Reader says...
My mum was given an inheritance to the tune of $200k.
Not knowing what to do with the money, my mum deposited it in the bank without our knowledge and of course, she was “invited” to speak to a bank’s representative and...
I experienced some difficulty convincing her to put a significant portion of the remaining sum into her CPF as she is apprehensive that the money will thereafter be “locked up” for life and she can only get a small portion of it every month.
I do not think the sum in her CPF RA is anywhere near the BRS.
Unfortunately, every individual is only limited to a maximum of $100k in SSB.
What do you think are good alternatives for someone like my mum (62 this year) to park her remaining sum?
I take it upon myself to find out more about the most logical way to optimise the growth of this sum of money while still keeping it safe for her later years.
AK says...
I think you have to explain to her the importance of an annuity and CPF LIFE.
We will not always make the most prudent financial decisions in our old age.
Having a dependable monthly income for life in her golden years will provide peace of mind for her and the family.
"What if I live longer than expected?"
Related post:
Retirement adequacy for late bloomers 101.
Raymond Ng says...
ReplyDeletePut some money in CPFLife and private annuity.
Keep some cash for daily use.
Gabriel Tham says...
ReplyDeletebuy AK fund.
Jackson Yang says...
ReplyDeleteYeah, buy AK fund.
But regarding this reader's mum situation, it is hard truth that many ppl really don't trust cpf.
While SSB max is only $100k, it is still better than put all into bank and "invited" specially for the talk.
If one dont trust cpf, SSB is the next closest thing i could think of
AK says...
CPF run by ah gong.
SSB also run by ah gong.
Don't trust ah gong.
How like that? :p
Jackson Yang says...
ReplyDeleteI also just told the same thing to 2 aunties last night about SSB.
Instead of buying endowment plan or ILP from insurance, pls consider SSB.
Although rate is lower abit, but at least when you need money, you could get the money in less than 1 month time, at no capital loss.
Jackson Yang says...
ReplyDeletehaha.. we all knew both run by ah gong, but many ppl just dont like money to be "locked down" by ah gong like cpf... or even felt cpf is a scam.
Well, ppl mindset is quite difficult to change sometimes...
Always heed our Oracle.
ReplyDeleteAs he always says.... "Peace of Mind is Priceless".
;)
My Own comments on this.
ReplyDelete1) Is the mum placed on CPF Life or still under the Old Retirement Sum Scheme?
2) If she is, she is effectively taking her own interest. Which in a sense, is drawable (albeit some at a time) as long as it she is not under CPF LIFE. whatever interest compounded goes to the next of kin. This is a long term bond of 6/5/4% interest, and just by living off the dividends (as long as she is not on CPF Life), is much beneficial imho. I'm doing this for my mum at age 68 currently (i only discover it recently that she has less than 20k in RA).
Hi Ethan,
ReplyDeleteYou are a good son.
Help your mom to get the full benefits of her CPF membership. :)