all my shares and used it to pay down (then off) my Housing Loan. Today, I have only ~$5k in my CPF-OA.
Instead of looking at my CPF monies as untouchable low-hanging fruits and feeling angry, upset and miserable all the time, I'd decided instead to channel and focus all my energies into building up my own funds, saving and investing and compounding it. The intent and purpose is to reach a point where the total CPF monies is insignificant, as compared to what I have (that's within my full control).
IMO, at retirement, if your CPF monies is going to be a significant amount as compared to your total Net Worth, I don't think you're going to have a very enjoyable lifestyle...
(04-09-2012, 09:22 AM)ken Wrote: [ -> ]If not, hopefully our children can inherit them.
(Good Luck !)
It is possible to treat CPF as life policy till 62 especially if there is a mortgage insurance in place.
So, for those with a significant amount in OA+SA, they can reduce their term insurance in correspond amount.
(04-09-2012, 10:03 AM)KopiKat Wrote: [ -> ]IMO, at retirement, if your CPF monies is going to be a significant amount as compared to your total Net Worth, I don't think you're going to have a very enjoyable lifestyle...
With OA at 2.5% and SA at 4%, it is quite possible that CPF may outrun the cash savings of many Singaporeans provided they had not overcommitted in their housing loan.
I still keep my housing loan though since it is just 0.1% higher than OA interest rate and the 1st 20k enjoys 3.5% interest rate.
I still actively managing my CPF since it is quite fun trying to outperform the 2.5% CPF return.haha.
(04-09-2012, 10:06 AM)yeokiwi Wrote: [ -> ]With OA at 2.5% and SA at 4%, it is quite possible that CPF may outrun the cash savings of many Singaporeans provided they had not overcommitted in their housing loan.
I still keep my housing loan though since it is just 0.1% higher than OA interest rate and the 1st 20k enjoys 3.5% interest rate.
I still actively managing my CPF since it is quite fun trying to outperform the 2.5% CPF return.haha.
I am keeping my housing loan, instead of pay down (or off) with my CPF OA.
The housing loan carry less interest than CPF OA. I am effectively earning more than 1% in interest if i keep the $ in CPF OA
(03-09-2012, 01:53 PM)sgd Wrote: [ -> ]Delaying payment does not work either.
Do you have any evidence to say that delaying payment does not work?
This is a common retirement practice advocated by personal finance guru's like Suze Orman and the likes.
The idea is that you work longer and contribute to CPF and at the same time the longer you keep it CPF, the more compounding interest you get and thus when you draw down the total amount is bigger .
The purpose is as Yeokiwi highlighted is because people are living longer and this would help them ensure they have adequate funds when they really need it. It also reduces the burden on the taxpayer .
I think if is actually your own fault if you didn't save for retirement and expected to use only the CPF money for your total retirement needs.
There is an error in your way of thinking.
The CPF should be a supplement to your retirement living income and not the total amount or the higher amount.
It helps you at the later stage to supplement your retirement needs.
If you have lots of money in CPF, you can withdraw it at age 55, as the minimum sum only takes a portion based on inflation and other related metrics.
(03-09-2012, 01:53 PM)sgd Wrote: [ -> ]Can you imagine for a moment if now you reach 55yo and are expected to live longer and you go to cpf to get your money out and they tell you
"oops you don't have the minimum sum come back again in a few years"
So how will you live longer in the future if you can't even withdraw the money to live on today is ludicrous.
I think it boils down to trust in government. And i would let data to speak rather.
On average, withholding money in CPF for old age do make senses, just how much is enough.
Will the min. sum last me for 15 years on average ?
That's the purpose of CPF LIFE correct?
It's an annuity that provides for Life.
(04-09-2012, 10:41 AM)corydorus Wrote: [ -> ]Will the min. sum last me for 15 years on average ?
When it comes to investing many here in this forum have the most stringent and exacting requirements and demand the most transparent where their money is involve yet when it comes to our cpf monies and going on's behind them many choose to ignore, why? Maybe things are looking great now or their careers are at stake so not convienient to "rock the boat" ?
I choose not to believe because the whole thing doesn't add up. This started as a simple retirement scheme has now grown into complex instrument and the money seem to be getting further and further away why? Nobody can answer except an excuse "people living longer" and trying to justfy it that's the real conspiracy theory if you are looking for one.
(31-08-2012, 11:26 PM)tanjm Wrote: [ -> ] (31-08-2012, 02:12 PM)snowcap Wrote: [ -> ]I have put almost all of my investible OA into REITs and dividend stocks since 2004. Averaging 6% yield, even through the 08 GFC.
I congratulate you then for picking the right reit.
Let me ask you : supposing you had invested all your OA in a reit. Then GFC struck and the reit issued rights to raise money, and you hit your investible limit in CPF to pick up the rights issue. You would then suffer dilution and loss of capital through liquidity risk. Many Reits raised money around GFC.
If you make 6% on 90% of your money, but lose 50% on the other 10% of your money. What is your net P&L? About zero. Could that happen while invested in reits during GFC ? - yes.
Thanks for the points.
My experience during the GFC was that, yes the REITs I held issued rights. However, the dilution was not significant. They would have to issue the entire market capitalisation of the REIT to dilute my yield into half. So most of them diluted my yields by 10% or so (IIRC). Which I can endure. So a 6% yield became 5.4%. Still better than CPF-OA.
If contributions of 14% to 16% of one's income for most of one's work life is only for a supplement to one's retirement living income, how much more then, should one put aside for the main source of one's retirement living income?
Since it is only a supplement, it follows then that CPF LIFE is insufficient, even if it is described as provides for life?
Just some comments to challenge the mainstream thinking.
(04-09-2012, 12:12 PM)wsreader Wrote: [ -> ]If contributions of 14% to 16% of one's income for most of one's work life is only for a supplement to one's retirement living income, how much more then, should one put aside for the main source of one's retirement living income?
Since it is only a supplement, it follows then that CPF LIFE is insufficient, even if it is described as provides for life?
Just some comments to challenge the mainstream thinking.
CPF is a tool designed for the poor, to make sure they don't starve to death, or become a liability to the state. That means you can maybe eat 3 x $2 meals a day, live in a small studio of 35 sqm, don't go on holidays, etc.
CPF is not meant to provide us with a "comfortable" retirement. People who want that should save on their own. This is why CPF has a salary ceiling (used to be $4500, I think it's $5000 now).
It is not relevant to talk in terms of percentage, because a low wage worker earning $800 a month already complains to the MP that the 14-16% CPF is reducing his take-home pay to a point where he cannot feed his family, and he has a valid point. While the people earning $10,000 can easily squirrel away $5,000 (50%) every month into investments (depending on their lifestyle, there are people who earn $10k but spend $11k).
The idea is that you one should try to
a) earn more by upgrading one's skills, or try to get promoted
b) live within one's means
c) put off some consumption today, as savings for the future
d) invest to outdo inflation so that c) retains its purchasing power
My humble opinion. You may disagree.