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Thread: Any Ceiling for contribution of CPF OA?

  1. #1

    Default Any Ceiling for contribution of CPF OA?

    Hi, I am a self employed and would like to contribute my CPFOA. Is there any ceiling or cap per year?

    Thanks
    When is the right time to buy my next property?

  2. #2

  3. #3

    Default

    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.

  4. #4

    Default

    http://www.tradingeconomics.com/sing...oney-supply-m2

    Don't know can outperform the printing of 10 Billion (10,000,000,000) in one year.

    If Bank can loan me money to buy property I will still buy.

  5. #5
    Join Date
    Mar 2009
    Posts
    10,739

    Default

    Better borrow lots of money from bank than to deposit money in bank (or CPF for that matter), because your money's value are just depreciating with massive printing!

    However, most people are doomed by TDSR and can't borrow much anymore and with ABSD+TDSR it becomes not worth investing in another property and have no choice but have to deposit money in the bank (and the money become dead duck).......... Either way, most are doomed!

    Quote Originally Posted by Arcachon View Post
    http://www.tradingeconomics.com/sing...oney-supply-m2

    Don't know can outperform the printing of 10 Billion (10,000,000,000) in one year.

    If Bank can loan me money to buy property I will still buy.

  6. #6

    Default

    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: IT CAN BE DONE : Accumulate $1m in your CPF by age 55 with starting pay ONLY $2500 at age 25.
    The best part is that you only use 20% of your salary + 17% employer contribution. No voluntary cash involved.



    CPF Annual Limit

    The maximum amount of CPF contributions that can be credited to an individual’s account in a year. It consists of both the mandatory contributions (employer’s and employee’s share) and voluntary contributions. Currently it is $31,450 a year. [With effect from 2016, it will be $37,740.]

    CPF Ordinary Wage Ceiling

    Ordinary Wages (OW) are wages due/granted wholly and exclusively for your employment in a month and are payable before the due date for payment of CPF contributions for that month. This would be your monthly salary, which may include items such as transport allowances and overtime payment.

    The maximum amount of CPF contribution payable on OW is the OW Ceiling, which is currently $5,000. [In 2016, it shall be $6000]. For example, if you earn a monthly wage of $5,500, only $5,000 would attract CPF contributions; the remaining $500 would not.

    Additional Wage Ceiling

    Additional Wages (AW) are wages which are not granted wholly and exclusively for your employment in the month. These payments are usually made at intervals of more than a month. For example, your annual bonus, leave pay and incentives are considered AW.

    The AW Ceiling is the maximum amount of AW that attracts CPF for the year, and can be computed using the following: $85,000 - Total OW subject to CPF for the year. [With effect from 2016, it the formula will be: $102,000 - Total OW subject to CPF for the year.]



    Risk of Using this Method

    The following are the risks involved:

    First, this method assumes all money in the ordinary account is used exclusively for wealth accumulation. This means you cannot use the ordinary account for purchase of a property. You cannot use the ordinary account to service the housing loan.

    Assuming a BTO flat of $400,000, the first 10% downpayment of $40,000 would have to be paid using cash. The remaining 90% has to be funded by borrowing. The monthly mortgage installment would be $1,633 at 2.6% for 25 years payable in cash. Assuming a MSR of 35%, it means the household income should be at least $4,666. Of course, if both husband and wife are income earners, this should not be an issue.


    It is assumed all CPF rules remain static.The top-up from CPF-OA to CPF SA is irrevocable .

    ==============================================================================================================================
    So you have to decide how you plan your retirement early especially when you start to work at age 23 to 25.
    Investment in equity or property or FX or CPF or (The safest) + equity or ppty etc etc.

    Pls dont use CPF OA to buy SG stock esepcially Penny stock. When you are young. Your IQ maybe high. But it is the EQ that will make
    you lose money. Inablity to cut loss when a good trade turn bad.

    Both my niece (age 28 to 30) who bought unit trust using CPF OA 30k in 2014. paper loss >25% in Jan-Feb16.. But now the paper loss much lesser.
    They dont have the courage to CUT loss. Too painful. It will never able to beat the Special acct compounded interest of 4% for the next
    30 yrs if they transfer from OA (2.5%) to SA(4%). The more they hold on to their unit trust. More loss opportunities to earn higher 4% SA
    compounded interest. $30k compounded 30 yrs @4% is $97.3k

    My another friend invested CPF OA $50k in HSBC unit trust from friend 17 yrs ago. Till now, the NAV is only $51k.
    Look at how much interest he lost if he will be transfered OA to SA 17 yrs ago. ( 97k -50k = $47k). Unit trust gain only 1k for holding 17 yrs
    against 47k if he transfer OA to SA.

  7. #7
    Join Date
    May 2012
    Posts
    3,751

    Default

    What are your views regarding insurance Bro CBSH ?

    Quote Originally Posted by cbsh38584 View Post
    CPF: IT CAN BE DONE : Accumulate $1m in your CPF by age 55 with starting pay ONLY $2500 at age 25.
    The best part is that you only use 20% of your salary + 17% employer contribution. No voluntary cash involved.



    CPF Annual Limit

    The maximum amount of CPF contributions that can be credited to an individual’s account in a year. It consists of both the mandatory contributions (employer’s and employee’s share) and voluntary contributions. Currently it is $31,450 a year. [With effect from 2016, it will be $37,740.]

    CPF Ordinary Wage Ceiling

    Ordinary Wages (OW) are wages due/granted wholly and exclusively for your employment in a month and are payable before the due date for payment of CPF contributions for that month. This would be your monthly salary, which may include items such as transport allowances and overtime payment.

    The maximum amount of CPF contribution payable on OW is the OW Ceiling, which is currently $5,000. [In 2016, it shall be $6000]. For example, if you earn a monthly wage of $5,500, only $5,000 would attract CPF contributions; the remaining $500 would not.

    Additional Wage Ceiling

    Additional Wages (AW) are wages which are not granted wholly and exclusively for your employment in the month. These payments are usually made at intervals of more than a month. For example, your annual bonus, leave pay and incentives are considered AW.

    The AW Ceiling is the maximum amount of AW that attracts CPF for the year, and can be computed using the following: $85,000 - Total OW subject to CPF for the year. [With effect from 2016, it the formula will be: $102,000 - Total OW subject to CPF for the year.]



    Risk of Using this Method

    The following are the risks involved:

    First, this method assumes all money in the ordinary account is used exclusively for wealth accumulation. This means you cannot use the ordinary account for purchase of a property. You cannot use the ordinary account to service the housing loan.

    Assuming a BTO flat of $400,000, the first 10% downpayment of $40,000 would have to be paid using cash. The remaining 90% has to be funded by borrowing. The monthly mortgage installment would be $1,633 at 2.6% for 25 years payable in cash. Assuming a MSR of 35%, it means the household income should be at least $4,666. Of course, if both husband and wife are income earners, this should not be an issue.


    It is assumed all CPF rules remain static.The top-up from CPF-OA to CPF SA is irrevocable .

    ==============================================================================================================================
    So you have to decide how you plan your retirement early especially when you start to work at age 23 to 25.
    Investment in equity or property or FX or CPF or (The safest) + equity or ppty etc etc.

    Pls dont use CPF OA to buy SG stock esepcially Penny stock. When you are young. Your IQ maybe high. But it is the EQ that will make
    you lose money. Inablity to cut loss when a good trade turn bad.

    Both my niece (age 28 to 30) who bought unit trust using CPF OA 30k in 2014. paper loss >25% in Jan-Feb16.. But now the paper loss much lesser.
    They dont have the courage to CUT loss. Too painful. It will never able to beat the Special acct compounded interest of 4% for the next
    30 yrs if they transfer from OA (2.5%) to SA(4%). The more they hold on to their unit trust. More loss opportunities to earn higher 4% SA
    compounded interest. $30k compounded 30 yrs @4% is $97.3k

    My another friend invested CPF OA $50k in HSBC unit trust from friend 17 yrs ago. Till now, the NAV is only $51k.
    Look at how much interest he lost if he will be transfered OA to SA 17 yrs ago. ( 97k -50k = $47k). Unit trust gain only 1k for holding 17 yrs
    against 47k if he transfer OA to SA.
    The three laws of Kelonguni:

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

  8. #8

    Default

    Quote Originally Posted by Kelonguni View Post
    What are your views regarding insurance Bro CBSH ?
    I invested in investment link insurance using CPF at a early age. I recently took a caculation. the return is ard 5.5% return on equity . but as with investment link insurance u need to start from a young age. the more savvy ones these days can just do own share investment i.e. ETF and buy a term insurance. I find that way the overhead is much lower and its cheaper and more flexible.
    “Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”
    ― Martin Luther King, Jr.

    OUT WITH THE SHIT TRASH

    https://www.facebook.com/shutdowntrs

  9. #9
    Join Date
    May 2012
    Posts
    3,751

    Default

    Quote Originally Posted by minority View Post
    I invested in investment link insurance using CPF at a early age. I recently took a caculation. the return is ard 5.5% return on equity . but as with investment link insurance u need to start from a young age. the more savvy ones these days can just do own share investment i.e. ETF and buy a term insurance. I find that way the overhead is much lower and its cheaper and more flexible.
    I also had one such plan. But its so complex I find it hard to calculate how much gains or losses.

    Just treat as insurance plan now. Luckily is not a large amount each month.
    The three laws of Kelonguni:

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

  10. #10

    Default

    Quote Originally Posted by minority View Post
    I invested in investment link insurance using CPF at a early age. I recently took a caculation. the return is ard 5.5% return on equity . but as with investment link insurance u need to start from a young age. the more savvy ones these days can just do own share investment i.e. ETF and buy a term insurance. I find that way the overhead is much lower and its cheaper and more flexible.

    When you invest your CPF OA into investment link insurance (ILP). There is always a 3% sale (bid & offer) charge deduction when you buy your ILP unit trust.
    To beat the CPF return, you need to time the entry or do the switching to income fund when equity is over value & switch back from income fund when equity is
    under value etc. So Only a very few minorities beat CPF compounded interest rate return.

    In the 90s, CPF board allows 60% of your CPF-OA for stock investment . But it has since reduced to 35% as CPF board realised that most SG retail investors are not
    making $ using CPF OA. It affect their retirement planning.

  11. #11

    Default

    Quote Originally Posted by Kelonguni View Post
    What are your views regarding insurance Bro CBSH ?

    Life insurance is used to protect the life insured in the event of death. The premium that you paid is split into two portions. A small portion of your premium will go to the participating fund of the insurer and the remaining portion will be used to pay the insurance protection cost.
    Life insurance is a small savings and high protection insurance. Because there is a savings element in life insurance, it will have a certain cash value which is declared yearly as reversionary bonus by the insurer.


    Term Insurance
    Term insurance is a rather simple product. Term insurance is pure protection and nothing else. The entire premium paid goes towards insurance protection cost. Therefore, there is no cash value for term insurance. Term insurance can be used to cover for temporary needs. Age 65 or 75 or 80.


    Buy term and invest the rest.
    You will save some cost by buying term insurance. The second part of this statement is “Invest the rest”. You need to invest the rest. If a person is habituat a spender that spends the amount that you save from buying term insurance, then I would rather prefer you go get a life insurance.


    Bought my 1st life whole insurance policy when I just start working in 1988, premium $231/year ($10,000 sum assured) which is a small amt for a start.
    The projected non guarantee between 5.25% to 9.25% at that time. After 27 yrs, the actual return is 1.8% if I will to terminate now.
    That mean I paid a total of $6237 for 27 yrs. I get back $8060 which is est 1.8% return.

    So better buy term at young age & invest the rest either through a retail bond or saving plan etc etc.

  12. #12
    Join Date
    May 2012
    Posts
    3,751

    Default

    Thanks for advice but the coverage seems very minimal in your case.

    Quote Originally Posted by cbsh38584 View Post
    Life insurance is used to protect the life insured in the event of death. The premium that you paid is split into two portions. A small portion of your premium will go to the participating fund of the insurer and the remaining portion will be used to pay the insurance protection cost.
    Life insurance is a small savings and high protection insurance. Because there is a savings element in life insurance, it will have a certain cash value which is declared yearly as reversionary bonus by the insurer.


    Term Insurance
    Term insurance is a rather simple product. Term insurance is pure protection and nothing else. The entire premium paid goes towards insurance protection cost. Therefore, there is no cash value for term insurance. Term insurance can be used to cover for temporary needs. Age 65 or 75 or 80.


    Buy term and invest the rest.
    You will save some cost by buying term insurance. The second part of this statement is “Invest the rest”. You need to invest the rest. If a person is habituat a spender that spends the amount that you save from buying term insurance, then I would rather prefer you go get a life insurance.


    Bought my 1st life whole insurance policy when I just start working in 1988, premium $231/year ($10,000 sum assured) which is a small amt for a start.
    The projected non guarantee between 5.25% to 9.25% at that time. After 27 yrs, the actual return is 1.8% if I will to terminate now.
    That mean I paid a total of $6237 for 27 yrs. I get back $8060 which is est 1.8% return.

    So better buy term at young age & invest the rest either through a retail bond or saving plan etc etc.
    The three laws of Kelonguni:

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

  13. #13

    Default

    Quote Originally Posted by Kelonguni View Post
    Thanks for advice but the coverage seems very minimal in your case.
    My coverage for whole + CI is $350k. I bought AIA Universal life plan (legacy plan) in 2013 coverage US$1m.
    Lump sum Premium paid is US$260k. I borrowed US$260k @ between 1.1% (2012) to 1.6%(now).Critical ( Breakeven)
    year est 10-12 yrs time.

    It is so much cheaper than my lady friend who bought a term policy (insured S$1m up to age 99 ) from prudential &
    premium paid is S$9k / yr.

    I bought CI term insurance ($431/yr - protection $171k) for both of my sons from prudential.

  14. #14
    Join Date
    May 2012
    Posts
    3,751

    Default

    Power indeed. I din know insurance can borrow also. Really steady.

    Quote Originally Posted by cbsh38584 View Post
    My coverage for whole + CI is $350k. I bought AIA Universal life plan (legacy plan) in 2013 coverage US$1m.
    Lump sum Premium paid is US$260k. I borrowed US$260k @ between 1.1% (2012) to 1.6%(now).Critical ( Breakeven)
    year est 10-12 yrs time.

    It is so much cheaper than my lady friend who bought a term policy (insured S$1m up to age 99 ) from prudential &
    premium paid is S$9k / yr.

    I bought CI term insurance ($431/yr - protection $171k) for both of my sons from prudential.
    The three laws of Kelonguni:

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

  15. #15

    Default

    Quote Originally Posted by Kelonguni View Post
    Power indeed. I din know insurance can borrow also. Really steady.
    My friend bought Tokio marine saving plan from CIMB. Projected return est 4%+ for 15 yrs.
    He borrows SGD loan @ 1.6% from CIMB to buy this tokio marine saving plan.(LTV 85%).
    Nett return >10% if the interest rate continue to be low . If the borrowing cost >2.5%. He will
    reduce the SGD loan.

  16. #16

    Default

    FYI, DBS SGD borrowing cost between 1.3-1.4%. Too much cash at DBS/POSB bank

  17. #17

    Default

    Quote Originally Posted by cbsh38584 View Post
    My coverage for whole + CI is $350k. I bought AIA Universal life plan (legacy plan) in 2013 coverage US$1m.
    Lump sum Premium paid is US$260k. I borrowed US$260k @ between 1.1% (2012) to 1.6%(now).Critical ( Breakeven)
    year est 10-12 yrs time.

    It is so much cheaper than my lady friend who bought a term policy (insured S$1m up to age 99 ) from prudential &
    premium paid is S$9k / yr.

    I bought CI term insurance ($431/yr - protection $171k) for both of my sons from prudential.
    Good sharing cbsh38584.

    If you are cash rich, you can also overfund the UL policy which is what I did. Critical (break even) for me was yr 6th. I'm also banking on appreciation/ strength of USD. Back then it was in the $1.2s

    I also bought your friend's policy, believe it's pruterm vantage? The return is approx 3x of total premium paid. My assumption is though it's 'term', I'm unlikely to live that long.

  18. #18
    Join Date
    May 2012
    Posts
    3,751

    Default

    Thanks for sharing guys!
    The three laws of Kelonguni:

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

  19. #19

    Default

    Quote Originally Posted by cbsh38584 View Post
    My friend bought Tokio marine saving plan from CIMB. Projected return est 4%+ for 15 yrs.
    He borrows SGD loan @ 1.6% from CIMB to buy this tokio marine saving plan.(LTV 85%).
    Nett return >10% if the interest rate continue to be low . If the borrowing cost >2.5%. He will
    reduce the SGD loan.
    Tokio Marine today is not the same as TM of yesteryears (Asia Insurance)....do ask your friend to continue to monitor closely their yearly declared bonus. Just a gentle advice....and I also have policies with them.

  20. #20
    Join Date
    Nov 2008
    Posts
    3,812

    Default

    Quote Originally Posted by Kelonguni View Post
    Power indeed. I din know insurance can borrow also. Really steady.
    This is for Universal Life. Say you put premium of 350k for coverage of 1 mil. So you borrow 350k and in the event in f death, payout will be 1 mil minus 350k = 650k. Interest slightly above 1% for US$ borrowing. You just need to pay interest. Say 1.2% of 350k = 4.2k.
    You can then borrow 250k to buy US$ bond paying say 4%. Net payout = 4% minus 1.2% = 2.8% of 250k = 7k. Use the 7k to pay off the interest on the Universal Life.
    You need to know what to do when interest rate goes north.... That's all...

    In life, just plan worst case scenario and be prepared....

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