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Do this to inject more funds into CPF-SA?

Wednesday, August 23, 2017

InvestSg:
Got a question: Is it possible to max out SA, use the money to buy SG gov bonds, then top up SA again to max, and then sell the SGBs and return money back to SA? workable bo?

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AK:
I have yet to see anyone do this. Personally, I don't think it is advisable unless we want much more of our funds in our CPF-SA which we cannot access till we are 55. Liquidity should be a pertinent consideration.

Definitely, like I have always said, it is prudent to treat the CPF-SA as the investment bond component of our investment portfolio but, for the average investor, going beyond the FRS is probably overdoing it.

The exceptions would be investors who are very rich and the FRS is too low a percentage of their total portfolio.

Even in such cases, it could be a good idea to consider genuine bonds (like the Singapore Savings Bond) and not a pseudo bond like the CPF to park the spare cash.

It is my belief that I should use the CPF as a cornerstone and not as the entire foundation of my retirement funding strategy.

----------------
Update:
Oliver Tan:
What you have in SA +any investment (using SA money) cannot exceed prevailing FRS. So answer to InvestSg should be "impossible".


Related posts:

1. 4 ways to boost our CPF savings.
2. Build a cornerstone in retirement funding.

3 comments:

SK said...

Please note that the FRS calculated is including the amount use to purchase unit trust.You are not able to transfer from OA to SA.

AK71 said...

Hi SK,

Thank you for sharing this. :)

AK71 said...

Ed Cheongster:
Not possible as OA to SA as well as top ups to SA will consider the amount withdrawn from CPFIS scheme.

ASSI:
Yup. Blog updated. :)

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