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Thread: Any Ceiling for contribution of CPF OA?

  1. #41
    OCR properties going to crash! teddybear's Avatar
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    Wondering why you are calculating the PV?
    PV should be known (since at 55 years old you have $241,000 and you are supposed to get 3.5-4% return till 65 years old).

    What is unknown here is the interest rate / return for your annuity (from 65 years old onwards) if you live till the average age of 86 years old.

    Quote Originally Posted by richwang View Post
    Let's use discount rate of 1.94%
    Standing at the year when you are 65 and calculate the "current value" of your total payouts:

    I = 1.94
    N = 21
    PMT = 21,240
    FV = 0

    Any financial calculator will give you:
    PV= 363,511
    http://www.calculator.net/present-va...1=end&x=61&y=9


  2. #42

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    And now back to age 55, to see what is the effective rates used between age 55 and 65.

    PV = 241,500
    FV = 363,511
    N = 65 - 55 = 10
    PMT = 0

    Again any financial calculator will tell you:
    I = 4.174%

    http://www.calculator.net/finance-ca...tit=0&x=53&y=2


  3. #43

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    This is about right for the weighted average interest rate:
    First 30k 6%
    Next 30k 5%
    The rest 4% (241,500 - 60,000 = 181,500)

    To be exact
    Weighted I = (30,000 X 6 + 30,000 x 5 + 181,500 X 4 ) / 241,500 = 4.37


  4. #44

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    Ok, teddy is right.
    With weighted interest rate of
    I = 4.37
    PV = 241,500
    PMT = 0
    N = 65 - 55 = 10

    By age 65, the
    FV = 370,402

    http://www.calculator.net/finance-ca...it=0&x=67&y=11


  5. #45

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    Now stand at age 65,

    PV = 370,402
    FV = 0
    N = 86 - 65 = 21
    PMT = 21,240

    Financial calculator tells you:
    I = 1.755

    http://www.calculator.net/finance-ca...tit=0&x=62&y=2


  6. #46

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    My dear, teddy was nice to say 1.96%!


  7. #47
    OCR properties going to crash! teddybear's Avatar
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    For those who are interested in the calculation, some kind soul has developed a Google Sheet to help you to calculate the figures (please click here!), and you can see for yourself (LIVE) that CPF Life really pays very low annuity return of 1.9% (or so) even if you live till 85 years old (for women)........ (You need to make a copy of the Google Sheet file before you can change the figures! To make a copy, you need to have Google Drive account and login to it. You can also download a copy as Excel .xlsx file).
    If people tell you otherwise, you can show them how you calculate them and ask them to justify and prove the contrary (don't just empty talk and bullshit)...........................

    And in case you are wondering why use 85 years old for women, you can see the statistics here, which states that life expectancy for Singapore women is 84.9 years and for men is 80.4 years!


    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


  8. #48

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    Now, let's find out how much they should pay, using 4% as the rate:

    PV = 370,420
    FV = 0
    N = 86 - 65 = 21
    I = 4


    Calculate
    PMT = 26,403
    (S$2,200 per month)


  9. #49

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    I only know if you buy property, you pay 20% loan 80%.

    Before the loan is fully pay, you buy another one and loan.

    This way you are ahead of inflation.

    1988 4 room HDB cost 83,000

    1996 5 room HDB cost 225,600 (now 5 room asking 640,000)

    2006 2 Bedroom cost 535,000 (now asking 1,450,000)

    2011 3 bedroom PH cost 1,305,800. (now asking 1,500,000)

    If bank can loan me money, I will still buy property.
    Last edited by Arcachon; 14th August 2016 at 11:15 PM.


  10. #50
    OCR properties going to crash! teddybear's Avatar
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    How to make money all year round if you only know about investing in property and nothing else???

    Quote Originally Posted by Arcachon View Post
    I only know if you buy property, you pay 20% loan 80%.

    Before the loan is fully pay, you buy another one and loan.

    This way you are ahead of inflation.

    1988 4 room HDB cost 83,000

    1996 5 room HDB cost 225,600 (now 5 room asking 640,000)

    2006 2 Bedroom cost 535,000 (now asking 1,450,000)

    2011 3 bedroom PH cost 1,305,800.

    If bank can loan me money, I will still buy property.


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