CPF – Aged 54 & below

This post is meant to summarised the importance of CPF in your early years before age 55.

  1. Mandatory Interest Rate
    • OA (2.5 – 3%)
    • SA (4 – 5%)
    • MA (4% – 5%)
  2. Things you can do to increase your CPF money
    • CPFIS
    • PROPERTY (buying two or more property for investment purposes)
      • Cap at valuation / purchase price limit
    • LRIS ( In the future)
      • Diversified products
    • Voluntary contribution
  3. CPF is one way to reduce your income tax
    • Voluntary contribution to your own account (capped at $7k relief)
    • Contribute to your relatives (Additional $7k)

Q&A

  1. How to obtain higher interest rate (+1%) in my CPF account?
    • It is included into the mandatory interest rate – Pointed out by bedokian
    • Combined account has to have $60k (OA ; $20k / SA ; $40k)
  2. Should I be investing my CPF money??
    • CPFIS, requires a min sum of $20k before being able to invest.
    • There are limited options for investment
    • Cost is around $2 per quarter for each counter
    • Remember the growth of your investment is not certain but the interest rate is, unless the opportunity for you to invest has far greater value and certainty, I would only recommend you to do so.
  3. Should I use my CPF money to pay for my house or property investment?
    • Ideally you must know the lifestyle you do want to live when you get a home.
      • Are you the type who wants to keep upgrading?
        • Then you need to know that you have to pay accrued interest on your house when you sell them off!
        • Resale levies have to be considered for all BTOS (but if you have taken any Housing Grant you might be subjected to it)
      • As a form of investment into properties?
        • The interest tends to be alot higher and risker than normal investment with CPFIS

 

Read more :

“+1 Knowledge Point”

 

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