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Use CPF savings for homes and investments?

Sunday, May 30, 2021

This blog is in reply to a reader's comment: HERE.

Hi Tonny,

Apologies for the tardy reply. 

Didn't check my blog for a couple of days. 

Been spending my time sailing in another world. ;p

We are likely to stay in a low interest rate environment for some time to come. 

So, using our CPF OA money which generates 2.5% risk free return every year to fund the purchase of homes is rather silly.

Of course, for some people, there really isn't any other choice but for those of us who have a choice, if we have idle cash, using that to fund the purchase of homes makes better sense.

If we do not have idle cash but have assets which can be liquidated to generate cash, I would liquidate assets which are not generating an income first if I am thinking of raising cash that way.

Income generating assets should not be liquidated first especially very good income generating assets like investments made in the local banks at rock bottom prices during the crisis.

Of course, the CPF is risk free and volatility free while our investments are not so.

Still, our local banks are well capitalised and well run. 

They are probably the next best thing to the CPF. 

If we have paid rock bottom prices for their stocks, they are probably generating very attractive return on investment for us.

What is more important to us? 

Having something that is risk free and volatility free that generates a decent return like the CPF? 

Or having the next best thing for higher returns like investing in our local banks? 

I don't know what gives you peace of mind. 

You decide. :)

Since I am on the subject, recently, we have been bombarded with advertisements to use our CPF OA money to invest in properties. 

I always say that no one cares more about our money than we do.

Who are these people telling us it is OK to use our CPF OA money to invest in properties if we do not have cash and that owning multiple properties is not something only the rich can do?

These people have vested interest in making us part with our money.

We buy a property through them, they make money.

If the property does not do well later on and if we have to sell, they make money too.

They have nothing to risk and everything to gain.

Don't bite off more than we can chew because some do choke and some choke to death.

Related posts:
1. Buy 2nd property and pay ABSD?

2. Disastrous investments in property market.

3. $500,000 stuck in property investment.

4. Don't do silly things and retire smart.

5. This condo investment has been a drag.

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