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Thread: Any Ceiling for contribution of CPF OA?

  1. #91
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    Quote Originally Posted by teddybear View Post
    For the expenses, you still need to include:
    (1) Agent fees for getting rental tenancy
    (2) Property taxes
    (3) Maintenance fees
    (4) Repairs to make good the property for next tenant / existing tenant (eg air-con spoilt, re-painting, etc)
    (5) Property rental income taxes
    (6) Housing loan interest rate rises significantly
    (7) 15 years is 1.5 property cycle and if this property is in OCR means may be 3-5 years no rental income or rental income drop by a lot?
    (8) What if the property price stay stagnant (because 99-years lease reducing and the drop compensating against rise in inflation (so no price profit)?)
    (9) (What else did I miss???)

    May be you can re-work your figure to include the above (and specifiy loan instalment amount, rental per month etc) and still see whether there is profit or not?
    That why u see alot of ccr condo selling at a lost. Because ccr property tax and taxable rental income + salary may hit $150k per year. Some ccr msintenance fee r crazily high too.

  2. #92
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    Quote Originally Posted by chestnut View Post
    Bought $680k
    Assume the following :
    Downpayment - 20% = 136k
    Borrowed - 544k
    Assume loan of 30 years.
    After 15 years, loan amount is assume 300k. So paid up is 244k. (Technically should be 1/2).
    Assume rental top up of 5k per year for 15 years = 75k. (Let's say rental cannot cover mortgage).
    Rework cost 12k
    Sold 800k

    Now let's work it out:
    Down payment - 136k

    profit - 800-680= 120k
    Capital repayment = 244k
    Total gross = 364k

    Expenses = 75k+12k+20.4(3% of 680k)+16k(assume he generous and give agent 2%of 800k) = 123.4k

    Net profit = 364-123.4= 240.6k

    Why never make money??????
    For an investment of 136k, make 240k in 15 years???

    If he hold for another 15 years, condo will be fully paid?????? By tenant???? Why did he sell???? Can anyone answer that question?????

    Feel free to correct and edit any portion if you think the computation is wrong.... Or put your own assumptions....
    Have not add in deduction of property tax, maintance fee, rental income tax, agent fee yet... But if net profit is $240.6k after adding up all fee maybe still can make $140k net profit. Then it is quite good. Because 20% down payment is $136k and he make $140k which is more than 100% profit.
    Last edited by star; 27-08-16 at 12:50.

  3. #93
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    CCR condos selling at a big loss now is because of the effect of ABSD/TDSR etc property cooling measures that causes few buyers in the market (since majority of CCR buyers are foreigners) and that these owners have no holding power and then probably with lose/reduce in income and they have difficulty re-financing because of TDSR etc.

    Anyway, soon OCR condo owners will face same situation as Singapore's economy is getting bad and more OCR owners will face lose/reduce in income and then face re-financing issues and will also have to sell at lower and lower prices.......... Just WAIT..........

    Quote Originally Posted by star View Post
    That why u see alot of ccr condo selling at a lost. Because ccr property tax and taxable rental income + salary may hit $150k per year. Some ccr msintenance fee r crazily high too.

  4. #94
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    Quote Originally Posted by richwang View Post
    To support teddy, here is the Maths for the inputs:
    Current value: $241,500
    Current age: 55
    Payout age: 65
    Estimated payout: $1,770 - $1,920 monthly ($21,240 - $23,040 per year)
    Life expectancy: 86
    N = 86 - 65 = 21 (years)
    Future value: 0

    https://www.cpf.gov.sg/Members/Schem...ent-sum-scheme
    PV = 370,420 at age 65
    I = 4
    FV = 0
    PMT = 21,240

    Calculate N = 28

    That means you need to live until 65 + 28 = 93 years old, good luck!

    http://tcalc.timevalue.com/all-finan...k=true#results

  5. #95
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    Quote Originally Posted by star View Post
    Have not add in deduction of property tax, maintance fee, rental income tax, agent fee yet... But if net profit is $240.6k after adding up all fee maybe still can make $140k net profit. Then it is quite good. Because 20% down payment is $136k and he make $140k which is more than 100% profit.
    Do the calculations. U will realise that he made >200k. Hahahaha

    If he hold for another 15 years, work out how much he would have made?????

  6. #96
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    Quote Originally Posted by chestnut View Post
    Bought $680k
    Assume the following :
    Downpayment - 20% = 136k
    Borrowed - 544k
    Assume loan of 30 years.
    After 15 years, loan amount is assume 300k. So paid up is 244k. (Technically should be 1/2).
    Assume rental top up of 5k per year for 15 years = 75k. (Let's say rental cannot cover mortgage).
    Rework cost 12k
    Sold 800k

    Now let's work it out:
    Down payment - 136k

    profit - 800-680= 120k
    Capital repayment = 244k
    Total gross = 364k

    Expenses = 75k+12k+20.4(3% of 680k)+16k(assume he generous and give agent 2%of 800k) = 123.4k

    Net profit = 364-123.4= 240.6k

    Why never make money??????
    For an investment of 136k, make 240k in 15 years???

    If he hold for another 15 years, condo will be fully paid?????? By tenant???? Why did he sell???? Can anyone answer that question?????

    Feel free to correct and edit any portion if you think the computation is wrong.... Or put your own assumptions....

    I have 3 incomes from my investment.

    Fixed income (Bond)
    =================
    Quite risky due to my portfolio having more non investment grade JUNK bond. It give me many sleepless nite
    Evergrande & OLAM dropped >20% after Muddy water said that these companies have serious accounting
    problem. But it survived & later sold at a profits.

    I have one bond , Trikomsel default on the coupon. imagine Jpan softbank is one of the largest investor & yet
    trikomsel default. It is clearly a INTENTIONAL FRAUD. I suspect Japan Softbank & the CEO are "PARTNER "
    in this incident. No news till now. But I am ok as I have made S$1m since 2010 till End 2015 as I trade very often.
    But now the bond is overvalue. Cant find a investment grade giving 4-5% on shorter tenor & borrowing cost is
    getting more expensive.


    Property invesment
    ===============
    I am lucky to sell in 2011 for my D15 property which I made >1m within 6 yrs. I believe this kind of short term big profit
    will be rare due to the TDSR & ABSD. It will be a very slow & steady gain if you have bought in a good location + good
    timing. If not, you have be sitting at a loss for many years to come before it start to go up. Maybe 10 or 15 or 20 yrs later.
    Nobody knows. Right now, rental yield is very bad.


    One of my ppty is renting out which I bought from the developer in Q1 of 2011. I am lucky to be able to rent out since 2014.
    Maybe I just accept whatever the tenant requested. I dont want to drag & wait for a better "GOOD" tenant with a " IDEAL"
    rental. When the lease expire next yr. I have to go through the same frusrating process again. Is the tenant INDIAN, PRC or
    Phillipno, "weird" S'porean family etc. In ealy 2011, A japanese view 3 times for my D15 for rental. I thought it will be successful.
    But they did not offer me. My agent was very angry but I am ok.


    My friend rented out to a S'porean family with children. He found quite weird but accept it. Many mth later, they just disappered &
    loanshark started to splash paint at his HDB ppty. It was left 2 yrs empty as the loanshark was looking at "this address" not
    the actual person who took the loanshark loan. Many police reports & finally it was over after 2 yrs of harassment.


    CPF "AAA" bond
    =============
    This is one the safest place to park my money with NO SLEEPless nite. But it rquired long term wise planning at young age <30.
    Some of my bond coupon rec'd is channelled it into my CPF every year. Too much cash on hand is no good as somehow whatever
    reason (intention or unitentional) you will use spend it very quickly . CREDIT CARD with 36 mths ZERO interest , yearly expensive
    holiday, change car every 3 years, upgrade to a better home., buy induction cooker , change Iphone every new launch etc etc.

    I locked it in my CPF to prevent my wife or even me to spend money like propersity is perpetual & Bond investment is always safe.
    My tgt to have S$1m before age 60. I also put $30k each to my son (4 & 7) into their CPF.

    Both of son CDA (Child development acct) will not be used unless really need to. With 12k in their CDA acct. By age 30, their CDA
    acct money(2.5%) will grow from 12k to 24k+ & it will auto transfer into their CPF-OA. It is a good return which I only use 6k cash &
    30 yrs later, it grow to 24k+ with Govt incentive (6k cash injection).

    In 2016, the baby bonus incentive is even better. 4k into the baby MEDISAVE ACCT(4%). Plus 8k cash into the baby CDA acct
    provide the parent also put it 8k. which total 16k. If possible , try not to use it. It will grow to 33k+. What a good way to "EAT the govt".
    The govt will let you "EAT them" but they want you to think long term & hold long term.




  7. #97
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    No equity, no gold holdings?
    By the way, where was your initial capital come from to make those 1M + 1M profit? From earlier generations? (like what you are doing for your next generation)?

  8. #98
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    Quote Originally Posted by richwang View Post
    No equity, no gold holdings?
    By the way, where was your initial capital come from to make those 1M + 1M profit? From earlier generations? (like what you are doing for your next generation)?
    As usual the 20% downpayment for my D15 ppty investment.

    My bond portfolio consist of junk bond like mostly Chinese developers which pay 7% to 10% & some SGD bond
    like banyan tree 6.25%, Lippomall 5,875% , Amtek 6.9% , Trafigura 7.5% , OLAM 7% etc from 2011 to 2015.
    I did hold as high as S$4m+ with leveraging est 2m+. But not now. Only 2M+ I have traded almost 70 bonds since 2010.

    I am now holding a Euro Carlye private equity fund (min investment amt) Euro300k since Dec 2006. The max holding
    period for this Euro private equity fund is 10 yrs + 3 yrs extension. The fund will have capital call when there is a investment
    need to invest in a new start up company. The capital call can be range from Euro $10k to 30k just like a ppty progressive
    payment. One thing good about this private equity fund they can used the part of the fund distribution payout to pay for the capital call.

    It has payout so far Euro$303k since 2012 till now. Current NAV price is Euro $165k still pending for further payout
    distribution till 2019. Hopefully it can payout maybe >Euro $200k b4 the fund holding period end in 2019. It is quite
    difficult to calculate the actual return.

    I bought some phyical gold from UOB gold counter. But only $40k.

    Currently, holding only Red chip H share (China life) at 20% paper loss. But I believe it should be ok to hold long term.
    Yield 2%+.I am not so successful in my equity investment for the last 20yrs as the initial years was to PAY TO LEARN
    to gain experience. But did not lose alot as I have the courage to cut loss if a trade turn bad.

    My intention is to hold less volatile bond & to switch to equity when there is FEAR in the stock mtk. In Feb16, there is
    a chance but I failed to strike when there really a extreme fear. This show that it is not easy to trade when there is a
    real EXTREME FEAR . So I think I will be better off with fixed income with some risky taking into junk bond.

  9. #99
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    'Singaporeans don't realise what a good deal the CPF is'


    The Central Provident Fund (CPF) system has its share of detractors among Singaporeans but, overseas, it attracts a lot of positive attention.

    This puzzling fact could be because Singaporeans do not realise they really have a good deal, says finance professor Benedict Koh, a member of the advisory panel that studied ways to improve the scheme.

    He tells Insight in a recent panel discussion: "I present papers at international conferences. You won't believe what people say: 'Can I invest in your account?'. 'Can foreigners buy it?'."

    Many people here are not aware that a 4 to 5 per cent interest rate guaranteed by a government with a triple-A credit rating - the highest rating - is simply unique, says Prof Koh, who is associate dean of the Singapore Management University Lee Kong Chian School of Business.

    CPF savings currently accumulate interest of between 2.5 and 6 per cent, including additional interest on lower balances as well as for older members.

    There is a legislated minimum interest of 2.5 per cent per year on Ordinary Account savings, but the rate will follow the three-month average of major local banks' interest rates if that is higher.

    For the July to September CPF interest rates, the latter was calculated from February to April and was only 0.24 per cent.

    The interest rates on the Special, Medisave and Retirement accounts are pegged at 1 percentage point above the 12-month average yield of 10-year Singapore Government Securities, or 4 per cent, whichever is higher. But there is a limit to what people can expect from the system, because it must be a sustainable one, say Prof Koh and panel chairman Tan Chorh Chuan.

    For instance, it is not advisable to extend the extra 1 percentage point interest on the first $60,000 of balances to a higher limit because, "eventually, someone would have to pay for that", says Professor Tan.

    Prof Koh adds: "You cannot guarantee paying interest on a risk-free asset that is permanently higher than the market rates. For a country like ours with limited financial resources, it's not a prudent thing to do. I teach finance and my message in the first class is always 'There is no free lunch'. You cannot want high returns and not take risks, you will never find such a financial product."

    For those who do have a higher risk appetite, but lack the time and expertise to actively manage investments, the panel recommended introducing a new Lifetime Retirement Investment Scheme to give members more options.

    VIEWING IT AS A WHOLE

    But if the system is so good, why do some people clamour to take as much money out of it as they can?

    One reason could be that people tend to view the CPF system in fragments rather than as a whole retirement savings plan, says fellow advisory panel member Christopher Tan, chief executive of financial advisory Providend.

    Looking at it in parts, people see that they put their money in when they are young, and when they want to take it all out at 55 they are unable to, and at 65 they try again and can withdraw only a portion.

    In fact, it is similar to what people sign up for with conventional retirement plans offered by insurance companies, he says, where "you don't take the money out early, and when you reach the age of 55 or 60 if you don't take out a lump sum they pay it out as an annuity".

    In CPF Life, money that is in the Retirement Account when members choose to start getting monthly payouts is used as the premium for the annuity that provides the payouts.

    "So if people see that connection and they see this like a retirement plan, if you look at CPF like another provider and compare all the products between the providers right now, it's the best retirement plan you can find, really," he said.

  10. #100
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    Quote Originally Posted by cbsh38584 View Post
    As usual the 20% downpayment for my D15 ppty investment.

    My bond portfolio consist of junk bond like mostly Chinese developers which pay 7% to 10% & some SGD bond
    like banyan tree 6.25%, Lippomall 5,875% , Amtek 6.9% , Trafigura 7.5% , OLAM 7% etc from 2011 to 2015.
    I did hold as high as S$4m+ with leveraging est 2m+. But not now. Only 2M+ I have traded almost 70 bonds since 2010.

    I am now holding a Euro Carlye private equity fund (min investment amt) Euro300k since Dec 2006. The max holding
    period for this Euro private equity fund is 10 yrs + 3 yrs extension. The fund will have capital call when there is a investment
    need to invest in a new start up company. The capital call can be range from Euro $10k to 30k just like a ppty progressive
    payment. One thing good about this private equity fund they can used the part of the fund distribution payout to pay for the capital call.

    It has payout so far Euro$303k since 2012 till now. Current NAV price is Euro $165k still pending for further payout
    distribution till 2019. Hopefully it can payout maybe >Euro $200k b4 the fund holding period end in 2019. It is quite
    difficult to calculate the actual return.

    I bought some phyical gold from UOB gold counter. But only $40k.

    Currently, holding only Red chip H share (China life) at 20% paper loss. But I believe it should be ok to hold long term.
    Yield 2%+.I am not so successful in my equity investment for the last 20yrs as the initial years was to PAY TO LEARN
    to gain experience. But did not lose alot as I have the courage to cut loss if a trade turn bad.

    My intention is to hold less volatile bond & to switch to equity when there is FEAR in the stock mtk. In Feb16, there is
    a chance but I failed to strike when there really a extreme fear. This show that it is not easy to trade when there is a
    real EXTREME FEAR . So I think I will be better off with fixed income with some risky taking into junk bond.
    It is certainly a good deal

  11. #101
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    Turning 55 is supposed to be a momentous event in our lives.

    When my dad reached that milestone 33 years ago, he stopped working. He also got a big windfall from withdrawing all his Central Provident Fund (CPF) savings. Those were the days when a person did not have to set aside any money in his CPF for retirement needs or medical expenses.

    Time flies. I could scarcely believe that it was my turn to hit 55 earlier this month. I still look and feel pretty much the same as always, but my friends made a big fuss about it and hosted me to dinner at the Tanglin Club to celebrate the occasion.

    For me, the greatest significance of this milestone is the need to take decisions on our CPF savings, which can turn out to be quite a sizeable sum for some of us.

    In my case, the choice is simple. After setting aside $161,000 in the newly created CPF Retirement Account, I still have some funds left in both my CPF Ordinary and Special accounts.





    I could have withdrawn the monies like my dad did all those years ago, but I decided against doing that because the CPF pays a much higher interest rate vis-a-vis what I can get from bank deposits.

    ST ILLUSTRATION: MIEL
    I also did something which my dad would not have dreamt of doing - I wrote a cheque to put another $80,500 into the CPF Retirement Account to top it up to the so-called Enhanced Retirement Sum limit of $241,500.

    I also reckoned that if I pour another $7,500 each year into the Retirement Account for the next 10 years, the sum in it would escalate to about $470,000 by the time I turn 65. That is not including the additional savings that I would have accumulated from the contributions made to the CPF Ordinary and Special accounts so long as I keep on working.

    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.

    This is because Singapore is one of the few remaining triple-A rated countries and the Singapore dollar is one of the world's strongest currencies.

    In doing what I did to achieve the best returns I can get out of the CPF, I am simply relying on the power of compounding - once described by the great scientist Albert Einstein as the eighth wonder of the world.

    I am also assuming that the CPF will continue to keep payouts at the current attractive levels while inflation stays low for a long time - a scenario that seems conceivable since much of the global economy is stuck in a rut of low growth which dampens consumer spending.

    To try to achieve the same returns elsewhere, I would have to take on risks which may cause me to lose part of my nest egg if I am not careful. Given the availability of the CPF mechanism to accumulate returns risk-free, this is one issue which I would rather not lose sleep over.


    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.

    I also find that I am not the only person who adopted such a strategy. At a recent class reunion, a classmate friend said that he had taken a similar approach.

    What we are doing reminds one of the snowball analogy about accumulating wealth that was once articulated by Mr Charlie Munger, the billionaire business partner of investment guru Warren Buffett.

    Mr Munger likens the process to rolling a snowball. It helps to start on top of a long hill, start rolling early, and try to roll that snowball for a very long time. It pays to start saving when one is young and to live a long life.

    WHAT IF YOU HAVEN'T SAVED?

    Now, this is well and good for people who have the foresight to consistently save more than they spend. We can afford to leave our monies in the CPF to enjoy a further snowballing effect on our retirement savings because we have other sources of finance to fall back on if we are suddenly confronted with an emergency.

    This may, however, not sound like music to the ears of those in their 50s who may have missed out on the opportunity to squirrel away more savings when they were younger and who may be eyeing the CPF money, now locked out of their reach, to help defray their expenses.

    This is the group which most keenly feel the threat of being pushed out of their jobs because their companies may want to replace them with younger and cheaper staff - but which want to carry on working, not because they want to, but because they have little savings to fall back on.

    For them, turning 55 can be a scary turning point in life - the beginning of the end, as one friend despondently puts it. But this is surely no reason for despair if they are worried about their finances. There is still time to catch up.

    I believe that the expertise they acquired from their many years of working will enable them to build up their wealth in a significant way if they put their heart and soul into it.

    One of the most heartwarming stories I have ever read is that of a remarkable woman, Ms Anne Scheiber, who turned the US$5,000 which she had saved up when she retired at 50 into a mind-boggling US$22 million by the time she died at the ripe old age of 101 in 1995.

    During her long career at the US Internal Revenue Service until she retired in 1944, Ms Scheiber never earned more than US$4,000 a year, and despite being an exemplary worker, she never got a promotion. She also suffered financial losses in the 1930s after getting bad advice from stockbrokers.

    In short, hers is a familiar hard-luck story that those of us who may be stuck in a career rut and got burned in our investments when we looked for alternative ways to make money, can relate to.

    Yet, after she retired, Ms Scheiber was able to turn adversity into advantage by putting to good use the analytical skills she picked up on her job by looking for worthwhile investments. Her investments included shares of companies such as healthcare products maker Johnson & Johnson and consumer products maker Colgate-Palmolive.

    The best part of it all is that until her death, she operated from a tiny apartment in New York and nobody knew how incredibly wealthy she was.

    There was even an upbeat end to her story: Towards the end of her life, she quietly arranged for her fortune, which had blossomed through both boom and bust, and every sociological change imaginable, to be donated to a university to set up a scholarship to help support women's education.

  12. #102
    teddybear's Avatar
    teddybear is offline Global recession is coming....
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    Think he is talking about a small minority? May be these small minority don't know the details?
    If CPF so good other government don't want to copy and win more votes?
    And he is the CPF advisory panel member, what do you expect him to say? You expect him to say CPF scheme is not good enough (and to tell the bad sides of it) etc?


    Quote Originally Posted by cbsh38584 View Post
    'Singaporeans don't realise what a good deal the CPF is'


    The Central Provident Fund (CPF) system has its share of detractors among Singaporeans but, overseas, it attracts a lot of positive attention.

    This puzzling fact could be because Singaporeans do not realise they really have a good deal, says finance professor Benedict Koh, a member of the advisory panel that studied ways to improve the scheme.

    He tells Insight in a recent panel discussion: "I present papers at international conferences. You won't believe what people say: 'Can I invest in your account?'. 'Can foreigners buy it?'."

    Many people here are not aware that a 4 to 5 per cent interest rate guaranteed by a government with a triple-A credit rating - the highest rating - is simply unique, says Prof Koh, who is associate dean of the Singapore Management University Lee Kong Chian School of Business.

    CPF savings currently accumulate interest of between 2.5 and 6 per cent, including additional interest on lower balances as well as for older members.

    There is a legislated minimum interest of 2.5 per cent per year on Ordinary Account savings, but the rate will follow the three-month average of major local banks' interest rates if that is higher.

    For the July to September CPF interest rates, the latter was calculated from February to April and was only 0.24 per cent.

    The interest rates on the Special, Medisave and Retirement accounts are pegged at 1 percentage point above the 12-month average yield of 10-year Singapore Government Securities, or 4 per cent, whichever is higher. But there is a limit to what people can expect from the system, because it must be a sustainable one, say Prof Koh and panel chairman Tan Chorh Chuan.

    For instance, it is not advisable to extend the extra 1 percentage point interest on the first $60,000 of balances to a higher limit because, "eventually, someone would have to pay for that", says Professor Tan.

    Prof Koh adds: "You cannot guarantee paying interest on a risk-free asset that is permanently higher than the market rates. For a country like ours with limited financial resources, it's not a prudent thing to do. I teach finance and my message in the first class is always 'There is no free lunch'. You cannot want high returns and not take risks, you will never find such a financial product."

    For those who do have a higher risk appetite, but lack the time and expertise to actively manage investments, the panel recommended introducing a new Lifetime Retirement Investment Scheme to give members more options.

    VIEWING IT AS A WHOLE

    But if the system is so good, why do some people clamour to take as much money out of it as they can?

    One reason could be that people tend to view the CPF system in fragments rather than as a whole retirement savings plan, says fellow advisory panel member Christopher Tan, chief executive of financial advisory Providend.

    Looking at it in parts, people see that they put their money in when they are young, and when they want to take it all out at 55 they are unable to, and at 65 they try again and can withdraw only a portion.

    In fact, it is similar to what people sign up for with conventional retirement plans offered by insurance companies, he says, where "you don't take the money out early, and when you reach the age of 55 or 60 if you don't take out a lump sum they pay it out as an annuity".

    In CPF Life, money that is in the Retirement Account when members choose to start getting monthly payouts is used as the premium for the annuity that provides the payouts.

    "So if people see that connection and they see this like a retirement plan, if you look at CPF like another provider and compare all the products between the providers right now, it's the best retirement plan you can find, really," he said.

  13. #103
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    Good story, too bad there is still many Ms. Scheiber around before her retirement.

  14. #104
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    http://www.financialwisdomforum.org/...f/Scheiber.htm

    Read till the end. She has done great, but it's the way of life that really made the difference.



    Quote Originally Posted by cbsh38584 View Post
    Turning 55 is supposed to be a momentous event in our lives.

    When my dad reached that milestone 33 years ago, he stopped working. He also got a big windfall from withdrawing all his Central Provident Fund (CPF) savings. Those were the days when a person did not have to set aside any money in his CPF for retirement needs or medical expenses.

    Time flies. I could scarcely believe that it was my turn to hit 55 earlier this month. I still look and feel pretty much the same as always, but my friends made a big fuss about it and hosted me to dinner at the Tanglin Club to celebrate the occasion.

    For me, the greatest significance of this milestone is the need to take decisions on our CPF savings, which can turn out to be quite a sizeable sum for some of us.

    In my case, the choice is simple. After setting aside $161,000 in the newly created CPF Retirement Account, I still have some funds left in both my CPF Ordinary and Special accounts.





    I could have withdrawn the monies like my dad did all those years ago, but I decided against doing that because the CPF pays a much higher interest rate vis-a-vis what I can get from bank deposits.

    ST ILLUSTRATION: MIEL
    I also did something which my dad would not have dreamt of doing - I wrote a cheque to put another $80,500 into the CPF Retirement Account to top it up to the so-called Enhanced Retirement Sum limit of $241,500.

    I also reckoned that if I pour another $7,500 each year into the Retirement Account for the next 10 years, the sum in it would escalate to about $470,000 by the time I turn 65. That is not including the additional savings that I would have accumulated from the contributions made to the CPF Ordinary and Special accounts so long as I keep on working.

    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.

    This is because Singapore is one of the few remaining triple-A rated countries and the Singapore dollar is one of the world's strongest currencies.

    In doing what I did to achieve the best returns I can get out of the CPF, I am simply relying on the power of compounding - once described by the great scientist Albert Einstein as the eighth wonder of the world.

    I am also assuming that the CPF will continue to keep payouts at the current attractive levels while inflation stays low for a long time - a scenario that seems conceivable since much of the global economy is stuck in a rut of low growth which dampens consumer spending.

    To try to achieve the same returns elsewhere, I would have to take on risks which may cause me to lose part of my nest egg if I am not careful. Given the availability of the CPF mechanism to accumulate returns risk-free, this is one issue which I would rather not lose sleep over.


    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.

    I also find that I am not the only person who adopted such a strategy. At a recent class reunion, a classmate friend said that he had taken a similar approach.

    What we are doing reminds one of the snowball analogy about accumulating wealth that was once articulated by Mr Charlie Munger, the billionaire business partner of investment guru Warren Buffett.

    Mr Munger likens the process to rolling a snowball. It helps to start on top of a long hill, start rolling early, and try to roll that snowball for a very long time. It pays to start saving when one is young and to live a long life.

    WHAT IF YOU HAVEN'T SAVED?

    Now, this is well and good for people who have the foresight to consistently save more than they spend. We can afford to leave our monies in the CPF to enjoy a further snowballing effect on our retirement savings because we have other sources of finance to fall back on if we are suddenly confronted with an emergency.

    This may, however, not sound like music to the ears of those in their 50s who may have missed out on the opportunity to squirrel away more savings when they were younger and who may be eyeing the CPF money, now locked out of their reach, to help defray their expenses.

    This is the group which most keenly feel the threat of being pushed out of their jobs because their companies may want to replace them with younger and cheaper staff - but which want to carry on working, not because they want to, but because they have little savings to fall back on.

    For them, turning 55 can be a scary turning point in life - the beginning of the end, as one friend despondently puts it. But this is surely no reason for despair if they are worried about their finances. There is still time to catch up.

    I believe that the expertise they acquired from their many years of working will enable them to build up their wealth in a significant way if they put their heart and soul into it.

    One of the most heartwarming stories I have ever read is that of a remarkable woman, Ms Anne Scheiber, who turned the US$5,000 which she had saved up when she retired at 50 into a mind-boggling US$22 million by the time she died at the ripe old age of 101 in 1995.

    During her long career at the US Internal Revenue Service until she retired in 1944, Ms Scheiber never earned more than US$4,000 a year, and despite being an exemplary worker, she never got a promotion. She also suffered financial losses in the 1930s after getting bad advice from stockbrokers.

    In short, hers is a familiar hard-luck story that those of us who may be stuck in a career rut and got burned in our investments when we looked for alternative ways to make money, can relate to.

    Yet, after she retired, Ms Scheiber was able to turn adversity into advantage by putting to good use the analytical skills she picked up on her job by looking for worthwhile investments. Her investments included shares of companies such as healthcare products maker Johnson & Johnson and consumer products maker Colgate-Palmolive.

    The best part of it all is that until her death, she operated from a tiny apartment in New York and nobody knew how incredibly wealthy she was.

    There was even an upbeat end to her story: Towards the end of her life, she quietly arranged for her fortune, which had blossomed through both boom and bust, and every sociological change imaginable, to be donated to a university to set up a scholarship to help support women's education.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  15. #105
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    Think you have made mistakes in your comments about CPF because you have not got your facts right, and you are still not reading what we have discussed in this forum about CPF and CPF Life........

    (1) If you put more money into CPF Retirement Account, then from 65 years old onwards, your actual return will depends on how old you can live.

    (2) To illustrate the return of CPF Life, let's just say the your CPF Retirement Account has $161,000.
    The payout is about $1300 pm for men (and CPF could change this payout figure any time, but let's just assume it remains constant for now).
    The average life-span for Singapore men is about 80 years old.
    So, based on above, your CPF life return if you could live till 80 years old = -0.94%.

    (3) From (2) above, we know that even if you could live till 80 years old, your CPF Life return is basically negative! (and based on known data, about half of the Singapore men won't be able to make it pass 80 years old).

    (4) From (2) and (3) above, how could you conclude that CPF Life is giving your attractive return that you can't beat if you invest these money instead? You can't beat the CPF Life's negative return?

    (5) The above illustrates that that CPF Life payout is not really attractive, contrary to what you concluded (even if you, like about half of all Singapore men, can only live till average age of 80 years old)!


    Quote Originally Posted by cbsh38584 View Post
    Turning 55 is supposed to be a momentous event in our lives.

    When my dad reached that milestone 33 years ago, he stopped working. He also got a big windfall from withdrawing all his Central Provident Fund (CPF) savings. Those were the days when a person did not have to set aside any money in his CPF for retirement needs or medical expenses.

    Time flies. I could scarcely believe that it was my turn to hit 55 earlier this month. I still look and feel pretty much the same as always, but my friends made a big fuss about it and hosted me to dinner at the Tanglin Club to celebrate the occasion.

    For me, the greatest significance of this milestone is the need to take decisions on our CPF savings, which can turn out to be quite a sizeable sum for some of us.

    In my case, the choice is simple. After setting aside $161,000 in the newly created CPF Retirement Account, I still have some funds left in both my CPF Ordinary and Special accounts.

    I could have withdrawn the monies like my dad did all those years ago, but I decided against doing that because the CPF pays a much higher interest rate vis-a-vis what I can get from bank deposits.

    ST ILLUSTRATION: MIEL
    I also did something which my dad would not have dreamt of doing - I wrote a cheque to put another $80,500 into the CPF Retirement Account to top it up to the so-called Enhanced Retirement Sum limit of $241,500.

    I also reckoned that if I pour another $7,500 each year into the Retirement Account for the next 10 years, the sum in it would escalate to about $470,000 by the time I turn 65. That is not including the additional savings that I would have accumulated from the contributions made to the CPF Ordinary and Special accounts so long as I keep on working.

    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.

    This is because Singapore is one of the few remaining triple-A rated countries and the Singapore dollar is one of the world's strongest currencies.

    In doing what I did to achieve the best returns I can get out of the CPF, I am simply relying on the power of compounding - once described by the great scientist Albert Einstein as the eighth wonder of the world.

    I am also assuming that the CPF will continue to keep payouts at the current attractive levels while inflation stays low for a long time - a scenario that seems conceivable since much of the global economy is stuck in a rut of low growth which dampens consumer spending.

    To try to achieve the same returns elsewhere, I would have to take on risks which may cause me to lose part of my nest egg if I am not careful. Given the availability of the CPF mechanism to accumulate returns risk-free, this is one issue which I would rather not lose sleep over.


    Those who want their CPF money back as soon as they can get their hands on it will think that I must be crazy to be putting more money into my CPF Retirement Account.

    However, to me, the ugly possibility of my CPF money going up in smoke or not getting the money back is practically nil. The CPF is probably the safest place in the world to park our retirement nest egg and get an attractive, risk-free return to boot.
    ?
    I also find that I am not the only person who adopted such a strategy. At a recent class reunion, a classmate friend said that he had taken a similar approach.

    What we are doing reminds one of the snowball analogy about accumulating wealth that was once articulated by Mr Charlie Munger, the billionaire business partner of investment guru Warren Buffett.

    Mr Munger likens the process to rolling a snowball. It helps to start on top of a long hill, start rolling early, and try to roll that snowball for a very long time. It pays to start saving when one is young and to live a long life.

    WHAT IF YOU HAVEN'T SAVED?

    Now, this is well and good for people who have the foresight to consistently save more than they spend. We can afford to leave our monies in the CPF to enjoy a further snowballing effect on our retirement savings because we have other sources of finance to fall back on if we are suddenly confronted with an emergency.

    This may, however, not sound like music to the ears of those in their 50s who may have missed out on the opportunity to squirrel away more savings when they were younger and who may be eyeing the CPF money, now locked out of their reach, to help defray their expenses.

    This is the group which most keenly feel the threat of being pushed out of their jobs because their companies may want to replace them with younger and cheaper staff - but which want to carry on working, not because they want to, but because they have little savings to fall back on.

    For them, turning 55 can be a scary turning point in life - the beginning of the end, as one friend despondently puts it. But this is surely no reason for despair if they are worried about their finances. There is still time to catch up.

    I believe that the expertise they acquired from their many years of working will enable them to build up their wealth in a significant way if they put their heart and soul into it.

    One of the most heartwarming stories I have ever read is that of a remarkable woman, Ms Anne Scheiber, who turned the US$5,000 which she had saved up when she retired at 50 into a mind-boggling US$22 million by the time she died at the ripe old age of 101 in 1995.

    During her long career at the US Internal Revenue Service until she retired in 1944, Ms Scheiber never earned more than US$4,000 a year, and despite being an exemplary worker, she never got a promotion. She also suffered financial losses in the 1930s after getting bad advice from stockbrokers.

    In short, hers is a familiar hard-luck story that those of us who may be stuck in a career rut and got burned in our investments when we looked for alternative ways to make money, can relate to.

    Yet, after she retired, Ms Scheiber was able to turn adversity into advantage by putting to good use the analytical skills she picked up on her job by looking for worthwhile investments. Her investments included shares of companies such as healthcare products maker Johnson & Johnson and consumer products maker Colgate-Palmolive.

    The best part of it all is that until her death, she operated from a tiny apartment in New York and nobody knew how incredibly wealthy she was.

    There was even an upbeat end to her story: Towards the end of her life, she quietly arranged for her fortune, which had blossomed through both boom and bust, and every sociological change imaginable, to be donated to a university to set up a scholarship to help support women's education.

  16. #106
    teddybear's Avatar
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    You could use the calculator on this webpage to help you calculate your CPF Life annuity return (no talk only and no bullshit here):
    http://www.investopedia.com/calculator/arannuity.aspx

    Present Value ($) = 251000 (CPF Retirement Account at 65 years old assuming you have $161,000 at 55 years old)
    Payment ($) = 1300 (monthly payout for men)
    Time Period = 180 (in months or 15 years till 80 years old)

    Quote Originally Posted by teddybear View Post
    Think you have made mistakes in your comments about CPF because you have not got your facts right, and you are still not reading what we have discussed in this forum about CPF and CPF Life........

    (1) If you put more money into CPF Retirement Account, then from 65 years old onwards, your actual return will depends on how old you can live.

    (2) To illustrate the return of CPF Life, let's just say the your CPF Retirement Account has $161,000.
    The payout is about $1300 pm for men (and CPF could change this payout figure any time, but let's just assume it remains constant for now).
    The average life-span for Singapore men is about 80 years old.
    So, based on above, your CPF life return if you could live till 80 years old = -0.94%.

    (3) From (2) above, we know that even if you could live till 80 years old, your CPF Life return is basically negative! (and based on known data, about half of the Singapore men won't be able to make it pass 80 years old).

    (4) From (2) and (3) above, how could you conclude that CPF Life is giving your attractive return that you can't beat if you invest these money instead? You can't beat the CPF Life's negative return?

    (5) The above illustrates that that CPF Life payout is not really attractive, contrary to what you concluded (even if you, like about half of all Singapore men, can only live till average age of 80 years old)!

  17. #107
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    Quote Originally Posted by cbsh38584 View Post
    CPF is more than enough for retirement Planning if you manage it wisely - Starting pay $2500 @age25
    =============================================================================
    There are 3 type of min retirement sum as from 2016 Figure.

    2016 retirement sum figure for BRS (80.5k) , FRS ($161k) & ERS ($241k)
    2020 retirement sum figure for BRS (90.5k) , FRS ($181k) & ERS ($271k) inflation est 2.5%

    1. Basic Retirement Sum(BRS) = $80.5k with 2/3/4 rm HDB pledged
    Monthly payout for life@65 = $660-$720

    2. Full Retirement Sum (FRS) = $161k (No 2/3/4 rm HDB pledged)
    Monthly payout for life@65 = $1220-$1320

    3.Enhanced Retirement Sum (ERS) = $241,500
    Those who wish to put more saving in CPF life - optional
    Monthly payout for life@65 = $1770-$1920.

    Max contribution to your CPF for 2015 = $31.45k / yr (20% of your Salary + 17% employer + voluntary cash)
    Max contribution to your CPF for 2016 = $37.75k / yr (20% of your Salary + 17% employer + voluntary cash)


    Many of them are unaware of how their annual income + CPF adds up over 30 years of working (age 25 to age 55).

    Starting pay $2500 (3% Salary increment yearly till age 55).Do nothing to your CPF acct
    ==================================================================
    At age 25 - OA=$7.1k. SA=$1.9k MA=$2.5k

    By age 35, OA=$112k. SA=33k. MA=41k

    By age 45 - OA=$268k. SA=120k. MA=97k

    By age 55 - OA=$479k. SA=354k. MA = $138k

    ** When MA (now call BHS) ceiling is reached ($49.8k) Excess goes to SA. But if SA (4%) min FRS ($161k) is also reached. MA (4%) excess goes to OA (2.5%)

    NET CASH Income (take home pay) earned accumulated for 30 years of working (age 25 to age 55)= $1.3 million dollars very very more than enough
    for the HDB BTO 4rm HDB flat $350k (income >$8k no HDB grant) . I did not include variable or performance bonus which range from 0.5 mth to 3 mths
    & also your partner income whic may be also $1.3m if she/he has the same earning power.

    If you have the job stability & the financial capablilty . Consider on How To Manage Your CPF Money by Shift all your money from Ordinary Acct to Special Acct as
    YOUNG as possible. You will get extra >60k to 100k more with no sweat involved at all.Just transfering OA-SA every Year . It MUST BE DONE when you are young.


    Shift CPF-OA (2.5%-3.5%) to SA (4-5%) at YOUNG age & start to transfer OA (2.5% to SA(4%)
    ------------------------------------------------------------------------------------------------------------------------------
    At age 25 - OA=$7.1k. SA=$1.9k. MA=$2.5k.

    By age 35, OA=0 (vs 112k). SA=156k (vs 33k) . MA=41k

    By 45 - OA=$85k.(vs 268k) SA=347k (vs 120k). MA=93k

    By 55 - OA=$341k (vs$479k) @SA=$550k to 600k. (vs $354k). @MA=$100k - 135k

    @ SA=550k to $600k depend on the CPF board yearly adjustment of the min sum retirement % increment. Range from 2.5% to 3.5%.

    @ MA= $100k to $135k also depend on the CPF board yearly adjustment on the MA & your medishield life selection from Govt b2 to private A class
    MA (now call BHS) ceiling is reached. MA Excess goes to SA. But if SA min sum is also reached. MA excess goes to OA

    Remember, you are not voluntary CASH contribution in the CPF. Just only your 20% of your Salary + 17% from your employer.

    ================================================================================================================
    I believe only the minorities have the financial capablity , determination & discipline to prorities their retirement need when young & transfer from OA
    to SA to see the magic of compouned interest in their special acct. Young prefer WANTS 1st & ignore the NEEDS. if they mismanage the CASH & CPF,
    they will be in trouble when they grow old. Low cash & low CPF.

    I do not recommend to voluntary contribute cash into CPF when young unless you really have more more than enough cash either from your parent or you yourself.
    Maybe when your reach late 40s & your children are age 21 & start working . You have extra cash. Can consider voluntary cash into CPF if min sum is met.
    By age 55, you can withdraw all after meeting the min sum (161k). Eg OA=200k SA=201k MA=49.8k(cannot touch). U can withdraw all OA=200k + SA=40k
    (201k minus 161k) if you chose FRS ($161k).


    Since most of the young couple likely to marry late between age 30-40. Why not set yourself a tgt to hit your Special acct min $100k at age 35
    (By age 35, OA=$112k. SA=33k --- Move 67k from your OA to SA (33k + 67k ) to increase your SA to 100k tgt.


    Once your SA=100k is reached by age 35. You know that the BIG WORRY min retirement need is SETTLED & can concentrate to build your OA .
    Any extra contribution to your SA is extra extra bonus.



    $100k compounded 4% interest for 30 yrs. U will have at least 325k at age 65. A very basic retirement est 2.5k/mth at age 65 for life.
    http://www.moneychimp.com/calculator...calculator.htm



    FYI, those wiives who decided to become a homemaker to take care of children & self employed . You better start to think now about your retirement as you have much lesser CPF for retirement. A umarried man or women. You are also need to plan early as MAID is the only person which you need to depend on when you grow old.
    CPF scheme is probably one of the best tool for retirement planning.
    A fresh graduate at age 25 starting pay $2500. With a yearly 3% till age 55.
    If he can manage his CPF wisely by transfer your CPF OA (2.5% - 3.5%) to CPF SA(4-5%). By age 55 to 57, he probably will have S$1m in his CPF acct.

    A middle income S'porean earner can achieve $1m using only 20% of his OWN Salary which is est $316k.. The rest is 17% from employer contribution + snowball effect
    of the compounded interest earned. Dont you think it is a good deal for the fresh young guy only using 20% salary 30 yrs of contribution of $316k grow to $1m in 30 to 32 yrs time.

    Fresh graduate (starting pay $2.5k (with 3% yearly increment till age 55) 20% of his salary 30 yrs of CPF contribution = $316k
    30 to 32 years later = From $316k to $1m (with the help of your employer 17% contribution + snowball compounded interest effect).

    So better stay employed as long as possible till age 55. Dont need to be a high income earner earning >$10k/mth.
    Starting pay $2500 age 25 will do. So plan & actively manage your CPF wisely. Set a tgt for CPF acct. Dont ignore & have a mind set "CPF $ cannot touch".

  18. #108
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    In essence, CPF and/or properties.

    Both have their merits and strengths.

    If you can put into properties and top up CPF to the max, you can afford to retire very assuredly and comfortably.

    If only have properties and no CPF, you will continue to have to worry about the tenancy market.

    If only have CPF and no properties (or only 1 for housing), you will continue to have to worry about inflation and the inflated and depreciated value of the funds in your CPF. And have to find some way to survive through 55 to 65 even if you have strong need to withdraw.

    My choice is balance between CPF and (additional) housing needs.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  19. #109
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    Quote Originally Posted by Kelonguni View Post
    In essence, CPF and/or properties.

    Both have their merits and strengths.

    If you can put into properties and top up CPF to the max, you can afford to retire very assuredly and comfortably.

    If only have properties and no CPF, you will continue to have to worry about the tenancy market.

    If only have CPF and no properties (or only 1 for housing), you will continue to have to worry about inflation and the inflated and depreciated value of the funds in your CPF. And have to find some way to survive through 55 to 65 even if you have strong need to withdraw.

    My choice is balance between CPF and (additional) housing needs.
    U can leave it in retirement account to earn 4% to 5% interest. Lets say u got $1m in retirement account after 55yrs old, every year interest amount to $40k...
    Btw anyone knows if we can withdraw the interest yearly after 55yrs old?

  20. #110
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    Quote Originally Posted by star View Post
    U can leave it in retirement account to earn 4% to 5% interest. Lets say u got $1m in retirement account after 55yrs old, every year interest amount to $40k...
    Btw anyone knows if we can withdraw the interest yearly after 55yrs old?


    Earn 40K is true for RA.

    But you can only withdraw once at 55. Cannot touch till 65 woh...

    Unless set aside in OA and earn OA interest rate. Then can use for housing.

    40K seems a lot now but we really don't know its value 10 or 20 years later.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  21. #111
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    Quote Originally Posted by star View Post
    U can leave it in retirement account to earn 4% to 5% interest. Lets say u got $1m in retirement account after 55yrs old, every year interest amount to $40k...
    Btw anyone knows if we can withdraw the interest yearly after 55yrs old?
    Yes, you can withdraw whatever you eligible any time after 55 yrs old.

  22. #112
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    S$1M 30 years later is equivalent to $300k in today's money (assuming a 4% discount rate), you cannot buy much.

    http://www.calculator.net/finance-ca...it=0&x=64&y=24

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    If u attend a cpf event, you can see how desperate they ask you to put money into SA: transfer from OA or even using cash.
    When anyone is asking about the payout rate is only 2% (by age 85), or you need to live until 93 (4%), they simply refuse to answer that question, and say: "let's discuss offline."
    When a sales person is behaving like that, you know what is your best option.

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    I am going to withdraw whatever I can withdraw at 55, and I am not going to put a single cent of my own cash into it.

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    Quote Originally Posted by richwang View Post
    I am going to withdraw whatever I can withdraw at 55, and I am not going to put a single cent of my own cash into it.
    Use cpf for monthly mortgage and keep rental amount. It is like cashing out from cpf.

    When a person reach mid life, cash is more important.

  26. #116
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    You can keep $1M in your CPF account but you will never get $40k interest p.a.!

    Don't go and believe all those propaganda about CPF, just like they telling you that CPF Life pays 4% return p.a. (but they will conveniently "forget" to tell you that you will have to live pass 93 years old to get that kind of return with your money in CPF Life, of which probably 95% or more of the people can't make it! Most of you will probably get 1.x% return or even less..............)

    Quote Originally Posted by star View Post
    U can leave it in retirement account to earn 4% to 5% interest. Lets say u got $1m in retirement account after 55yrs old, every year interest amount to $40k...
    Btw anyone knows if we can withdraw the interest yearly after 55yrs old?

  27. #117
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    Quote Originally Posted by richwang View Post
    PV = 370,420 at age 65
    I = 4
    FV = 0
    PMT = 21,240

    Calculate N = 28

    That means you need to live until 65 + 28 = 93 years old, good luck!

    http://tcalc.timevalue.com/all-finan...k=true#results
    And the "return rate" is 21,240 / 370,420 = 5.7% if you can live forever!

  28. #118
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    As long as save and invest wisely, we will all be safe.

    You ask people not to save in cpf, too late. Already did.

    You ask people to save in cpf, for some also too late cos not enough years to compound.

    So just chill. Either way, can save up and hit 4% of gains annually, for sure we will die with money that we don't get to spend. And that is enough for me.

    Million here million there also can't hug to coffin.
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

  29. #119
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    What can you expect?
    They just didn't want to tell the truth, and only want to tell half-truths and deflect to something else by not answering your question?

    MOM reply (see below) is that "Mr Kung stated that CPF LIFE provides a return of 3.5% per annum. This is incorrect. CPF savings used to purchase a CPF LIFE plan receive the current CPF interest rate floor of 4% per annum as well as the extra interest rates of up to 2%."

    Well, the letter writer is asking about the CPF Life payout return over the life time of the payee and is MOM telling us that CPF Life provides a return of 4-6% over the whole duration of the payout regardless of what age the person die?
    Did MOM mis-interpret the question, or trying to avoid the question by side-stepping or try to tell half-truth???
    Can MOM show us how they arrive at 4-6% return for CPF Life payout over the life time of the payee?

    Anyway, it is unlikely that MOM, CPF, the newspapers, or anybody else in the mainstream news to that effect, will bother to show how they arrive at 4-6% return for CPF Life payout over the life time of the payee, because the truth is that they CAN'T (without showing that you need to live pass 100 years old) since the truth is that if you live till average age of 80 (for men) or 85 (for women), your CPF Life return is still <1.x % only!!!


    Quote Originally Posted by richwang View Post
    If u attend a cpf event, you can see how desperate they ask you to put money into SA: transfer from OA or even using cash.
    When anyone is asking about the payout rate is only 2% (by age 85), or you need to live until 93 (4%), they simply refuse to answer that question, and say: "let's discuss offline."
    When a sales person is behaving like that, you know what is your best option.


    CPF system constantly enhanced for more retirement assurance


    TODAY (19 August 2016): CPF system constantly enhanced for more retirement assurance
    TODAY (11 August 2016): CPF system still flawed despite new proposals

    CPF system constantly enhanced for more retirement assurance
    - TODAY, 19 August 2016

    We refer to Mr Geoffrey Kung's letter (“CPF system still flawed despite new proposals”, 11 August).
    The Government has been continually improving the CPF system to help Singaporeans meet their basic retirement needs, recognising that Singaporeans will live longer. Among Singaporeans aged 65 today, 1 in 2 will live past age 85, and 1 in 3 will live past age 90.
    CPF LIFE was introduced in 2009 to help the increasing number of Singaporeans who will live longer, by giving them CPF payouts for life. Since then, more than 89,000 CPF members have voluntarily opted to join CPF LIFE. It will become the retirement scheme for the majority of CPF members turning 55 from 2013 onwards.
    We have also progressively enabled Singaporeans to save more through CPF. The CPF salary ceiling, which is the maximum monthly salary that is subject to CPF contributions, has been raised from $5,000 to $6,000. We have also raised the CPF contribution rates for workers aged 50 to 55 to the same level as those for younger workers. To help lower-wage workers save more for retirement, we have provided them with CPF top-ups through the Workfare Income Supplement Scheme.
    We have also improved the returns on CPF savings. CPF members aged 55 and above now earn an additional 1% extra interest on the first $30,000 of their CPF balances. This is on top of the 1% extra interest on the first $60,000 of CPF balances that all CPF members receive.
    Mr Kung stated that CPF LIFE provides a return of 3.5% per annum. This is incorrect. CPF savings used to purchase a CPF LIFE plan receive the current CPF interest rate floor of 4% per annum as well as the extra interest rates of up to 2%. This will increase the member’s CPF LIFE payouts.
    Most recently, the CPF Advisory Panel recommended the introduction of a CPF LIFE plan with a lower starting payout that increases at 2% annually. This plan will provide more choice for CPF members. It is in addition to the current CPF LIFE Standard and Basic plans and does not replace them.
    The Government remains committed to continually enhancing the CPF system so that we can better help Singaporeans prepare for their retirement.


    CPF system still flawed despite new proposals
    - TODAY, 11 August 2016
    I refer to the report “Flexible annuity, new CPF investment scheme recommended” (Aug 4). It seems there is a need for flexibility because the Central Provident Fund scheme affects a wide range of different individuals.
    However, the fundamental flaws in the system remain, at the root of which is the inadequacy of CPF savings to see one through retirement.
    This is obvious because the CPF contribution rates and accumulation period were calculated decades ago to last a shorter lifespan.
    Singaporeans’ increasing longevity has blown a hole in the original computation and intention of the CPF.
    If retirement savings are inadequate, then higher returns are needed to compensate for this. The Lifetime Retirement Investment Scheme promises better returns but may come with a higher risk, which cannot be taken with CPF money.
    The real bugbear in the existing CPF Investment Scheme is that management fees take a bite out of the yield in the current low interest rate environment.
    To lop 0.5 per cent off a 4.5 per cent yield is to reduce the return for retirees by 11 per cent. The CPF Board should adopt a two-pronged approach: Lower management fees and increase returns by hedging risks.
    As for the current CPF Life yield, it is approximately 3.5 per cent. If the vesting period receives 4-plus per cent, then the same 4 per cent should apply to payout periods.
    The reluctance or inability to pay annuitants more has given rise to the most visible problem. Inflation is seen to eat into already-inadequate payouts, hence the call for some inflation-protection features.
    But to propose starting payouts about 20 per cent lower to hedge against a 2 per cent annual inflation is a worse deal for members.
    One of the more common reasons for resisting annuities is that the annuitant may live less than the average life expectancy used in calculating payouts.
    And the new proposal seems to have overlooked the poor response to the original CPF annuity scheme, before it was made compulsory.
    Last edited by teddybear; 31-08-16 at 13:06.

  30. #120
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    Quote Originally Posted by Kelonguni View Post

    Million here million there also can't hug to coffin.
    There are plenty of multi-generation products to allow wealth to pass on.
    Trust, some insurance, etc. Freehold property ...
    Mutil-genration planning is becoming more and more important in an increasingly unequal society.

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