Why worry about hitting the CPF MS (FRS) too soon?

Hi AK,

I've been following your blog for years and thanks for all the tips you've shared. 

I transferred a considerable sum of monies from OA to SA when I was 34 as I was inspired by your strategy of doing so. I've been trying to build up my RS and hope that my SA balance will reach my RS within the next few years.


I'm also considering to top up my SA with cash to take advantage of the tax relief. However, I realised the strategy of transferring more OA to SA again may interfere with my plans to get tax relief in subsequent years, as the faster my SA grows, the faster I'll reach RS and after I reach RS, I will not be able to top up my SA and earn tax relief. 

Is my understanding correct? If yes, would it be better if I slow down on the OA transfers so that I can take advantage of the tax relief in subsequent years, esp since I'd expect income to get higher (and hence more in need of tax relief)?

Hi YY,

If you would like to have tax benefit, yes, MS Top Up to SA is the way to go. Up to $7K a year of cash top up will enjoy tax benefit.

Once you have hit the MS (the FRS) in your CPF-SA, you will not be allowed to do anymore MS Top Up to SA.

Thus, slowing down or stopping OA to SA transfer might be a good idea if tax benefit from MS Top Up to SA is something that is important to you.

Best wishes,
AK


Related post:
Met CPF Minimum Sum but has one regret.

Following AK, Pokemon Go, Saizen REIT DPU 9.87c etc.

I decided quite a while back that I should restrict the amount of time I spend on blogging and its related activities. So, nothing more than 2 hours a day. I think that is a fairly generous amount of time to spend daily on a hobby.

I know people who are spending a lot more time on Pokémon Go now. That is not something I understand but we decide on how we would spend our time and must be comfortable with the consequences. The latter is something people think less about.

I am also spending more time with family, gardening, exercising, shopping, cooking, watching anime and k-drama. So, even in retirement, I am kept busy as there are many things which I am spending more time on.

Blogging is not a job and I hope it won't become a job because I might not enjoy it as much then.

Some might notice that I have more updates on my Facebook wall than in my blog these days. This is because Facebook is very convenient.

I know.

AK is terribly lazy.

Bad AK! Bad AK!

Whenever I do that, I also update the comments section of my blog here. So, for those who do not follow me on Facebook and would like to have more updates, following the comments section of my blog is something to consider.

Here is a recent email exchange with a reader on the subject:

Reader:

Hi AK
Saizen made an anoucement.  I read that we will be paid the residual sum
and Sime Derby
buying shares at about 3 cents.
I do not understand at all.
Like to understand how do you see this development and your plan of action.

Thanks for your help.
 

AK:
I am holding on to my investment to receive the payout. :)

The REIT will issue new shares to new investor and I get to stay on as an old investor.

 

Reader:
Hi AKThank You. Likely we have to pay for new the new shares. What
is the cost and the net gain for old investor.This is the area I am
not clear.Appreciate advise.
Regards

 

AK:
I shared this on my FB wall:

 R:
 "May I ask what is happening to Saizen? I've read the document
released today but still do not understand. wish you would talk to
yourself n explain in simple terms to us! Thanks!"

Assi AK:
 "We will be paid 9.87c a unit and still get to keep our investment in the REIT, it seems.
"The REIT will issue new units priced at 3.484c to new investors to  partially fund purchase of some Australian properties.
"Whether it is a good deal or not is hard to say at this moment but to  get paid and yet retain an investment that could possibly generate
income for me in future sounds good."

Reader:
Thanks AK.i do not go faceboik.Why do not you post it on your regular website.

 

AK:
I actually posted this in the comments section of my blog too.
You can follow the comments section of my blog for updates, if you like. I provide info on how to do this under "Following my blog" in the left side bar.
I don't always have the time or inclination to blog. So, the comments section or my Facebook wall are quick ways for me to do updates. :)

Related post:
Following comments in ASSI.