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Reader:
I want to thank you... A friend shared your 4d pick at a gathering... I am a gambler and I bought the most... I have never won so much money gambling before... He told me to top up my CPF but I have been thinking of buying a car...
AK:
Welcome to my blog. I will not tell you not to buy a car if you are one of the following:
#1 If you NEED a car and if you have the money for the upkeep, buy it. Upkeep? Yes, road tax, insurance, maintenance. You know. Upkeep. Paying for fuel, parking and ERP are just the smaller expenses.
#2 If you are able to make more money from owning a car, why not? If you are an UBER driver renting a car now, for example, you could save (what an UBER driver told me) $70 a day in rental. That works out to be $2,100 in a 30 day month! That's a lot of money.
#3 If you have enough money today to last you till the day you die without having to work another day of your life, if you WANT a car, what's stopping you? Hey, Y.O.L.O. See? AK is not unreasonable nor extreme like what some people say.
Now, if you are none of the above, what do you do?
Don't buy a car!
Why not consider this instead?
The CPF Full Retirement Sum (FRS) is now $166,000. So, you are allowed to top up your CPF-SA to $166,000.
30 years from now even if there should be no more contribution to your CPF-SA from today (i.e. if you stop working today), compounding at 4% per annum, you would have $538,403.99 at age 55.
Then, after setting aside the prevailing FRS in your CPF-RA, you could withdraw the rest of the money if you like. 10 years from then, at age 65, you would also get a monthly income for life.
Oh, the calculation above did not take into consideration the additional 1% interest paid on the first $40K in your CPF-SA. Aiyoh, never mind lah. 1%? That is small money when you are rich, right? Kidding!
100% win rate. There is no easier way for a gambler to win money. Believe it!
Related posts:
1. Chinese New Year lucky 4D.
2. Don't have to be smart to be rich.
3. Showing off my CPF numbers!
Bloggy Award
10 comments:
Believed on the compounding interest and my spouse was taken aback when we compare CPF monies we have when we applied for our HDB. What I've done is transferred 7k from OA into my SA during the 1st 2yrs of work. Back then I've got no gf, no plans of settling down so might as well hit that 40k limit 1st. So my interest rate was climbing at a higher rate compared to my spouse who didn't transfer to the SA and worked few more years compared to me. That's why she was shocked at how I worked lesser years and gotten closer to her amount. Haha...
After we got together and owning a HDB was in mind and I stopped transferring everything except 4k/yr and top up 3k/yr cash. She started to transfer 7k into her SA account, our goal is to hit that 40k before we sign our HDB loan. We just signed our HDB loan last week and after thorough calculation, no top ups of cash for HDB payment after repayment via OA and we have both hit our 1st 40k as well.
As you mentioned, play by the rules of the CPF to help ourselves with free money and medical insurance. Now we're home-leasers(not home-owners) without forking any extra cash and on our way to hitting my future FRS in 35yrs time!
Good post, AK. Thanks!
would u mind sharing the link to the calculator you shown in this post?
Hi Scopion,
You are absolutely right. Don't complain about the system. See how we can use the system to help us. Congratulations! :)
Hi MJ,
I am glad you like it. :)
Hi Ethan,
Sure. Go to:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
Thank you AK!
Hi Ethan,
You are welcome. :)
Football season is here.
Play but don't play play hor. ;p
Ben said...
Over the years, I realised that some people consider the previously want as need. One example is the sedan car which the people consider to be a "need" as a transport mean for ferrying the kids.
AK said...
Oh, for sure, I am not against car ownership per se.
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