1 00:00:00,009 --> 00:00:02,339 Speaker 1: You're listening to a CNA podcast? 2 00:00:05,159 --> 00:00:08,359 Speaker 1: Hi, I'm Andrea Heng and I am back with a 3 00:00:08,369 --> 00:00:11,119 Speaker 1: brand new episode of Money Talks. And this is where 4 00:00:11,130 --> 00:00:14,300 Speaker 1: we talk about all things money, what you can do 5 00:00:14,310 --> 00:00:17,389 Speaker 1: with it and what it can do for you. Now, 6 00:00:17,399 --> 00:00:20,809 Speaker 1: on the previous episode, we started a new conversation about 7 00:00:20,819 --> 00:00:24,690 Speaker 1: your CPF moneys specifically how you can use it to 8 00:00:24,700 --> 00:00:26,590 Speaker 1: its fullest potential if you're in 9 00:00:26,670 --> 00:00:30,159 Speaker 1: your twenties and thirties, this is just about the time 10 00:00:30,170 --> 00:00:34,119 Speaker 1: you're entering the prime of your life, launching your career, 11 00:00:34,130 --> 00:00:38,380 Speaker 1: buying a home, starting to invest and save. Now if 12 00:00:38,389 --> 00:00:41,119 Speaker 1: you are in this age range and you're thinking about 13 00:00:41,130 --> 00:00:44,278 Speaker 1: how you can maximize your CPF hop on over to 14 00:00:44,290 --> 00:00:48,040 Speaker 1: Spotify or Apple podcasts and tune in to that episode. 15 00:00:48,540 --> 00:00:50,790 Speaker 1: So as I said, you're coming into the prime of 16 00:00:50,799 --> 00:00:53,650 Speaker 1: your life in your twenties and thirties, the peak of 17 00:00:53,659 --> 00:00:59,150 Speaker 1: it arguably is your forties growing kids an established career. 18 00:00:59,479 --> 00:01:02,299 Speaker 1: But you know what, you've got other priorities on your mind, too, 19 00:01:02,419 --> 00:01:06,330 Speaker 1: aging parents, your own retirement. It's still a distance to 20 00:01:06,339 --> 00:01:09,400 Speaker 1: go before you say goodbye to the workplace. Or if 21 00:01:09,410 --> 00:01:13,500 Speaker 1: you think it's too late to strategize your CPF monies. Well, 22 00:01:13,510 --> 00:01:16,830 Speaker 1: you might want to reconsider helping me walk you through. 23 00:01:16,839 --> 00:01:19,089 Speaker 1: This is Christopher Tan CEO of 24 00:01:19,610 --> 00:01:22,250 Speaker 1: he is no stranger to us here and I'm happy 25 00:01:22,260 --> 00:01:24,819 Speaker 1: to finally talk to him in the flesh. Welcome to 26 00:01:24,830 --> 00:01:25,349 Speaker 1: Money Talks, 27 00:01:25,360 --> 00:01:27,169 Speaker 2: Chris, thank you. Thank you for having me. 28 00:01:27,309 --> 00:01:29,819 Speaker 1: Ok. So did I get that right, Chris, by your forties? 29 00:01:29,830 --> 00:01:31,660 Speaker 1: Many of us would be at the peak of life, 30 00:01:31,669 --> 00:01:35,360 Speaker 1: you know, marriage, kids, elderly parents in one hand, hopefully 31 00:01:35,370 --> 00:01:39,110 Speaker 1: a thriving career, healthy savings and investment portfolio in the other. 32 00:01:39,519 --> 00:01:42,919 Speaker 2: I think it's like the peak of your expenses. That's 33 00:01:42,930 --> 00:01:45,220 Speaker 2: a good way of, I'm not sure that's the peak 34 00:01:45,230 --> 00:01:47,349 Speaker 2: of your life. But I mean, in terms of career, 35 00:01:47,360 --> 00:01:49,199 Speaker 2: I think your peak is really the 50. But 36 00:01:49,589 --> 00:01:52,919 Speaker 2: well, at 40 years old, you have a lot of commitments, right? 37 00:01:52,930 --> 00:01:54,809 Speaker 2: Your parents are probably still around, you got to take 38 00:01:54,819 --> 00:01:56,550 Speaker 2: care of your parents and you have probably Children, you 39 00:01:56,559 --> 00:01:58,699 Speaker 2: got to take care of Children and like you said, 40 00:01:58,709 --> 00:02:01,169 Speaker 2: mortgages and all things like that and then you have 41 00:02:01,180 --> 00:02:04,839 Speaker 2: to plan for retirement. So I think in terms of expenses, 42 00:02:04,849 --> 00:02:07,300 Speaker 2: it's really quite a heavy commitment at that age. It's 43 00:02:07,309 --> 00:02:07,319 Speaker 2: a 44 00:02:07,330 --> 00:02:09,619 Speaker 1: burden. I can tell you that and I don't have 45 00:02:09,630 --> 00:02:10,889 Speaker 1: kids yet yet. 46 00:02:11,910 --> 00:02:14,880 Speaker 1: So by the time I reached my forties, that's not 47 00:02:14,889 --> 00:02:17,529 Speaker 1: very far away for me. You know, I have worked 48 00:02:17,538 --> 00:02:21,990 Speaker 1: 20 years, bought a house and that's possibly the biggest 49 00:02:22,000 --> 00:02:25,539 Speaker 1: ticket item that I would use my CPF for. Right. Chris. 50 00:02:25,610 --> 00:02:28,990 Speaker 1: And I've only just realized that I could have invested 51 00:02:29,000 --> 00:02:31,919 Speaker 1: some of that CPF money. The question I really want 52 00:02:31,929 --> 00:02:34,948 Speaker 1: to ask is, is it too late? Has my investment 53 00:02:34,960 --> 00:02:37,610 Speaker 1: runway shortened to the point where I can't actually do 54 00:02:37,619 --> 00:02:38,809 Speaker 1: anything about it? No, 55 00:02:38,820 --> 00:02:40,110 Speaker 2: I think you have a lot of time. 56 00:02:40,380 --> 00:02:44,288 Speaker 2: 40 I'm 53 and you know, so for you have 57 00:02:44,300 --> 00:02:47,589 Speaker 2: long runway. right? I mean, I guess you're asking this 58 00:02:47,600 --> 00:02:50,600 Speaker 2: question because if you buy a house, your money is 59 00:02:50,610 --> 00:02:54,160 Speaker 2: in your ordinary account probably got wiped out. And that's natural. Right? 60 00:02:54,169 --> 00:02:57,788 Speaker 2: Because how many Singaporeans actually have got a few 100,000 61 00:02:57,800 --> 00:03:00,660 Speaker 2: to put down for a deposit of a house? Right. 62 00:03:00,669 --> 00:03:03,779 Speaker 2: And then you have to service that monthly mortgage. So 63 00:03:03,788 --> 00:03:06,509 Speaker 2: I think it's quite normal that if you buy a house, 64 00:03:06,520 --> 00:03:08,970 Speaker 2: your money is in your ordinary account get wiped out. 65 00:03:09,220 --> 00:03:10,820 Speaker 2: But not to worry. I mean, you can use your 66 00:03:10,830 --> 00:03:13,740 Speaker 2: cash still to invest for your retirement. I mean, you 67 00:03:13,750 --> 00:03:16,350 Speaker 2: can even use your cash if you want to, to 68 00:03:16,360 --> 00:03:19,100 Speaker 2: top up in your special account. So I can't say 69 00:03:19,110 --> 00:03:20,258 Speaker 2: it's too late. So there 70 00:03:20,270 --> 00:03:23,470 Speaker 1: are options if in my forties and I still want 71 00:03:23,479 --> 00:03:25,948 Speaker 1: to do some investment using my CPF money. I 72 00:03:25,960 --> 00:03:30,130 Speaker 2: wish I was in my forties and plenty of time. Ok. 73 00:03:30,139 --> 00:03:32,619 Speaker 1: Ok. I hope I can wind back the clock for 74 00:03:32,630 --> 00:03:34,910 Speaker 1: you in this episode and make you feel young again. 75 00:03:35,169 --> 00:03:38,460 Speaker 1: So at this juncture in my forties, what kind of 76 00:03:38,470 --> 00:03:38,830 Speaker 1: CPF 77 00:03:38,929 --> 00:03:42,070 Speaker 1: investment products can I look at and how I think 78 00:03:42,080 --> 00:03:46,500 Speaker 1: more importantly, how would they differ from investment products that 79 00:03:46,509 --> 00:03:49,270 Speaker 1: the younger folks, the twenties and thirties folks would be 80 00:03:49,279 --> 00:03:49,970 Speaker 1: looking into? 81 00:03:50,130 --> 00:03:54,460 Speaker 2: Yeah, I would say first, don't look into investment products, right? 82 00:03:54,470 --> 00:03:57,630 Speaker 2: I mean, make use of your CPF special account because 83 00:03:57,639 --> 00:04:01,830 Speaker 2: it's giving you 4 to 5% with almost no risk, right? 84 00:04:01,839 --> 00:04:04,100 Speaker 2: And there are very few products out there. In fact, 85 00:04:04,110 --> 00:04:06,389 Speaker 2: there aren't any products out there that can give you 86 00:04:06,399 --> 00:04:08,559 Speaker 2: a guaranteed 4 to 5% 87 00:04:08,820 --> 00:04:14,009 Speaker 2: capital guaranteed AAA risk, none out there, right? So before 88 00:04:14,020 --> 00:04:15,919 Speaker 2: we go out there and start looking for products to 89 00:04:15,929 --> 00:04:20,179 Speaker 2: buy insurance and all that, start considering topping up your 90 00:04:20,190 --> 00:04:22,549 Speaker 2: CPF special account, right? The only thing you have to 91 00:04:22,559 --> 00:04:26,089 Speaker 2: accept is that putting money in your special account is 92 00:04:26,100 --> 00:04:27,790 Speaker 2: like joining secret society 93 00:04:28,260 --> 00:04:31,269 Speaker 2: very easy to join, very difficult to get out, right? 94 00:04:31,279 --> 00:04:33,230 Speaker 1: Because the 4 to 5% is just so 95 00:04:33,238 --> 00:04:35,880 Speaker 2: good, it's so good, but then no liquidity. So once 96 00:04:35,890 --> 00:04:37,899 Speaker 2: you put it in, you got to accept no liquidity. 97 00:04:37,910 --> 00:04:40,649 Speaker 2: But consider that that makes that to be your first 98 00:04:40,660 --> 00:04:43,690 Speaker 2: place to consider putting your investments in after you have 99 00:04:43,700 --> 00:04:46,339 Speaker 2: done that and you can't top up anymore, then you 100 00:04:46,350 --> 00:04:50,540 Speaker 2: can think about investing into other products, right? And when 101 00:04:50,549 --> 00:04:53,130 Speaker 2: it comes to investing in other products, we always say true. 102 00:04:53,338 --> 00:04:56,588 Speaker 2: The source of funds that gives you a lower interest first. 103 00:04:56,976 --> 00:05:01,928 Speaker 2: So between cash and ordinary account right now, cash is 104 00:05:01,937 --> 00:05:04,757 Speaker 2: giving you a higher yield right now, right? You can 105 00:05:04,767 --> 00:05:07,687 Speaker 2: buy t bills, you can put a fixed deposit easily. 106 00:05:07,697 --> 00:05:11,477 Speaker 2: You be 2.5% right? So right now, you might want 107 00:05:11,488 --> 00:05:13,337 Speaker 2: to use if you still have got money in your 108 00:05:13,347 --> 00:05:15,588 Speaker 2: O A to invest, you, you still want to consider that. 109 00:05:15,597 --> 00:05:17,608 Speaker 2: But if you look at it over the long term 110 00:05:17,618 --> 00:05:18,088 Speaker 2: and this rise 111 00:05:18,175 --> 00:05:21,305 Speaker 2: interest rate environment won't be here forever, right? So when 112 00:05:21,315 --> 00:05:23,015 Speaker 2: the interest rate starts to come down and go back 113 00:05:23,026 --> 00:05:26,825 Speaker 2: to normal, then you might want to start investing using 114 00:05:26,835 --> 00:05:31,215 Speaker 2: your cash first. Don't invest your CPF, right? Unless you 115 00:05:31,226 --> 00:05:32,186 Speaker 2: have to. Ok. 116 00:05:32,196 --> 00:05:35,145 Speaker 1: So ensuring that there is liquidity in the first place 117 00:05:35,156 --> 00:05:39,196 Speaker 1: to even invest or make some investments. That's a separate 118 00:05:39,205 --> 00:05:42,006 Speaker 1: matter from what you should do with your CPF. 119 00:05:42,135 --> 00:05:43,045 Speaker 2: Yeah, you actually 120 00:05:43,134 --> 00:05:45,053 Speaker 2: brought up a very good point, right? If you want 121 00:05:45,063 --> 00:05:48,773 Speaker 2: to use your cash to invest, please also make sure 122 00:05:48,783 --> 00:05:52,074 Speaker 2: that you have got sufficient emergency fund, right? And if 123 00:05:52,084 --> 00:05:55,722 Speaker 2: I use the previous scenario near 40 going to buy 124 00:05:55,734 --> 00:06:00,074 Speaker 2: a house CPF wiped out, you probably need some money 125 00:06:00,084 --> 00:06:02,144 Speaker 2: for your renovation, you know, and all that, 126 00:06:02,803 --> 00:06:03,944 Speaker 1: there's a huge cash out. 127 00:06:04,153 --> 00:06:06,373 Speaker 2: Yeah, so I would say don't be too hurried to 128 00:06:06,384 --> 00:06:07,243 Speaker 2: go and invest. 129 00:06:08,092 --> 00:06:10,661 Speaker 2: So all those expenses first, you start to build up 130 00:06:10,671 --> 00:06:14,921 Speaker 2: your cash to have an emergency fund before you start investing. 131 00:06:14,951 --> 00:06:19,101 Speaker 1: Ok. That's very good advice. Now, let's talk about the 132 00:06:19,111 --> 00:06:22,582 Speaker 1: O A for a second. My money is already compounding 133 00:06:23,002 --> 00:06:26,970 Speaker 1: in there in the O A the ordinary account at 2.5% 134 00:06:26,981 --> 00:06:30,671 Speaker 1: interest without me really doing anything. I mean, it's the 135 00:06:30,682 --> 00:06:32,611 Speaker 1: same with the special account which we'll get into in 136 00:06:32,622 --> 00:06:32,962 Speaker 1: a bit 137 00:06:33,269 --> 00:06:37,118 Speaker 1: if I choose not to or am unable to invest 138 00:06:37,130 --> 00:06:39,909 Speaker 1: my CPF moneys. Since like you said, it's locked in 139 00:06:39,920 --> 00:06:43,029 Speaker 1: somewhere such as my home. Are there other ways for 140 00:06:43,040 --> 00:06:46,920 Speaker 1: me to maximize it for some kind of sizable return? 141 00:06:47,170 --> 00:06:49,510 Speaker 2: I mean, if you want to make use of, if 142 00:06:49,519 --> 00:06:53,380 Speaker 2: it's purely on CPF I going back to that first option. Sure. 143 00:06:53,390 --> 00:06:56,510 Speaker 2: Top up your special account, right. That's your first option 144 00:06:56,660 --> 00:06:58,720 Speaker 2: and then your O A you won't have much to 145 00:06:58,730 --> 00:07:01,518 Speaker 2: use anyway. That's right. Yeah, you won't have much to 146 00:07:01,529 --> 00:07:04,320 Speaker 2: use will be out anyway. Yeah, that's right. And so 147 00:07:04,329 --> 00:07:06,690 Speaker 2: just leave it there. Ok. Don't worry about it, you know, 148 00:07:06,700 --> 00:07:08,500 Speaker 2: because you still need some money in your O A 149 00:07:08,510 --> 00:07:13,220 Speaker 2: to pay for your monthly mortgage, right? Consider using cash 150 00:07:13,230 --> 00:07:14,359 Speaker 2: to invest instead. 151 00:07:14,690 --> 00:07:18,880 Speaker 2: I mean, later on, if you have more cash as 152 00:07:18,890 --> 00:07:22,700 Speaker 2: your career progresses and you have savings, you can always 153 00:07:22,709 --> 00:07:25,489 Speaker 2: if you want to do a housing refund if you 154 00:07:25,500 --> 00:07:28,209 Speaker 2: want to, right? Because the money that you have taken 155 00:07:28,220 --> 00:07:31,260 Speaker 2: out to pay for your mortgage, plus the accrued interest 156 00:07:31,269 --> 00:07:33,390 Speaker 2: that you didn't get because you take the money out 157 00:07:33,399 --> 00:07:37,309 Speaker 2: from oe, right? So you are losing 2.5%. So that 158 00:07:37,320 --> 00:07:39,040 Speaker 2: accrued interest later on 159 00:07:39,149 --> 00:07:41,779 Speaker 2: in life. If you want to top it back up 160 00:07:41,790 --> 00:07:44,410 Speaker 2: into your O A using the housing refund scheme, you 161 00:07:44,420 --> 00:07:46,299 Speaker 2: can do that if you want to. There you go. 162 00:07:46,309 --> 00:07:49,230 Speaker 1: That's an option. So just because you're using your CPF 163 00:07:49,239 --> 00:07:51,869 Speaker 1: to pay for your mortgage, it's not the end of 164 00:07:51,880 --> 00:07:53,920 Speaker 1: the road for your CPF money. You can actually earn 165 00:07:53,929 --> 00:07:55,059 Speaker 1: it back in some way. Yes, 166 00:07:55,070 --> 00:07:56,850 Speaker 2: if you have cash, you can always choose to put 167 00:07:56,859 --> 00:07:58,260 Speaker 2: it back again. Ok. That's 168 00:07:58,269 --> 00:07:59,679 Speaker 1: fantastic to know. 169 00:07:59,899 --> 00:08:02,730 Speaker 1: And as you said, one of the best things you 170 00:08:02,739 --> 00:08:06,260 Speaker 1: can do is to top up your special account because 171 00:08:06,269 --> 00:08:09,720 Speaker 1: that's earning you a 4 to 5% interest. Apparently there's 172 00:08:09,730 --> 00:08:13,160 Speaker 1: an optimum time of the year to do these top ups. 173 00:08:13,760 --> 00:08:16,709 Speaker 2: Well, I mean, yes, I mean, people usually want to 174 00:08:16,720 --> 00:08:18,709 Speaker 2: top it up before the end of the year. So 175 00:08:18,720 --> 00:08:20,890 Speaker 2: that at the beginning of the year, that's when CPF 176 00:08:20,899 --> 00:08:22,450 Speaker 2: will pay interest, right? 177 00:08:22,739 --> 00:08:27,059 Speaker 2: But I think that we don't have to be so specific, 178 00:08:27,239 --> 00:08:29,390 Speaker 2: you know, to try and capture that little 179 00:08:30,170 --> 00:08:31,750 Speaker 1: 1% is in. 180 00:08:31,760 --> 00:08:33,820 Speaker 2: Yeah, I mean, I don't do it myself, right? It's too, 181 00:08:33,830 --> 00:08:36,989 Speaker 2: it's too tiring, right? So I will say along the way, 182 00:08:37,000 --> 00:08:39,400 Speaker 2: the best thing to do is along the way, put 183 00:08:39,409 --> 00:08:40,250 Speaker 2: it in slowly, 184 00:08:40,520 --> 00:08:44,189 Speaker 2: right? I find it very difficult to suddenly put in 185 00:08:44,200 --> 00:08:47,039 Speaker 2: one lump sum in your special account because knowing that 186 00:08:47,049 --> 00:08:49,098 Speaker 2: once you put in, you can, you can't take it 187 00:08:49,109 --> 00:08:51,460 Speaker 2: out until 55 years. So that's the first time you 188 00:08:51,469 --> 00:08:54,260 Speaker 2: can withdraw. So there's a lot of inertia. So I 189 00:08:54,270 --> 00:08:57,228 Speaker 2: would suggest that people start putting in small amount like 190 00:08:57,260 --> 00:09:01,099 Speaker 2: 100 205 100. That's very. And then after that, when 191 00:09:01,109 --> 00:09:04,000 Speaker 2: you get more comfortable, then you put it in. Now, 192 00:09:04,010 --> 00:09:05,468 Speaker 2: of course, the Top Up scheme, 193 00:09:05,596 --> 00:09:07,726 Speaker 2: in fact, the specific name for it is called Istu 194 00:09:07,736 --> 00:09:11,346 Speaker 2: retirement sum top up scheme, right? Is just one way. 195 00:09:11,606 --> 00:09:14,245 Speaker 2: Once you reach the full retirement sum, you can't do 196 00:09:14,255 --> 00:09:18,125 Speaker 2: it anymore. And this year the full retirement sum is 198,800. 197 00:09:18,356 --> 00:09:20,846 Speaker 2: That's the, that's the cap, right? So you can't do 198 00:09:20,856 --> 00:09:23,726 Speaker 2: it anymore. But there are other ways to put in 199 00:09:23,736 --> 00:09:26,655 Speaker 2: more money and that's the voluntary contribution scheme. 200 00:09:26,934 --> 00:09:28,596 Speaker 1: Ah OK. Talk to us 201 00:09:28,606 --> 00:09:30,584 Speaker 2: about that. Yeah. So if your total 202 00:09:30,671 --> 00:09:35,182 Speaker 2: your contribution in that 12 months, your contribution plus your 203 00:09:35,192 --> 00:09:44,101 Speaker 2: employer's contribution has not exceeded $37,740 you can always voluntarily contribute, right? 204 00:09:44,111 --> 00:09:47,281 Speaker 2: But take note that when you do that, you cannot 205 00:09:47,291 --> 00:09:50,682 Speaker 2: choose which account you want to contribute into, right? So 206 00:09:50,692 --> 00:09:55,160 Speaker 2: every dollar that you contribute, using the voluntary contribution scheme, 207 00:09:55,271 --> 00:09:55,660 Speaker 2: it gets 208 00:09:55,747 --> 00:10:00,078 Speaker 2: split into the three accounts, right? Oas A and ma 209 00:10:00,088 --> 00:10:03,797 Speaker 2: according to the CPF allocation rate for your age ban. 210 00:10:03,807 --> 00:10:06,427 Speaker 1: Right. It's not say, oh, ok. I'm gonna top, I 211 00:10:06,437 --> 00:10:09,046 Speaker 1: have extra cash lying around. Let's top up my oa 212 00:10:09,057 --> 00:10:11,708 Speaker 1: I can't do that because it goes according to the 213 00:10:11,718 --> 00:10:13,796 Speaker 1: way we've been receiving our CPF contributions 214 00:10:13,807 --> 00:10:17,277 Speaker 2: exactly for your age. But that is another way to 215 00:10:17,288 --> 00:10:19,757 Speaker 2: put in more money into your CPF if you want to. 216 00:10:19,768 --> 00:10:20,737 Speaker 1: Right. Ok. 217 00:10:21,124 --> 00:10:25,023 Speaker 1: Now, at the age of 40 or so it will 218 00:10:25,033 --> 00:10:28,363 Speaker 1: be about 15 years before the O A and the 219 00:10:28,374 --> 00:10:32,603 Speaker 1: S A get converted into the R A, the retirement account. Right? 220 00:10:32,934 --> 00:10:37,823 Speaker 1: So what's a safe sound investment move? Now that that 221 00:10:37,893 --> 00:10:40,973 Speaker 1: account has been created? I have topped up my S A, 222 00:10:41,093 --> 00:10:44,453 Speaker 1: it's pretty healthy. What's a safe sound investment move ahead 223 00:10:44,463 --> 00:10:45,754 Speaker 1: of turning 55? 224 00:10:46,179 --> 00:10:48,710 Speaker 2: Well, I mean, if by that time you have built 225 00:10:48,719 --> 00:10:51,710 Speaker 2: up a sizable amount of money in your O A, 226 00:10:51,789 --> 00:10:54,190 Speaker 2: despite the fact that you have used it to pay 227 00:10:54,200 --> 00:10:57,969 Speaker 2: your mortgage and you have used your cash to invest 228 00:10:58,179 --> 00:11:02,520 Speaker 2: and you really, really want to invest your ordinary account. Right. 229 00:11:02,530 --> 00:11:05,039 Speaker 2: Then you can use the ordinary account and go and 230 00:11:05,049 --> 00:11:06,650 Speaker 2: invest into the stock market. 231 00:11:06,940 --> 00:11:09,829 Speaker 2: You can maybe buy a unit trust for it. I 232 00:11:09,840 --> 00:11:13,479 Speaker 2: wouldn't recommend you to buy an insurance using your ordinary account, right? 233 00:11:13,489 --> 00:11:17,530 Speaker 2: Because your ordinary account is already giving you between 2.5 234 00:11:17,690 --> 00:11:21,450 Speaker 2: to 3.5%. Correct. Right. Because your 1st 20,000 year old 235 00:11:21,460 --> 00:11:24,989 Speaker 2: is giving you 1% more So that's 3.5 and then 236 00:11:25,000 --> 00:11:28,630 Speaker 2: the rest is 2.5. So you're getting 2.53 0.5%. There 237 00:11:28,640 --> 00:11:31,390 Speaker 2: are very few insurance products that can 238 00:11:31,534 --> 00:11:33,804 Speaker 2: beat that, right? I mean, there are of course a 239 00:11:33,815 --> 00:11:36,914 Speaker 2: lot of projections, but on average, I would say that 240 00:11:36,924 --> 00:11:39,575 Speaker 2: the insurance product cannot beat it convincingly. So if you 241 00:11:39,585 --> 00:11:41,344 Speaker 2: want to use your O A, you can choose to 242 00:11:41,354 --> 00:11:45,994 Speaker 2: invest it into funds that invest into the equity market. 243 00:11:46,005 --> 00:11:49,744 Speaker 2: That should at least be like 3.54%. 244 00:11:50,034 --> 00:11:54,184 Speaker 1: Ok. So that's to say I'm investing my O A 245 00:11:54,195 --> 00:11:55,984 Speaker 1: as it becomes the R A of course. 246 00:11:56,299 --> 00:11:59,599 Speaker 2: Oh, if you are talking about post 55 talking about 247 00:11:59,609 --> 00:12:00,330 Speaker 2: post 55 248 00:12:00,809 --> 00:12:02,309 Speaker 1: 55 now. Ok. What can 249 00:12:02,320 --> 00:12:06,108 Speaker 2: I do? What happens at 55 is that CPF board 250 00:12:06,119 --> 00:12:08,880 Speaker 2: will first go to your S A to try and 251 00:12:08,890 --> 00:12:12,189 Speaker 2: take the amount of money to meet the full retirement sum. 252 00:12:12,440 --> 00:12:15,848 Speaker 2: So assuming this year you are 55 the first thing 253 00:12:15,859 --> 00:12:17,340 Speaker 2: CPF Board will do is they will try and look 254 00:12:17,349 --> 00:12:18,848 Speaker 2: into your S A and try and get 100 and 255 00:12:18,859 --> 00:12:20,280 Speaker 2: $98,800 256 00:12:20,289 --> 00:12:22,409 Speaker 1: or the maximum that you have in there. Yes. 257 00:12:22,830 --> 00:12:23,450 Speaker 2: Right. So if you 258 00:12:23,539 --> 00:12:28,929 Speaker 2: 198,800 so the 198,800 will go into your R A. Yeah, 259 00:12:28,940 --> 00:12:31,630 Speaker 2: and it's done. Yeah. Whatever is left in your S 260 00:12:31,640 --> 00:12:34,710 Speaker 2: A and whatever that is left in your O A now, 261 00:12:34,719 --> 00:12:37,049 Speaker 2: you can take it out if you want to. Ok. 262 00:12:37,059 --> 00:12:40,109 Speaker 2: Right now, let's assume that at 55 years old, you 263 00:12:40,119 --> 00:12:43,070 Speaker 2: don't have 100 and 98,800. Ok? Then they will take 264 00:12:43,080 --> 00:12:45,719 Speaker 2: whatever there is in your S A put into your 265 00:12:45,729 --> 00:12:48,359 Speaker 2: R A and CPA board will go to your O 266 00:12:48,369 --> 00:12:50,669 Speaker 2: A and take whatever they need to make up 267 00:12:50,780 --> 00:12:54,150 Speaker 2: the balance, the FRS and whatever that's left in your 268 00:12:54,159 --> 00:12:55,869 Speaker 2: O A, you are free to do whatever it is 269 00:12:55,880 --> 00:12:58,619 Speaker 2: as good as cash for you got it. Now, money 270 00:12:58,630 --> 00:13:01,900 Speaker 2: is in your R A sitting there can't be invested, right? 271 00:13:01,909 --> 00:13:06,210 Speaker 2: It will sit there until at the earliest age 65 272 00:13:06,520 --> 00:13:10,010 Speaker 2: if you decide to draw down via the CPF Life 273 00:13:10,020 --> 00:13:11,780 Speaker 2: scheme and that's when it happens. And 274 00:13:11,789 --> 00:13:14,659 Speaker 1: that's why you're saying before we turn 55 if we 275 00:13:14,669 --> 00:13:17,000 Speaker 1: have enough in the O A or healthy amount in 276 00:13:17,010 --> 00:13:17,710 Speaker 1: the O A 277 00:13:18,099 --> 00:13:20,010 Speaker 1: go and invest it. So you want 278 00:13:20,020 --> 00:13:22,429 Speaker 2: to. So some people, they want to do this thing 279 00:13:22,440 --> 00:13:26,400 Speaker 2: called shielding cash, right? So it's quite popular and for 280 00:13:26,409 --> 00:13:29,140 Speaker 2: people whom they have got sufficient cash in O A 281 00:13:29,150 --> 00:13:32,190 Speaker 2: and S A. So that must be done before your 282 00:13:32,200 --> 00:13:36,179 Speaker 2: 55th birthday to be safe, do it. I'll say one 283 00:13:36,190 --> 00:13:38,979 Speaker 2: month before your 55th birthday, right? Because it takes a 284 00:13:38,989 --> 00:13:41,699 Speaker 2: while for money to come out, right? So this is 285 00:13:41,710 --> 00:13:45,150 Speaker 2: what happens. So before your 55th birthday, 286 00:13:45,450 --> 00:13:49,939 Speaker 2: you go to your S A and you invest all 287 00:13:49,950 --> 00:13:53,049 Speaker 2: the amount that is above 40,000. Ok. Right. Because the 288 00:13:53,059 --> 00:13:57,469 Speaker 2: 1st 40,000 you can't invest C off. That's right. Ok. 289 00:13:57,479 --> 00:13:59,199 Speaker 2: And then you can invest it in a very low 290 00:13:59,210 --> 00:14:03,090 Speaker 2: risk instrument like tea bills if you want to or 291 00:14:03,099 --> 00:14:05,939 Speaker 2: a short duration bond fund and you do the same 292 00:14:05,950 --> 00:14:09,900 Speaker 2: for O A. You take anything above the 1st 20,000, 293 00:14:09,909 --> 00:14:10,640 Speaker 2: you go and buy that 294 00:14:10,734 --> 00:14:13,854 Speaker 2: same low risk instrument it, right? So you have done that. 295 00:14:13,994 --> 00:14:17,044 Speaker 2: Your S A is now left with 40 your O 296 00:14:17,054 --> 00:14:19,434 Speaker 2: A is now left with 20. That's right on your 297 00:14:19,445 --> 00:14:23,515 Speaker 2: 55th birthday CPF board will wipe away the 60,000 and 298 00:14:23,525 --> 00:14:26,664 Speaker 2: put into your R A. Now right after that, you 299 00:14:26,674 --> 00:14:29,304 Speaker 2: sell off whatever investment you have bought, ok? If it 300 00:14:29,315 --> 00:14:30,945 Speaker 2: t bill don't sell, you gotta wait until six months 301 00:14:30,955 --> 00:14:33,395 Speaker 2: before the mature. But if you buy other instruments, you 302 00:14:33,405 --> 00:14:36,715 Speaker 2: can sell off one day after your birthday. It all 303 00:14:36,724 --> 00:14:39,025 Speaker 2: goes back into your O A and S A 304 00:14:39,289 --> 00:14:43,510 Speaker 2: and it becomes cash, right? But your R A has 305 00:14:43,520 --> 00:14:47,429 Speaker 2: only 60,000. If you remember now, you take cash and 306 00:14:47,440 --> 00:14:51,099 Speaker 2: you top up your R A up to the prevailing 307 00:14:51,109 --> 00:14:56,190 Speaker 2: full retirement sum, right? So in effect, you are actually 308 00:14:56,200 --> 00:15:00,570 Speaker 2: switching cash from your bank account to your O A 309 00:15:00,580 --> 00:15:02,409 Speaker 2: and S A, right? It's like you're putting 310 00:15:02,419 --> 00:15:05,190 Speaker 1: it in a temporary basket just to safeguard it first. 311 00:15:05,200 --> 00:15:07,739 Speaker 2: That's right. That's right. That's right. And the whole idea 312 00:15:07,750 --> 00:15:08,270 Speaker 2: is 313 00:15:08,450 --> 00:15:11,489 Speaker 2: want as much money in your O A and S 314 00:15:11,510 --> 00:15:16,780 Speaker 2: A after 55 not in your bank because after 55 315 00:15:16,789 --> 00:15:18,979 Speaker 2: your O A and S A, they are like, cash 316 00:15:18,989 --> 00:15:21,530 Speaker 2: their bank account because you can draw it out and 317 00:15:21,539 --> 00:15:24,539 Speaker 2: at a higher interest rate. Ok. So this is something 318 00:15:24,549 --> 00:15:27,890 Speaker 2: people do CPF shielding and a lot of people do 319 00:15:27,900 --> 00:15:30,419 Speaker 2: it just before 55. Are you planning to do that? 320 00:15:30,429 --> 00:15:33,450 Speaker 2: I've got two more years. If the board doesn't take 321 00:15:33,460 --> 00:15:36,500 Speaker 2: away this feature. Yes, I'm going to do 322 00:15:36,510 --> 00:15:37,500 Speaker 1: it. Ok. 323 00:15:40,590 --> 00:15:43,739 Speaker 1: Hello, everyone. My name is Christina and I'm Adrian and 324 00:15:43,750 --> 00:15:46,059 Speaker 1: we're the host of a podcast called Work It If 325 00:15:46,070 --> 00:15:48,080 Speaker 1: you never heard of it. Well, it's a good time 326 00:15:48,090 --> 00:15:50,799 Speaker 1: to tap in, in the last 20 episodes. We've discussed 327 00:15:50,809 --> 00:15:53,890 Speaker 1: topics like how to negotiate for a salary increase or 328 00:15:53,900 --> 00:15:56,500 Speaker 1: how to get along with younger colleagues who have different 329 00:15:56,510 --> 00:15:57,880 Speaker 1: values from you, which 330 00:15:57,965 --> 00:16:01,604 Speaker 1: incidentally it's our top performing episode. If work consumes your 331 00:16:01,614 --> 00:16:05,275 Speaker 1: life and you want some perspective on issues like management, stress, 332 00:16:05,284 --> 00:16:09,174 Speaker 1: even office romance, then this podcast should be on your list. 333 00:16:09,354 --> 00:16:12,265 Speaker 1: A new episode drops every Monday. Catch us on the 334 00:16:12,275 --> 00:16:15,275 Speaker 1: CN AM or wherever you get your podcast. 335 00:16:20,869 --> 00:16:24,210 Speaker 1: Now, Chris, I have a scenario that I wanted to 336 00:16:24,219 --> 00:16:27,650 Speaker 1: get your opinion on. Ok. A newlywed couple in their 337 00:16:27,659 --> 00:16:31,760 Speaker 1: late thirties, early forties buys an H DB flat. They're 338 00:16:31,770 --> 00:16:34,559 Speaker 1: paying off the loan in at least the first year 339 00:16:34,570 --> 00:16:36,340 Speaker 1: using full CPF. Right. 340 00:16:36,770 --> 00:16:40,210 Speaker 1: There's advice out there to obviously pay this mortgage in 341 00:16:40,219 --> 00:16:43,250 Speaker 1: full cash so that money in the O A gets 342 00:16:43,260 --> 00:16:45,669 Speaker 1: to grow and you don't end up wiping your CPF 343 00:16:45,679 --> 00:16:48,440 Speaker 1: because it's obviously best to keep at least 20 K 344 00:16:48,489 --> 00:16:51,080 Speaker 1: 20,000 in the O A as you mentioned. And of course, 345 00:16:51,090 --> 00:16:56,520 Speaker 1: that's what HEB and CPF advise as well. Question number one. 346 00:16:56,940 --> 00:17:00,570 Speaker 1: What if full cash is not an option to pay 347 00:17:00,580 --> 00:17:01,609 Speaker 1: off my mortgage loan? 348 00:17:01,619 --> 00:17:04,409 Speaker 2: Basically, I mean, to be honest, very few people would 349 00:17:04,420 --> 00:17:07,420 Speaker 2: have the amount of cash to pay off. Exactly. Right. 350 00:17:07,430 --> 00:17:10,939 Speaker 2: I mean, I don't know of anyone at all actually, 351 00:17:11,060 --> 00:17:13,270 Speaker 2: that has got the money to use cash to pay 352 00:17:13,280 --> 00:17:14,859 Speaker 2: off the whole house. Yeah. Right. 353 00:17:15,180 --> 00:17:17,530 Speaker 2: So the only way is really to take your CPF 354 00:17:17,540 --> 00:17:21,409 Speaker 2: money to do it. There's no other option, right? And subsequently, 355 00:17:21,430 --> 00:17:25,300 Speaker 2: even your monthly mortgage will have to use your money 356 00:17:25,310 --> 00:17:26,790 Speaker 2: in your O A right 357 00:17:27,189 --> 00:17:31,550 Speaker 2: now. Let's assume that you have got cash. Should you 358 00:17:31,560 --> 00:17:34,199 Speaker 2: do it? Even if you have got cash to do 359 00:17:34,209 --> 00:17:37,140 Speaker 2: it right now, it depends, it depends on what you 360 00:17:37,150 --> 00:17:40,349 Speaker 2: are doing with this cash. If you are doing nothing 361 00:17:40,359 --> 00:17:42,770 Speaker 2: with this cash and interest rate falls down to the 362 00:17:42,780 --> 00:17:46,550 Speaker 2: level where we saw before 2022. Right. So if you 363 00:17:46,560 --> 00:17:49,879 Speaker 2: are putting your savings account and you're getting like 1% 100% 364 00:17:50,280 --> 00:17:53,280 Speaker 2: and you Absolutely. You're not going to do anything about 365 00:17:53,290 --> 00:17:53,540 Speaker 2: it 366 00:17:54,199 --> 00:17:57,020 Speaker 2: then. Ok, use your cash to go and pay off 367 00:17:57,030 --> 00:18:00,679 Speaker 2: the house, right? Because it is better to leave money 368 00:18:00,689 --> 00:18:04,010 Speaker 2: in the O A because you're getting 2.5 right now. 369 00:18:04,020 --> 00:18:06,599 Speaker 2: Even if you do that, I would say don't wipe 370 00:18:06,609 --> 00:18:10,939 Speaker 2: away all the cash always set aside money for rainy days. Right? 371 00:18:10,949 --> 00:18:14,900 Speaker 2: Emergency because the advantage of cash is that he has 372 00:18:14,910 --> 00:18:18,849 Speaker 2: got liquidity. O A has no liquidity. So 373 00:18:19,479 --> 00:18:21,979 Speaker 2: very few, I would say very few people will do 374 00:18:21,989 --> 00:18:25,410 Speaker 2: nothing with cash. They will probably find ways to invest 375 00:18:25,420 --> 00:18:28,199 Speaker 2: the cash to at least beat the 2.5% 0 A. 376 00:18:28,530 --> 00:18:31,069 Speaker 2: So I will say use your O A, use your 377 00:18:31,079 --> 00:18:34,989 Speaker 2: cash for investment unless you are so conservative, you are 378 00:18:35,000 --> 00:18:38,109 Speaker 2: not touching your cash at all. You're just leaving it 379 00:18:38,119 --> 00:18:40,459 Speaker 2: in the bank or putting it under your pillow and 380 00:18:40,469 --> 00:18:42,359 Speaker 2: you might as well just pay off your, 381 00:18:42,670 --> 00:18:46,780 Speaker 1: I mean, it's not earning much more sitting in your pillow, right? Ok. 382 00:18:46,790 --> 00:18:51,979 Speaker 1: So what about doing partial, so partial CPF partial cash? 383 00:18:52,084 --> 00:18:55,145 Speaker 1: Is that something? I mean, that's obviously to help sort 384 00:18:55,155 --> 00:18:58,155 Speaker 1: of cushion the blow a little bit in terms of 385 00:18:58,165 --> 00:19:01,084 Speaker 1: liquidity as well as not wiping out the CPF. I 386 00:19:01,094 --> 00:19:05,255 Speaker 1: think also it applies to people in their forties or, 387 00:19:05,265 --> 00:19:07,185 Speaker 1: and depending on the age of the house as well. 388 00:19:07,194 --> 00:19:11,614 Speaker 1: If you've bought a pretty old decaying resale flat, you're 389 00:19:11,625 --> 00:19:13,515 Speaker 1: not going to be able to use your full o 390 00:19:13,525 --> 00:19:15,494 Speaker 1: a up to a certain point. 391 00:19:15,900 --> 00:19:18,619 Speaker 2: I mean, that's wise, in fact, if you have got 392 00:19:18,630 --> 00:19:21,479 Speaker 2: cash and you have got money in your oa I 393 00:19:21,489 --> 00:19:24,699 Speaker 2: would say use both also for the purpose of bringing 394 00:19:24,709 --> 00:19:28,209 Speaker 2: down the loan amount, right? So that's a wise thing 395 00:19:28,219 --> 00:19:31,579 Speaker 2: to do, right? So yeah, bring it down because the 396 00:19:31,589 --> 00:19:32,489 Speaker 2: lower your debt, 397 00:19:32,770 --> 00:19:36,188 Speaker 2: the lesser total interest you have to pay. Right? And 398 00:19:36,199 --> 00:19:40,719 Speaker 2: sometimes it's not just a financial decision, right? Because the 399 00:19:40,729 --> 00:19:44,170 Speaker 2: investment people like me will tell you that no, don't 400 00:19:44,180 --> 00:19:47,109 Speaker 2: pay down so much. I mean, the loan rates are 401 00:19:47,119 --> 00:19:50,040 Speaker 2: not high, especially if you're using the H DB concessionary 402 00:19:50,050 --> 00:19:50,479 Speaker 2: loan rate 403 00:19:50,579 --> 00:19:54,239 Speaker 2: which is currently fixed at 08 plus 0.1% which is 2.6. 404 00:19:54,540 --> 00:19:58,020 Speaker 2: If you can invest anything above 2.6 I'll say take 405 00:19:58,030 --> 00:20:01,349 Speaker 2: the loan right and go and invest your cash right now. 406 00:20:01,359 --> 00:20:07,129 Speaker 2: That seems like the correct investment advice. However, not everything 407 00:20:07,140 --> 00:20:11,670 Speaker 2: is financial, right? It gives you peace of mind knowing 408 00:20:11,680 --> 00:20:14,349 Speaker 2: that your loans are at a minimal, 409 00:20:14,650 --> 00:20:18,290 Speaker 2: you can sleep at night in peace even even if 410 00:20:18,300 --> 00:20:22,159 Speaker 2: it is not the best financial decision, I think it's 411 00:20:22,170 --> 00:20:25,069 Speaker 2: a good decision because at the end of the day, 412 00:20:25,079 --> 00:20:28,159 Speaker 2: it's all about money is about helping you to be happy. 413 00:20:28,849 --> 00:20:31,280 Speaker 2: What's the point of making all the right investment decision? 414 00:20:31,290 --> 00:20:34,459 Speaker 2: But you are stressed over it? Yeah, so I would say, yeah, 415 00:20:34,469 --> 00:20:36,958 Speaker 2: if you are just wanting to lower your debt, 416 00:20:37,520 --> 00:20:39,510 Speaker 2: pay off your debt even though it doesn't make investment. 417 00:20:39,650 --> 00:20:43,839 Speaker 1: So sleep and peace of mind over the best investment, 418 00:20:43,849 --> 00:20:45,429 Speaker 1: financial decision, you think it 419 00:20:45,439 --> 00:20:47,489 Speaker 2: is any time I will make that decision. 420 00:20:47,500 --> 00:20:49,979 Speaker 1: That's very wise, that's really very wise, especially those in 421 00:20:49,989 --> 00:20:53,189 Speaker 1: their thirties and forties, starting a family and very worried 422 00:20:53,280 --> 00:20:55,859 Speaker 1: about lots of, lots of expenses. I don't have kids 423 00:20:55,869 --> 00:20:58,198 Speaker 1: and I'm already worrying about how to provide for my 424 00:20:58,209 --> 00:21:01,089 Speaker 1: parents when they get older and to provide for myself 425 00:21:01,099 --> 00:21:04,199 Speaker 1: as well. It's a lot to think about. It's quite burdensome, right? 426 00:21:04,209 --> 00:21:04,889 Speaker 1: Being the sandwich 427 00:21:04,900 --> 00:21:07,630 Speaker 2: generation. Yeah, I mean, I'm 53 and I will say 428 00:21:07,640 --> 00:21:08,949 Speaker 2: that when you have no debt, 429 00:21:09,420 --> 00:21:12,129 Speaker 2: you have options for sure. Yeah, and that's the most 430 00:21:12,140 --> 00:21:13,750 Speaker 2: important thing in life that financial 431 00:21:13,770 --> 00:21:14,929 Speaker 1: freedom. So 432 00:21:15,359 --> 00:21:17,938 Speaker 2: yeah, I mean you don't like your boss. We are 433 00:21:17,949 --> 00:21:19,688 Speaker 2: not listening to this in office but you don't like 434 00:21:19,699 --> 00:21:22,040 Speaker 2: your I like my. That's fine. Ok. Yeah, so you 435 00:21:22,050 --> 00:21:24,709 Speaker 2: can set your boss, you can pursue things that are 436 00:21:24,719 --> 00:21:29,329 Speaker 2: meaningful for you. So don't let that be the master. 437 00:21:29,699 --> 00:21:31,739 Speaker 2: Yeah, be the master of that. So if you have 438 00:21:31,750 --> 00:21:33,819 Speaker 2: to make a decision, it may not be wise from 439 00:21:33,829 --> 00:21:36,939 Speaker 2: an investment standpoint, but it makes sense from the debt 440 00:21:36,949 --> 00:21:38,500 Speaker 2: and peace of mind standpoint. Make it. 441 00:21:38,760 --> 00:21:42,949 Speaker 1: Ok. Here's a follow up scenario. I have five K 442 00:21:42,959 --> 00:21:45,310 Speaker 1: in my O A because I've wiped it out to 443 00:21:45,319 --> 00:21:46,170 Speaker 1: buy the flat, 444 00:21:46,670 --> 00:21:52,089 Speaker 1: but I do have 32,000 lying around somewhere in CPFIS. 445 00:21:52,099 --> 00:21:56,069 Speaker 1: The investment scheme. Should I leave the latter there or 446 00:21:56,079 --> 00:21:59,869 Speaker 1: should I take it back out? Withdraw it, put it 447 00:21:59,880 --> 00:22:03,250 Speaker 1: back in my O A or option C take that 448 00:22:03,260 --> 00:22:06,800 Speaker 1: 32,000 in my CPFIS and chuck it into S A, 449 00:22:06,949 --> 00:22:07,760 Speaker 1: what's the move? 450 00:22:08,069 --> 00:22:10,639 Speaker 2: It's a difficult question to answer because it all depends 451 00:22:10,650 --> 00:22:11,380 Speaker 2: on what you are buying 452 00:22:11,589 --> 00:22:14,699 Speaker 2: in that cpfiso. A. Right. Right. So if you are 453 00:22:14,709 --> 00:22:19,459 Speaker 2: buying a lousy insurance product and it's giving you like 3% 454 00:22:19,469 --> 00:22:22,150 Speaker 2: it doesn't make sense at all. Right. So take a 455 00:22:22,160 --> 00:22:24,020 Speaker 2: look at the numbers. Really? Yeah, I mean, you are 456 00:22:24,030 --> 00:22:26,879 Speaker 2: buying an investment that is doing very badly and there's 457 00:22:26,890 --> 00:22:27,430 Speaker 2: no point leaving 458 00:22:27,439 --> 00:22:29,449 Speaker 1: it there because you're just going to lose even more. 459 00:22:29,459 --> 00:22:32,770 Speaker 2: Right? So I would say that if your investment is bad, 460 00:22:32,859 --> 00:22:37,290 Speaker 2: then consider terminating it and bring it back first to 461 00:22:37,300 --> 00:22:38,130 Speaker 2: your O A 462 00:22:38,619 --> 00:22:40,270 Speaker 2: and then you can decide what to do. Of course, 463 00:22:40,280 --> 00:22:42,520 Speaker 2: you can transfer to your essay if you want. That's 464 00:22:42,530 --> 00:22:44,020 Speaker 2: one thing I need to say. I mean, a lot 465 00:22:44,030 --> 00:22:45,310 Speaker 2: of times people will say this, I don't want to 466 00:22:45,319 --> 00:22:48,270 Speaker 2: terminate their investment because if I terminate, I will take 467 00:22:48,280 --> 00:22:50,800 Speaker 2: the loss, right? And I don't want to, but you 468 00:22:50,810 --> 00:22:55,989 Speaker 2: don't really suffer the loss. If you are selling it 469 00:22:56,219 --> 00:22:58,390 Speaker 2: and moving into something better, 470 00:22:59,180 --> 00:23:01,849 Speaker 2: you only take the loss if you sell it and 471 00:23:01,859 --> 00:23:04,739 Speaker 2: move it into cash, giving you 0% or 1%. Right. 472 00:23:05,469 --> 00:23:08,760 Speaker 1: You're moving it into a vehicle that actually lets you grow, 473 00:23:09,060 --> 00:23:11,679 Speaker 1: not only enough to make up for the shortfall you 474 00:23:11,689 --> 00:23:14,819 Speaker 1: may have, but even more because you're leaving it in there. 475 00:23:14,829 --> 00:23:17,160 Speaker 2: Precisely an analogy I use is that 476 00:23:17,530 --> 00:23:21,089 Speaker 2: if your pill is leaking, praying and hoping that you 477 00:23:21,099 --> 00:23:23,380 Speaker 2: will not leak further, is not going to help you 478 00:23:23,459 --> 00:23:27,438 Speaker 2: transfer into a pill that will not leak and even 479 00:23:27,449 --> 00:23:29,410 Speaker 2: have a chance to be filled again when you put 480 00:23:29,420 --> 00:23:32,369 Speaker 2: water into it. Right? So if your CPR S investment 481 00:23:32,380 --> 00:23:35,698 Speaker 2: is doing very badly, I will say consider selling it, 482 00:23:35,709 --> 00:23:38,329 Speaker 2: move it back to O A. Now, if you have 483 00:23:38,339 --> 00:23:42,000 Speaker 2: trouble paying off your mortgage, that becomes a buffer. 484 00:23:42,239 --> 00:23:46,099 Speaker 2: You have no problems actually paying your mortgage. You can 485 00:23:46,109 --> 00:23:49,050 Speaker 2: consider moving some to your S A to grow it 486 00:23:49,060 --> 00:23:50,290 Speaker 2: at a higher interest. 487 00:23:50,300 --> 00:23:54,869 Speaker 1: Ok. That's it. Right. So I have one last CPF 488 00:23:54,880 --> 00:23:56,650 Speaker 1: hack that I read about that. I wanted to get 489 00:23:56,660 --> 00:24:00,050 Speaker 1: your thoughts on transferring your O A savings to your 490 00:24:00,060 --> 00:24:02,520 Speaker 1: S A. It's something that we've been banging on about 491 00:24:02,530 --> 00:24:06,150 Speaker 1: for this entire conversation because it earns a higher interest 492 00:24:06,160 --> 00:24:07,270 Speaker 1: of 4 to 5%. 493 00:24:07,699 --> 00:24:10,849 Speaker 1: Is this possible to do while we have other CPF 494 00:24:10,859 --> 00:24:14,079 Speaker 1: commitments at this age and where we feel like turning 495 00:24:14,089 --> 00:24:17,819 Speaker 1: 55 and beyond, feels like a lifetime away. 496 00:24:18,199 --> 00:24:21,159 Speaker 2: Yes, it's always good to transfer if you can O 497 00:24:21,170 --> 00:24:22,390 Speaker 2: A to S A. 498 00:24:22,969 --> 00:24:28,459 Speaker 2: But practically speaking, when I was in my forties, late thirties, forties. 499 00:24:28,609 --> 00:24:31,170 Speaker 2: It was not possible for me to do that. Right. 500 00:24:31,180 --> 00:24:35,170 Speaker 2: Because I have to service my mortgage. Exactly. Right. And 501 00:24:35,180 --> 00:24:36,899 Speaker 2: I depend on it a lot. Right, to do it. 502 00:24:36,910 --> 00:24:38,640 Speaker 2: And also I'm not sure whether 503 00:24:38,739 --> 00:24:40,629 Speaker 2: I will lose my job. Right. 504 00:24:40,640 --> 00:24:41,660 Speaker 1: Job security is a 505 00:24:41,670 --> 00:24:45,310 Speaker 2: thing. And remember I say that when you top up 506 00:24:45,319 --> 00:24:49,780 Speaker 2: your s a, it's like joining secret society, it's irreversible. Right. 507 00:24:50,000 --> 00:24:52,399 Speaker 2: So if you're going to transfer O A to S 508 00:24:52,410 --> 00:24:56,589 Speaker 2: A at that age, what happens if you lose your job? 509 00:24:56,880 --> 00:24:59,938 Speaker 2: What happens if your O A runs dry and you 510 00:24:59,949 --> 00:25:03,219 Speaker 2: can't pay it anymore? You o anymore, right? So I 511 00:25:03,229 --> 00:25:06,729 Speaker 2: will not practically speaking at the age of 40 512 00:25:07,010 --> 00:25:10,419 Speaker 2: depending on your circumstances. I will not suggest that you 513 00:25:10,430 --> 00:25:13,859 Speaker 2: do a lot of transfer from your OE to your 514 00:25:13,869 --> 00:25:16,329 Speaker 2: S A. Ok. Yeah, if you have cash put in 515 00:25:16,339 --> 00:25:18,869 Speaker 2: slowly into your S A is your O A more 516 00:25:18,880 --> 00:25:22,050 Speaker 2: like a mortgage emergency fund just in case, just in 517 00:25:22,060 --> 00:25:24,438 Speaker 2: case you lose that job, you have some spare to 518 00:25:24,449 --> 00:25:26,030 Speaker 2: pay your mortgage. 519 00:25:26,040 --> 00:25:28,149 Speaker 1: It's just to weather. The rainy day is a little 520 00:25:28,160 --> 00:25:30,199 Speaker 1: bit better. Yeah, it's just from a practical standpoint and 521 00:25:30,209 --> 00:25:32,500 Speaker 1: to think about the special account, the S A 522 00:25:32,625 --> 00:25:35,554 Speaker 1: more as an instrument to top up to rather than 523 00:25:35,564 --> 00:25:39,555 Speaker 1: making big transfers that you, as you said, cannot reverse. Yeah, 524 00:25:39,564 --> 00:25:42,555 Speaker 2: unless you are much older things have stabilized and you 525 00:25:42,564 --> 00:25:45,854 Speaker 2: got no more mortgage and ok, you can consider transferring 526 00:25:45,864 --> 00:25:47,604 Speaker 2: more money from OE to S A. 527 00:25:47,864 --> 00:25:52,064 Speaker 1: Alright. So while investing your CPF is a long game, 528 00:25:52,255 --> 00:25:54,474 Speaker 1: it's not too late yet to play when you're in 529 00:25:54,484 --> 00:25:57,234 Speaker 1: your forties. As long as you plan it well, and 530 00:25:57,244 --> 00:26:01,353 Speaker 1: strategize wisely, think about that sleep, that you need that 531 00:26:01,364 --> 00:26:02,375 Speaker 1: peace of mind 532 00:26:02,619 --> 00:26:05,349 Speaker 1: that will weather you better in the long run. And 533 00:26:05,359 --> 00:26:08,060 Speaker 1: we hope that this episode has introduced you to some 534 00:26:08,069 --> 00:26:11,439 Speaker 1: of those strategies. Thanks so much Chris for helping us out. 535 00:26:11,479 --> 00:26:14,349 Speaker 1: Thanks for having me and thank you to you our listener. 536 00:26:14,359 --> 00:26:17,649 Speaker 1: If you've enjoyed this episode of Money Talks, there's always more, 537 00:26:17,724 --> 00:26:20,155 Speaker 1: more content for you to enjoy. Simply follow us on 538 00:26:20,165 --> 00:26:23,785 Speaker 1: Apple podcasts or Spotify. Give us five stars maybe leave 539 00:26:23,795 --> 00:26:26,405 Speaker 1: a review while you're there. The team behind Money Talks 540 00:26:26,415 --> 00:26:31,435 Speaker 1: is Jacqueline Chan, Joanne Chan Tiffany Ang, Christina Roberta and 541 00:26:31,444 --> 00:26:32,415 Speaker 1: I'm Andrea. He.