Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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Not only do all of us have different financial circumstances, we also have different capacities to stomach stress. What works for one might not work for another (i.e. what might give someone peace of mind might be quite stressful for another).
So, listen to what others have to say but, ultimately, make our own decision, one that will not rob us of our precious sleep.
Chat with Reader #1
Reader: Hi there Ak. I have a question. I have a new bto flat that im staying in with abt 200k hdb loan spread over 25 years. It takes up abt half of my oa contribution every mth to pay it. Should i use the excess oa funds to channel it to sa or focus on paying off the house asap?
Assi AK I would max out my SA first. Money should go to where it is treated best. Doing so, I would maintain a buffer in my OA sufficient for 24 months of loan repayment in case something goes wrong.
Hi AK, do you think i should pay off 10k of hdb housing loan whenever my OA accumulates to 20k so that it stays below 20k to enjoy the additional 1% interest? i.e. 3.5% instead of 2.5%
Earning more interest is always appealing to me. ;)
1:11pm
Reader:
Cos I have a friend who says it's more impt to pay off housing loan as the 0.1% on a big loan is more than 1.5% on the 10k transferred. I.e. It only makes sense if the housing loan is less than 150k, correct?
Hi AK, mine will be different approach because I have seen the benefit. Keep extra $$$ in OA for worst senario - lost job. The $$$ in OA will help to payoff HDB loan for years while we hunt for job.
Oh, yes. Don't ever deplete our CPF-OA if we are using it to service the mortgage. Even if we are using cash to service the mortgage, don't deplete the CPF-OA. Depleting the CPF-OA would be like burning one of our bridges. -.-"
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2 comments:
Hi AK,
mine will be different approach because I have seen the benefit.
Keep extra $$$ in OA for worst senario - lost job.
The $$$ in OA will help to payoff HDB loan for years while we hunt for job.
Regards
JQ
Hi JQ,
Oh, yes. Don't ever deplete our CPF-OA if we are using it to service the mortgage. Even if we are using cash to service the mortgage, don't deplete the CPF-OA. Depleting the CPF-OA would be like burning one of our bridges. -.-"
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