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Parents' CPF, voluntary refund to CPF and don't do silly things.

Tuesday, January 5, 2021

This blog was inspired by a comment from a reader.

Read SnOOpy168's comment: HERE.

Over the weekend, when I was spending time with my parents, I talked to them about their CPF savings and how they should try to put more into their RA and not leave money in their OA.

They will get bigger monthly payouts and enjoy 4% interest instead of 2.5% too.

My mom kept saying the OA money is going to us children when she passes on.

I had to keep telling her that we don't need the money. 

She and dad should not worry about us children.

I told her that if I were eyeing my parents' CPF savings as inheritance, I would be a sorry excuse for a human being.

I am not going to rehash and will do the easy (i.e. lazy) thing and share some of my old blogs here:

1. Boost elderly parents' CPF-RA or CPF-MA?

2. Improving my father's retirement adequacy.

3. CPF to help our retirement but what about our parents'?

On to the next topic which I told another reader I would touch on in my blog reply to SnOOpy168.

People don't realize what a big opportunity cost there is (i.e. the accrued interest) in the use of their CPF savings for everything they can use it for.

This is partially the government's fault for over liberalizing the rules on CPF usage.

It has also given the fake news mills plenty to scare people with.

This is a good example of the anxiety some feel about their CPF savings and the deficit caused by accrued interest for OA savings used:

Unemployed, almost 55 and worried about retirement.

In another blog, I shared that for those of us who are more conservative and who are financially able to, we could consider returning the money we used from our CPF-OA savings in the purchase of our homes to stop the accrued interest from growing:

How to stop accrued interest we owe from growing?

Not all of us are savvy investors and if statistics released by the CPFB is to be believed, most CPF members who invested with their CPF savings lost money.

They would have been better off leaving their money in their CPF accounts.

I would go for low hanging fruits first and CPF is a low hanging fruit and provides an unbeatable level of certainty.

1.  How to turn $60K into $332K?

2. An unbeatable level of certainty in wealth building.

I also shared the story of my CPF-OA because so many readers are incredulous when they see the figures and I did it also to stop the fake news mills from spinning fantasy stories about me:

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

If we have plenty of cash sloshing around, we should invest with our cash first instead of our CPF-OA savings which earns a risk free 2.5% interest per annum which is very good especially in a low interest rate environment.

I like to think of my CPF savings as the risk free and volatility free AAA investment grade bond component of my portfolio and would like to end this segment by sharing this blog:

Don't do silly things and we can retire smart too.

I used to blog as much as I did because I really enjoyed it and probably too much.

After all, I did start the blog back in 2009 out of curiosity and boredom.

If by doing something we enjoy, we are able to do good, it is win win.

I still enjoy blogging but not as much as before.

So, blog I will but I cannot say if I will be as regular.

Related post:
Leaving a legacy and AK stops blogging.


SnOOpy168 said...

Honoured by this mention

AK71 said...

Well deserved. ;)

Fong said...

Hi AK,

I find it a little ironic that one of the adverts in this very same post is by Endowus, asking us to invest our cash/CPF/srs with them...hahahahaha!

AK71 said...

Hi Fong,

Really? O_o

The only adverts I see are for online games... (^m^)

When it comes to investing, quite simply, I won't use my CPF money unless my other war chests are depleted.

As a AAA investment grade bond, the coupons paid by CPF are good enough for me. ;)

garyp said...

Hi Hi AK,

Happy New Year. I am referring to this post of yours which highlights the magic of compounding after depositing 40k into your SA, while having at least 20k in OA. What if after this step, I transfer all my OA money into SA, isn't the magic enhanced?

AK71 said...

Hi garyp,

Ah, yes, I think it was this blog:
How to upsize $100K to $225K in 20 years?

If you have more money in your OA and if your SA has yet to hit the FRS, you can certainly consider doing more OA to SA transfer for a more magical effect. ;)

However, you have to consider carefully because the OA to SA transfer is a one way street.

You have to be very sure you will not need your OA savings to fund anything in the future.

You might want to read this blog:
Sensible to do CPF-OA to SA transfer?

Wentworth Scofield said...

Hi AK,
A little confused here. Does it mean Money in SA will not be inherited but only money in OA? Thanks.

AK71 said...

Hi Wentworth Scofield,

Eh, I don't know where I might have given you that impression. O_o

When we expire, every cent that is left in our OA, SA, MA and even the RA (if we have one) will go to our beneficiaries.

No worries. ;)

Wentworth Scofield said...

Hi AK,
Thanks for the clarification! I might have misunderstood with my limited knowledge. I inferred from the sentence

"My mom kept saying the OA money is going to us children when she passes on"

So I thought AK's mum is refusing to transfer from OA to SA (which earns higher interest) because the money from SA will not be inherited.

Anyway. 万岁万岁 to your mummy :)

AK71 said...

Hi Wentworth Scofield,

Ah, I see now how that might have confused you.

Yeah, my mom doesn't want to use up all her CPF savings because she wants to leave some money for us children.

Transferring all her OA money to her RA would mean she gets a larger sum of money monthly to spend and if she were to spend it all, there won't be anything left for us children.

That is fine, I told her.

It is money she worked hard for.

Thank you for the well wishes. :D

Wentworth Scofield said...

AK you helped gov to receive more CPF money by promoting it :p well done!

AK71 said...

Hi Wentworth Scofield,

I know some people say that ASSI is the grandpa of showing off when it comes to CPF savings.

However, I haven't done much in recent years but other bloggers and financial websites have picked up the slack.

So, I am pretty sure this didn't happen because of me. ;)

Cindy said...

Hi AK,

Wish to ask for your thoughts regarding the CPF SA Shielding method.
i was considering putting all possible CPF SA fund (about 146K, leaving 40K in SA) to an approved bond for CPF SA CPFIS 2 weeks before i turn 55 and then sell the bond once i turn 55 and the RA account created.
Using this method, about 146K of OA will get transferred to RA and i can continue to earn 4% interest in SA once i sell the bond.
Will you consider doing SA shielding too?

AK71 said...

Hi Cindy,

As things are now, the CPF SA shielding hack is viable.

I blogged about this a few years ago and more recently in 2019.

See the more recent blog:
(Maximising CPF SA savings and returns.

There is a chance that rules might change in future, of course. ;)

Cindy said...

Thanks AK for the feedback :)

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