Transferring from OA to SA in CPF

[egghead]

Just saying my thoughts aloud.

Many of us here are pretty good investors. Why then should we transfer money to SA for 1.5% more returns when we are effectively locking money which otherwise could be used as a war chest during recessions, invest in undervalued companies or for monthly repayment (housing) if we run into a personal crisis.

I would personally forsake the 1.5% extra returns for flexibility

Different folks, different strokes. For me, the attraction of SA is the CAGR of 4% doing nothing. Besides housing is taken care of and I have no shortage of a war chest in cash.

[piggo]

There are limited flexibility with OA anyway... if used for housing you'll need to repay upon sales (+2.5% interests); the more you use, the more you'll have to pay in future. So for OA->SA it's a transfer of money with limited use to begin with for an additional 1.5%... not too bad! Hard to find another risk free SGD denominated bond for the same %, besides the odds of them increasing the interest rate is quite high as well...

[Porkbelly]

When buying a home ( regardless public or private housing), it should be for keeps.
At least for 20 years.

This continuous "upgrading" is the bugbear of "returning funds to CPF+interest".Unique to Singapore, perhaps to keep the place "newish", and generate economic activity.
It also prevents extracting cash from CPF prematurely.

Paying off the mortgage as soon as possible and not selling allows the OA to build on compound interest over 20-30 years.

Any short cut methods will test:

1. Greed
2. Attitudes
3. Discipline
4. Focus

These are values that guide investors to stay on track, a track that we determine for ourselves.

Transferring funds from OA to SA is a great way to build retirement funds. Once the Minimum Sum for that cohort is achieved, CPF LIFE will suck it out eventually. Any excess will be tucked away into the SA, and the OA continues to build, if you are still contributing ( staying employed )

The goal is to meet all the statutory requirements for CPF LIFE, Medisave account, Minimum Sum. By then, the OA will be available for use with less restrictions... 55 years old is not game over yet. You can still ski, hike and travel and fall in love all over again.

Including buying more property.

[gzbkel]

Hello Ray168, angtc11

I also emailed CPF, and they have replied to confirm that you cannot buy any ETFs with SA.

Click the link and you will able to see the type of ETF you can invest with SA.

1. SPDR STI ETF
2. ABF Singapore Bond Index Funds

Please click here for more details on the instruments included under CPFIS.
*
Please refer to the risk classification tables for unit trusts, investment-linked insurance products and exchange traded funds which Special Account savings can be invested in.

Anyway, let see what CPF reply.

SA can be use to invest in STI-ETF only.
CPFIS Investment Instrument

Take note that account holder must has $40K set aside and invest the balance.

Investment Administrators
1. iFAST Financial Pte Ltd
2. Navigator Investment Services Ltd
3. Phillip Securities Pte Ltd
CPF-SA Investment Service Provider

Hi all

Thank you very much for all the advice.
I learnt much about CPF strategies from this thread.

For me, the 4% in SA is good enough.
I bought quite abit of equities using cash, so the money in CPF is the risk free part of my portfolio.
But if there is a stock market crash, I will consider using SA to buy something like the STI ETF. (Thanks to angtc11 for the info, didn't know SA can be used for investments)

I am now leaning towards making the transfer, but will think abit longer, since the transfer is irreversible.

Hi, you can invest, but it does not include sti etf. The products available for investment from SA are different from OA. What I gather is the SA investments are via a tie up with individual investment firms.

Will try to clarify with CPF and let you know

Yes, I saw the file before, but when I enquired on what the etf are, they said there is no etf. Am clarifying via email

[Ray168]

Hi gzbkel,

Thanks for the update.

I am surprise with CPF's reply that SA cannot be use to invest in STI-ETF.

Hello Ray168, angtc11

I also emailed CPF, and they have replied to confirm that you cannot buy any ETFs with SA.

Click the link and you will able to see the type of ETF you can invest with SA.

1. SPDR STI ETF
2. ABF Singapore Bond Index Funds

Please click here for more details on the instruments included under CPFIS.
*
Please refer to the risk classification tables for unit trusts, investment-linked insurance products and exchange traded funds which Special Account savings can be invested in.

Anyway, let see what CPF reply.

SA can be use to invest in STI-ETF only.
CPFIS Investment Instrument

Take note that account holder must has $40K set aside and invest the balance.

Investment Administrators
1. iFAST Financial Pte Ltd
2. Navigator Investment Services Ltd
3. Phillip Securities Pte Ltd
CPF-SA Investment Service Provider

Hi, you can invest, but it does not include sti etf. The products available for investment from SA are different from OA. What I gather is the SA investments are via a tie up with individual investment firms.

Will try to clarify with CPF and let you know

Yes, I saw the file before, but when I enquired on what the etf are, they said there is no etf. Am clarifying via email

[Vseeker]

You can transfer from OA to top up your SA, up to the prevailing minimum sum limit.
You can also top up the SA a/cs of your love ones - up to their cohort's prevailing minimum sum limit.

inorder to do top up for love ones, your own CPF funds ( "OA+SA + amts withdrawn for invmnts") must be greater than the prevailing Minimum Sum.

* "Loved ones" include only your parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings.

Top up can be in one lumpsum, or you can even arrange for monthly GIRO of certain fixed quantum. (eg. do for your spouse/aged parents, even less well-off siblings)

Why would you do so ??
ofcoz First, you must be able to afford it, 2nd - you're willing to give & 3rd - you're certain that you DO NOT have other, more pressing needs for those funds in your OA.

One example of scenario where such topping-up of love ones a/c; may make lots of sense:-
eg. you are giving regular allowance to your spouse or parents anyway, and you may even have plans (in event yourself go first !)to leave them a chunk for their livelihoods,
then its probably good idea to supplement/diversify some into their CPF SA or RA a/cs, instead of giving them all in cashs only,
whether via CPF RA A/c, or takeup CPF Life - both allow for a phased drawdown,
in case you're no longer around to watch over them, you know they're provided for, with at least a certain minimum income... if via CPF Life - that's to last their lifetime too.

[CY09]

I know the answer to why etf can't be used in Sa.

It's about finding the balance between preserving member's capital and pursuing higher returns. I once posed this to a cpf director then

[specuvestor]

^^ Yeah SA used to be open to guaranteed products... not sure nowadays. Old timers who invested using SA will realise how difficult it was to do better than 4% year in year out. Beauty is that CPF calculates your opportunity cost for you and remind you how much you owe yourself by your actions Sometime I am bemused by people who complain why CPF wants them to pay themselves back / "pay CPF"... they have no idea what is the implication.

We always think it is easy until we try to do it over a cycle. Everyone looks smart until the tide goes out.

[Porkbelly]

Absolutely agree with that!

^^ Yeah SA used to be open to guaranteed products... not sure nowadays. Old timers who invested using SA will realise how difficult it was to do better than 4% year in year out. Beauty is that CPF calculates your opportunity cost for you and remind you how much you owe yourself by your actions Sometime I am bemused by people who complain why CPF wants them to pay themselves back / "pay CPF"... they have no idea what is the implication.

We always think it is easy until we try to do it over a cycle. Everyone looks smart until the tide goes out.

[Temperament]

HA! HA!
i know i not that smart to use SA to invest. i always think if i use OA and my Annulised return UTD is better then 2.5%, i am happy already. Now the first 60k is +1%, which means some of the OA investment must clear the huddle of 3.5%. It has become harder.