A CPF Talk during the Weekend

I was thinking to brush up my knowledge on CPF, so I decided to attend a CPF Event named "Maximising Your Money". Unfortunately, I didn't benefit from it as much as I would like (partly because the speakers had no time to really go indepth due to the lack of time).

Here's the event description from the CPF website:

But here's some things I find are key takeaways:

For Mr Soh's talk

CPF has a retirement calculator that determines the amount of savings you need based on your desired age and retirement lifestyle (it allows you to specify your own rate of return etc). I didn't know that CPF actually has one. I mostly use Excel myself manually or the CPF LIFE Estimator.

Forced savings is sticky, CPF is a good example. CPF forces people to save when they work so they have funds for various purposes.

Compound interest is rather powerful, paired with force savings, there would be twin engines to boost the size of nest eggs

A chart from something I am working on :)

CPF funds needed to be managed well just like our own cash as for every $3 earned, $1 goes into CPF. It is rather significant.

Increase your CPF Payouts by:

• Reducing CPF outflows
• Use cash for mortgage, Mr Soh says in the initial stages especially for younger fresh grads it is harder, but as career progresses and salary increases, can look to wean off the CPF usage over time
• Don't withdraw the CPF at 55 and put all in fixed deposits, keep the funds inside the CPF to let it compound. Now with technological advancements, partial withdrawals using PayNow is close to instantaneous, just clicking from the CPF website will allow you to withdraw funds to your bank account within seconds (quite a good move I feel).
• Increasing CPF inflows
• Voluntary Contributions to CPF  via
• Medisave Account Topups
• Special/Retirement Account Topups (CPF notice that the amount has been increasing year on year, which is a good thing)
• Voluntary contributions
• Housing refunds that help to reduce accrued interest
• Increasing your effective CPF interest rate via OA to SA transfers to take advantage of the additional 1.5% to help you with compounding your money

For Mr Chia's talk

This is one I am looking forward to as I wanted to know more on housing, but the time for each speaker is too short, I guess I will have to go to another talk purely for housing one day.

A home is the biggest asset and liability for many due to leverage.

Choosing the home of choice is actually based on career choices

• An entrepreneur has a more risky career (at least in the initial stages), so have to be more prudent with property as it involves a lot of money
• An employee has (generally) more stable income, so can be afford to have some margin of error with his property.

Downsizing should be called "Right Sizing", to find a "correct" size for family needs (this is the first time I am hearing of this, I guess it makes sense as it is both physically and financially).

Property cooling measures actually affect very few people (I'm actually quite surprised by the numbers frankly)

• Only 200 people in Singapore owns more than 10 properties
• Only 20,000 people in Singapore owns 3-10 properties (inclusive of Singaporeans, Permanent Residents and Foreigners).
• Number of private property owners who also owns a HDB is only 15%

This actually makes sense from the statistic point of view when the government wants to implement cooling measures as the number of people it affects is so little, I wonder how many stock investors are there then ^^".

Investing in property is not sure win. From his experience, there's many people who lost their pants speculating in property (not something we commonly hear either compared to equities).

Property investing is fine if you believe in the Singapore Economy (I guess property prices is correlated to GDP growth).

Interestingly, the top 10 Asia richest men are in property, as compared to businesses in for the US and EU, which could be asian values.

Property affordability is actually fine for Singapore and HDB actually do have better maintenance than certain private properties. He pointed out in other countries that if a huge majority can't afford homes, the government would have long been changed.

He went thru very briefly on SSD, ABSD, LTV, LRT, MSR and TDSR, he mentioned that he is happy with the implementation of the 60% TDSR as it ensures prudent borrowing and lending.

He pointed out that the numbers sort of works out to be approximately 4x annual combined income (I'll need to check this, my estimation works out to be 4.4-5.5x income).

Aim to pay down off the house by 55 or latest by 65, to have a comfortable retirement.

Unlock the Value of your Property by:

• Renting out unutilised bedrooms ("dividends")
• HDB Lease Buyback Scheme
• Right Size Property

For Mr Loo's Talk

I have heard his talk previously and the content is pretty much the same, you can find my post on it here.

Here are some notes that I might have missed out:

He recently got explained to regarding CPF LIFE after much questions from his listeners. His POV is to build the CPF until CPF LIFE is irrelevant, so it doesn't matter which plan you choose.

He also asked to separate insurance and investments as combining both adds a lot of fees which is pocketed by both the agents and the insurance companies. He advocates Buy Term and Invest the Rest, which is echoed by Mr Chia during Q&A.


For the Q&A

There's some answers that affirmed my own research, I'll share what I remembered here.

Withdrawal of cash after 55 onwards from your CPF, the SA would be drawn down first.

At age 55 and onwards, you can no longer topup the Special Account and only be able to topup the Retirement Account.

You can write to CPF to link your Child's CPF account to yours, so you can see your child's statement after you topup. In addition, you can send a check to CPF as well as the CPF topup form, and CPF will create an account for your child if it hasn't been created already.

Contributions from work after 55 still goes to all three CPF accounts (Ordinary, Medisave and Special Accounts).

Waiver of Ordinary Account repayment for your child's education can be done once you are older than 55 and have the Full Retirement Sum.

CPF nomination is done by CPF because they wanted to "bypass" the Probate and expedite it, saving legal costs (this is something new to me, but I guess that explains why those funds are protected from bankruptcy and divorces).

You can opt out of CPF LIFE if you have an annuity that pays out the same amount compared to CPF LIFE, however, Mr Chia pointed out that at this point in time, CPF LIFE is still the highest payout annuity on the market.


Phew, that's all for this post.

Hope it helps.