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How did AK amass so much money in his CPF-OA?

Saturday, January 31, 2015

I received my CPF statement in the mail last night and when I was chatting with my mom, I told her how much money I have in my CPF-OA now and she was very shocked.

"How much did you say?!" my mom went. 

I passed her my CPF statement so that she could take a look for herself.

Well, to be honest, it might not be much to some people but it is quite significant to me.

So, how much is it?

How did I achieve this?

What I basically did was to do nothing to my CPF-OA after selling my last property about 3 years ago. 

In the purchase of my current home, I use my CPF-OA money sparingly as I was not and still am not able to get any interest income for my cash on hand that is close to 2.5% per annum.

Also, we have to remember that the opportunity cost of using our money in the CPF-OA is a bit more than that because we would have to pay ourselves the accrued interest lost for using our CPF-OA money. 

This happens in the event that we sell the property concerned (before we turn 55).

Unemployed, almost 55 and worried about CPF.

Essentially, what happens is that instead of the government paying us interest on our CPF savings, we would have to pay ourselves interest as the CPF's primary objective is to ensure that we have a financial safety net in retirement. 

I rather prefer the idea of someone else paying me, to be sure.

For most of us, in our early years, it would probably be difficult to purchase a property in Singapore without the help of the funds in our CPF-OA.

However, if we are financially prudent enough to accumulate cash, invest to grow our wealth as we make progress in our career, it is not difficult to imagine us having more cash on hand as time goes by.

In the purchase of our second home years later, assuming that we do, it is then possible to use less of our CPF savings and more of our cash on hand, leaving money in the CPF-OA to grow.

Of course, we could always do voluntary refunds to our CPF-OA as well.

How to stop accrued interest from growing?

Let the government work steadily to help pay for our retirement? 

Yes, you got it, that is the idea.

Related post:
A lot of the money in my CPF-SA is from...


yeh said...

very rich man. hahaha

anon said...

"Singaporeans could be given greater flexibility to put in more money into their Central Provident Fund (CPF), if they want to enjoy a higher level of payouts in retirement. This is among the issues studied by a panel tasked to review the national savings scheme."

ha, ha, AK, the Govt heard you encouraging young Singaporeans to put more $ voluntarily into CPF to compound their retirement funds.

AK71 said...

Hi yeh and jojo,

I hope that through my personal sharing, more people will realise how the CPF can work for them in helping them meet retirement adequacy. :)

Mao Mao said...

Hi AK,

The first $20k in OA enjoys an extra 1% risk-free interest. The rest of the OA only earning 2.5% risk-free.

Have you considered buying cyclical blue chips stocks (e.g. Kep Corp, Semb Corp) for capital gains that far outweighs the 2.5% yield? Locking the stock profits a few times a year seem to be a better deal to get much more capital gains. Am I missing something on why you chose to park so much money in OA to get the conservative but slow interest rate of 2.5%? :)

Ana said...


Through your post, i learnt how to further use CPF as a tool (and one with guaranteed returns, unlike insurance companies) to build a retirement fund, as well as my children's education fund.

I started to study Singapore's CPF, versus HK's MPF... to understand the differences and benefits and weaknesses between the two.

I hope the Government would not adopt HK's MPF system... because it is just giving the fund manager's easy money to earn.

AS I study the pension system - independent of political hatred(I start to observe that singaporeans simply are anti-govt.... without providing alternatives with substance. In this aspect, Singaporeans are quite foolish..compared to the HK people. at least the latter understands that there is no perfect world, & are happy to continue with the existing HK SAR system...and not supporting the students) and realised how there are certain features within CPF which is really "free money".

I think with investments, one must be independent of emotions - with does not only mean "greed" and "fear", but also "hatred".

so, thanks very much AK.

AK71 said...

Hi MaoMao,

I have always looked at my CPF funds as sacrosanct and I shared this view in the early days of my blog.

If my investments should go awry, I would still have my CPF money to fall back on. That was how I thought and that has not changed much.

However, during the GFC, I utilised 20% of my CPF-OA funds and 10% of my CPF-SA funds to buy beaten down stocks and a unit trust. I divested within 6 to 18 months, locking in some gains as the market recovered. I was still rather conservative with what I viewed as my retirement safety net.

I was already almost totally invested using cash. So, I had the exposure that I wanted. If Mr. Market should return to a state of depression, I would have my CPF funds to deploy. This is consistent with my strategy of not being fully invested at any time.

Now, I think of money in my CPF-OA as one of my war chests. If prices of quality stocks should go much lower from here, I would have the means to take advantage of Mr. Market's depression. :)

AK71 said...

Hi Ana,

I am very happy that you have found my blog on the subject inspiring and useful. :)

You are right about the system in Hong Kong. Actually, my friends in Hong Kong envy us in Singapore for having the CPF.

I know many people just dislike the PAP government. They get emotional and they don't think rationally whenever they talk about the government.

So, through very personal sharing from some non-partisan blogger called AK, the hope is that I might be able to reach out to people who are still wavering. As for those who are staunchly anti-government, I doubt that I would be able to reach them.

We can only hope that the voices of reason prevail. :)

caelitus said...

Does anyone feel that allowing people to contribute beyond the minimum sum (over above the mandatory contributions) assists the upper middle echelons more? Perhaps in the second set of CPF recommendations, an increase of 50 basis points accorded to the first $60,000 of CPF balances.

AK71 said...

Hi caelitus,

I agree with you. The CPF is to help the masses. It should not be helping the rich. :)

I also agree with you that paying more on the first $60K in the OA and SA combined will be more helpful to the masses. :)

seefei said...

govt should allow us to contribute more to SA. i tried to top up my SA recently but was rejected cos there is $155K sitting there. as the minimum sum (MS) (currently $155K) is a uptrend goal post, govt should allow contribution beyond the current MS. i think govt also know that 4% risk free interest is a good deal, hence restricting our top up. Hope my thinking aloud is correct..

AK71 said...

Hi seefei,

I hear you. I would like to contribute more to my CPF-SA too. Maybe, just 10% more than the current MS? I am quite easily satisfied. ;p

Ana said...

Seefei, unfortunately the govt's hands are tied! They can't raise the minimum sum coz people will occupy hong lim again. At the same time, also cannot allow unlimited topping up. .... :)

Ana said...

I hope Shanmugam is reading this (as I understand he ask to meet AK once)

AK71 said...

Hi Ana,

Shanmugam wants to meet me? Really? Or do you mean the AK in K.L.? I am worried now. -.-"

AK71 said...

PM from a reader in FB:

With so much in cpf OA, did you make use of the 35% into the stocks? Because I do make use of it to get better than 2.5%.

Assi AK:
During the GFC, I did. Now, it is just one of my war chests.

Ok. Noted.

Assi AK:
I had to think whether to use my CPF-OA as a war chest or have more cash as a war chest and it seemed like a no brainer to use the CPF-OA as a war chest since it earns 2.5% risk free while waiting. ;p

Unknown said...

i am a little confused AK, why would your SA account show that you can VC and contribution from employment when your 2013 balance already more than the MS? According to seefei in the earlier comment, it seems he was not able to VC since his SA had 155k already.

AK71 said...

Hi Darryl,

We can do MS Top Ups to our SA and we can also do VC to our CPF accounts.

We cannot do MS Top Ups to our SA if we have hit the MS. However, we can still do VC to our CPF accounts as long as our mandatory contributions do not exceed the annual conribution cap which is $31,450 this year. ;)

LOL said...

Hi AK,

Regarding your reply to Darryl, can you kindly explain it a little more in detail? As a young Singaporean, I became interested to make VC to my cpf but it is quite confusing grasp the cpf system in detail for me to take advantage of it. Can you kindly help? :)

Thank you!

AK71 said...


Hmmm... I looked at my reply to Darryl but it seems to me that there is nothing left unsaid.

OK, let me put it this way, if you want to beef up your CPF savings for retirement and enjoy tax relief at the same time, do a MS top-up (up to $7,000 per year) to your CPF-SA. You can do this as long as you have not hit the MS which is $161,000 this year.

If you have already hit the MS, you cannot do MS top-up anymore but you can do a VC which is split into your OA, SA and MA (but if your MA has hit limit, then, it is just OA and SA). Note that VC has no tax relief.

You can only do a VC if your mandatory contributions (from your earned income) has not hit the annual limit which is $31,450 this year. In other words, mandatory contributions + VC must not exceed $31,450.

Hope this helps. :)

You might be interested in:
The CPF is a national Ponzi scheme.

AhJohn said...

So MS Top Up is separated with VC, and no yearly $31450 limit? I just learned another rule, so complicate.

AK71 said...

Hi Ah John,

Yes, the MS top up is not considered as part of the annual contribution limit of $31,450. Make sure you use the correct forms for doing MS Top Up and VC. If in doubt, call the CPF Board to check again. ;)

Nick said...

Thanks AK for clarifying, I always had the impression that MS top-up and VC are one and the same. I learned something new again from your blog.

AK71 said...

On FB, I shared a blog post titled:
"The Dirty CPF-HDB Scheme To Trick Singaporeans?"

In that blog post, I said that our CPF money
"is primarily meant for retirement use. We are allowed to use it for some other purposes including housing in the meantime but please remember that the money is primarily meant for retirement use. So, if we take out all the money for whatever reasons, we have to bear in mind the opportunity cost involved".

I elaborated on this opportunity cost in this blog post.

I know that there are many out there who ask why should they pay interest to the CPF for using their own money. Actually, they are not paying interest to the CPF. They are paying interest to themselves, to their future selves. They must know this.

When we understand the primary mission of the CPF, then, we will know why things are the way they are. Understand the system and make use of the system to our advantage.

Not knowing how the system works is our own misfortune.

jovan said...

Hi AK,

thank you once again for trying so hard to convince many people on our CPF system. Like you I had also been trying very hard to convince my friends on transfer OA to SA early and let the system work hard for us instead of us working hard for the system. The journey is not easy and so far I only manage to convince 5 person including myself.

Indeed, a lot of people out there will ask why the hell am I paying interest for my own money in CPF when it is my money and I am using it for housing. I guess they are comparing it with savings rather than a "loan". I always rational my CPF as a "loan" which is akin to getting a loan from the respective banks. Either way, you will need to pay the interest regardless of the comparison but you are spot on for to say many of us don't understand the CPF mission.

In reality, instant gratification combine with YOLO (you only live once) will always prevail in consumer behaviour while delayed gratification are meant for stupid people like us ;).

Just my 2 cents ^_^

Thank you

AK71 said...

Hi Jovan,

From one stupid person to another, well done! ;)

I know there is plenty of unhappiness with the CPF system but I dare say that much of this unhappiness stems from ignorance. Those of us who understand how the system works should try to help people with misconceptions. We can only hope that once they understand, they won't be unhappy anymore.

However, if they choose not to understand, then, they shall remain unhappy and I hope they will always be in the minority.

jovan said...

For now it's an uphill task but I must say that you have done hell of a good job trying to convince people on the good side of cpf. As usual, keep up the good work. With your blog getting all the popularity I am sure that more people will be convinced or at the very least think harder n deeper into this. :)

I always can't apprehend y people can buy many other products that can't even yield 4% (net off fees) with almost no risk to your money. Alternatively y not treat this as your own investment if everything else is too complicated for you.

AK71 said...

Hi Jovan,

I am quite happy if I am able to right the misconceptions out there about the CPF. What people do after that is up to them.

However, I must say that if people were to treat the CPF as a very long term AAA rated sovereign bond that pays a rather attractive coupon, they would want to top up if they could afford to. It is a no brainer. ;)

AK71 said...

From FB:

hi ak, when you graduated, you transferred all your OA to SA. How did you manage to pay off your housing loan purely with cash and nothing from OA? would be good to hear from you as i want to use the same strategy 🙂 you did not use any OA to purchase house right?

Answer in this blog post 😉
Very difficult for most to buy 1st property without touching CPF
Some people misunderstood me and spread rumours to say I was rich.

AK71 said...

Considering to lock $XXXK in my CPF OA to enjoy a minimum 2.5% interest from sale of my home. I can use my OA money for share/reit to get a higher return when the opportunity arises. In 3 years time, at 55 I can withdraw all if I need too. That way money is controlled. No itchy finger to anyhow spend. What u think?

How do you suppose I have so much money in my CPF OA? ;)

AK71 said...

Reader says...
What else can I do with the faster growing OA to grow my overall CPF funds?

AK says...
Let the government work harder to help fund our retirement.

disr said...

Hi AK,

I noticed you mentioned this in your reply to LOL

"OK, let me put it this way, if you want to beef up your CPF savings for retirement and enjoy tax relief at the same time, do a MS top-up (up to $7,000 per year) to your CPF-SA. You can do this as long as you have not hit the MS which is $161,000 this year.

If you have already hit the MS, you cannot do MS top-up anymore but you can do a VC which is split into your OA, SA and MA (but if your MA has hit limit, then, it is just OA and SA). Note that VC has no tax relief."

I believe you do get tax relief from this, just not from that 7000 relief, but from the usual CPF contribution relief, for whatever amount that you are able to VC?

AK71 said...

Hi disr,

Nope, VC to the 3 accounts does not get tax relief.

Only VC to the MA gets relief (for the recipient).

MC gets tax relief.

So, you might have mixed up VC and MC?

You want to read this:
How to grow our CPF?

AK71 said...

Investminds said...
To grow the OA no that you have, we will need to invest in a property. We need to sell it to earn a profit and money goes back to OA. I will need to wait for another GFC.

AK said...
Nope. You don't have to invest in properties to grow your OA.
Remember, what I have in my OA is mostly a refund of the money I used to buy my first home (plus accrued interest).

AK71 said...

Yi Sarah says...
Wow. How did you do it ?
So much on OA.
It is hard to catch up as I have used up OA to buy my flat.

AK says...
There is a very simple explanation. :)

WTK said...


I believe that it's the matter of egg and chicken for the simple peasant like most of us. It's unlikely that one will have the best of the two worlds. For those who own the property, it's likely that one will have to use the CPF or cash to service the housing loan. It will be much more easier for one who is single and has no financial commitment to save more in CPF as well as cash hoard. I guess that it will be the mentality and mindset of making the best use of the current and prevailing circumstance.


AK71 said...

Hi Ben,

I am not against property purchase per se.

I am against property purchase at any price.

To be sure, property purchase can be a good thing if the price is right. :)

Affordability and value for money.

Chris said...
This comment has been removed by the author.
AK71 said...

Hi ChingKang,

To solve the mystery, I will direct you to a few blogs. ;)

1. Investing or speculating in real estate?
2. Use CPF savings or cash to pay for our home?
4. The AK passive income strategy after making $1 million.
5. Voluntary contributions to CPF in January 2020.

AK71 said...

Oops. Missing link #3.

See also:
3. My investment philosophy and property investment.

Tonny said...

Hi AK, I have been reading your blog for many years and are still occasionally browsing through cos the info is timeless. I have a qn when I read through this blog. My 2nd BTO flat will be ready in 2 years time and I am thinking whether to use the CPF monies (from the sale of my first BTO flat) or use cash (currently invested in the 3 banks, bought during COVID crisis all below their NAV)? Can you talk to yourself about the pros and cons ? Thanks!

AK71 said...

Hi Tonny,

I have talked to myself: HERE. ;)

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