Speaker 1: You're listening to a CNA podcast?
Speaker 1: Hi, I'm Andrea Heng and I am back with a
Speaker 1: brand new episode of Money Talks. And this is where
Speaker 1: we talk about all things money, what you can do
Speaker 1: with it and what it can do for you. Now,
Speaker 1: on the previous episode, we started a new conversation about
Speaker 1: your CPF moneys specifically how you can use it to
Speaker 1: its fullest potential if you're in
Speaker 1: your twenties and thirties, this is just about the time
Speaker 1: you're entering the prime of your life, launching your career,
Speaker 1: buying a home, starting to invest and save. Now if
Speaker 1: you are in this age range and you're thinking about
Speaker 1: how you can maximize your CPF hop on over to
Speaker 1: Spotify or Apple podcasts and tune in to that episode.
Speaker 1: So as I said, you're coming into the prime of
Speaker 1: your life in your twenties and thirties, the peak of
Speaker 1: it arguably is your forties growing kids an established career.
Speaker 1: But you know what, you've got other priorities on your mind, too,
Speaker 1: aging parents, your own retirement. It's still a distance to
Speaker 1: go before you say goodbye to the workplace. Or if
Speaker 1: you think it's too late to strategize your CPF monies. Well,
Speaker 1: you might want to reconsider helping me walk you through.
Speaker 1: This is Christopher Tan CEO of
Speaker 1: he is no stranger to us here and I'm happy
Speaker 1: to finally talk to him in the flesh. Welcome to
Speaker 1: Money Talks,
Speaker 2: Chris, thank you. Thank you for having me.
Speaker 1: Ok. So did I get that right, Chris, by your forties?
Speaker 1: Many of us would be at the peak of life,
Speaker 1: you know, marriage, kids, elderly parents in one hand, hopefully
Speaker 1: a thriving career, healthy savings and investment portfolio in the other.
Speaker 2: I think it's like the peak of your expenses. That's
Speaker 2: a good way of, I'm not sure that's the peak
Speaker 2: of your life. But I mean, in terms of career,
Speaker 2: I think your peak is really the 50. But
Speaker 2: well, at 40 years old, you have a lot of commitments, right?
Speaker 2: Your parents are probably still around, you got to take
Speaker 2: care of your parents and you have probably Children, you
Speaker 2: got to take care of Children and like you said,
Speaker 2: mortgages and all things like that and then you have
Speaker 2: to plan for retirement. So I think in terms of expenses,
Speaker 2: it's really quite a heavy commitment at that age. It's
Speaker 2: a
Speaker 1: burden. I can tell you that and I don't have
Speaker 1: kids yet yet.
Speaker 1: So by the time I reached my forties, that's not
Speaker 1: very far away for me. You know, I have worked
Speaker 1: 20 years, bought a house and that's possibly the biggest
Speaker 1: ticket item that I would use my CPF for. Right. Chris.
Speaker 1: And I've only just realized that I could have invested
Speaker 1: some of that CPF money. The question I really want
Speaker 1: to ask is, is it too late? Has my investment
Speaker 1: runway shortened to the point where I can't actually do
Speaker 1: anything about it? No,
Speaker 2: I think you have a lot of time.
Speaker 2: 40 I'm 53 and you know, so for you have
Speaker 2: long runway. right? I mean, I guess you're asking this
Speaker 2: question because if you buy a house, your money is
Speaker 2: in your ordinary account probably got wiped out. And that's natural. Right?
Speaker 2: Because how many Singaporeans actually have got a few 100,000
Speaker 2: to put down for a deposit of a house? Right.
Speaker 2: And then you have to service that monthly mortgage. So
Speaker 2: I think it's quite normal that if you buy a house,
Speaker 2: your money is in your ordinary account get wiped out.
Speaker 2: But not to worry. I mean, you can use your
Speaker 2: cash still to invest for your retirement. I mean, you
Speaker 2: can even use your cash if you want to, to
Speaker 2: top up in your special account. So I can't say
Speaker 2: it's too late. So there
Speaker 1: are options if in my forties and I still want
Speaker 1: to do some investment using my CPF money. I
Speaker 2: wish I was in my forties and plenty of time. Ok.
Speaker 1: Ok. I hope I can wind back the clock for
Speaker 1: you in this episode and make you feel young again.
Speaker 1: So at this juncture in my forties, what kind of
Speaker 1: CPF
Speaker 1: investment products can I look at and how I think
Speaker 1: more importantly, how would they differ from investment products that
Speaker 1: the younger folks, the twenties and thirties folks would be
Speaker 1: looking into?
Speaker 2: Yeah, I would say first, don't look into investment products, right?
Speaker 2: I mean, make use of your CPF special account because
Speaker 2: it's giving you 4 to 5% with almost no risk, right?
Speaker 2: And there are very few products out there. In fact,
Speaker 2: there aren't any products out there that can give you
Speaker 2: a guaranteed 4 to 5%
Speaker 2: capital guaranteed AAA risk, none out there, right? So before
Speaker 2: we go out there and start looking for products to
Speaker 2: buy insurance and all that, start considering topping up your
Speaker 2: CPF special account, right? The only thing you have to
Speaker 2: accept is that putting money in your special account is
Speaker 2: like joining secret society
Speaker 2: very easy to join, very difficult to get out, right?
Speaker 1: Because the 4 to 5% is just so
Speaker 2: good, it's so good, but then no liquidity. So once
Speaker 2: you put it in, you got to accept no liquidity.
Speaker 2: But consider that that makes that to be your first
Speaker 2: place to consider putting your investments in after you have
Speaker 2: done that and you can't top up anymore, then you
Speaker 2: can think about investing into other products, right? And when
Speaker 2: it comes to investing in other products, we always say true.
Speaker 2: The source of funds that gives you a lower interest first.
Speaker 2: So between cash and ordinary account right now, cash is
Speaker 2: giving you a higher yield right now, right? You can
Speaker 2: buy t bills, you can put a fixed deposit easily.
Speaker 2: You be 2.5% right? So right now, you might want
Speaker 2: to use if you still have got money in your
Speaker 2: O A to invest, you, you still want to consider that.
Speaker 2: But if you look at it over the long term
Speaker 2: and this rise
Speaker 2: interest rate environment won't be here forever, right? So when
Speaker 2: the interest rate starts to come down and go back
Speaker 2: to normal, then you might want to start investing using
Speaker 2: your cash first. Don't invest your CPF, right? Unless you
Speaker 2: have to. Ok.
Speaker 1: So ensuring that there is liquidity in the first place
Speaker 1: to even invest or make some investments. That's a separate
Speaker 1: matter from what you should do with your CPF.
Speaker 2: Yeah, you actually
Speaker 2: brought up a very good point, right? If you want
Speaker 2: to use your cash to invest, please also make sure
Speaker 2: that you have got sufficient emergency fund, right? And if
Speaker 2: I use the previous scenario near 40 going to buy
Speaker 2: a house CPF wiped out, you probably need some money
Speaker 2: for your renovation, you know, and all that,
Speaker 1: there's a huge cash out.
Speaker 2: Yeah, so I would say don't be too hurried to
Speaker 2: go and invest.
Speaker 2: So all those expenses first, you start to build up
Speaker 2: your cash to have an emergency fund before you start investing.
Speaker 1: Ok. That's very good advice. Now, let's talk about the
Speaker 1: O A for a second. My money is already compounding
Speaker 1: in there in the O A the ordinary account at 2.5%
Speaker 1: interest without me really doing anything. I mean, it's the
Speaker 1: same with the special account which we'll get into in
Speaker 1: a bit
Speaker 1: if I choose not to or am unable to invest
Speaker 1: my CPF moneys. Since like you said, it's locked in
Speaker 1: somewhere such as my home. Are there other ways for
Speaker 1: me to maximize it for some kind of sizable return?
Speaker 2: I mean, if you want to make use of, if
Speaker 2: it's purely on CPF I going back to that first option. Sure.
Speaker 2: Top up your special account, right. That's your first option
Speaker 2: and then your O A you won't have much to
Speaker 2: use anyway. That's right. Yeah, you won't have much to
Speaker 2: use will be out anyway. Yeah, that's right. And so
Speaker 2: just leave it there. Ok. Don't worry about it, you know,
Speaker 2: because you still need some money in your O A
Speaker 2: to pay for your monthly mortgage, right? Consider using cash
Speaker 2: to invest instead.
Speaker 2: I mean, later on, if you have more cash as
Speaker 2: your career progresses and you have savings, you can always
Speaker 2: if you want to do a housing refund if you
Speaker 2: want to, right? Because the money that you have taken
Speaker 2: out to pay for your mortgage, plus the accrued interest
Speaker 2: that you didn't get because you take the money out
Speaker 2: from oe, right? So you are losing 2.5%. So that
Speaker 2: accrued interest later on
Speaker 2: in life. If you want to top it back up
Speaker 2: into your O A using the housing refund scheme, you
Speaker 2: can do that if you want to. There you go.
Speaker 1: That's an option. So just because you're using your CPF
Speaker 1: to pay for your mortgage, it's not the end of
Speaker 1: the road for your CPF money. You can actually earn
Speaker 1: it back in some way. Yes,
Speaker 2: if you have cash, you can always choose to put
Speaker 2: it back again. Ok. That's
Speaker 1: fantastic to know.
Speaker 1: And as you said, one of the best things you
Speaker 1: can do is to top up your special account because
Speaker 1: that's earning you a 4 to 5% interest. Apparently there's
Speaker 1: an optimum time of the year to do these top ups.
Speaker 2: Well, I mean, yes, I mean, people usually want to
Speaker 2: top it up before the end of the year. So
Speaker 2: that at the beginning of the year, that's when CPF
Speaker 2: will pay interest, right?
Speaker 2: But I think that we don't have to be so specific,
Speaker 2: you know, to try and capture that little
Speaker 1: 1% is in.
Speaker 2: Yeah, I mean, I don't do it myself, right? It's too,
Speaker 2: it's too tiring, right? So I will say along the way,
Speaker 2: the best thing to do is along the way, put
Speaker 2: it in slowly,
Speaker 2: right? I find it very difficult to suddenly put in
Speaker 2: one lump sum in your special account because knowing that
Speaker 2: once you put in, you can, you can't take it
Speaker 2: out until 55 years. So that's the first time you
Speaker 2: can withdraw. So there's a lot of inertia. So I
Speaker 2: would suggest that people start putting in small amount like
Speaker 2: 100 205 100. That's very. And then after that, when
Speaker 2: you get more comfortable, then you put it in. Now,
Speaker 2: of course, the Top Up scheme,
Speaker 2: in fact, the specific name for it is called Istu
Speaker 2: retirement sum top up scheme, right? Is just one way.
Speaker 2: Once you reach the full retirement sum, you can't do
Speaker 2: it anymore. And this year the full retirement sum is 198,800.
Speaker 2: That's the, that's the cap, right? So you can't do
Speaker 2: it anymore. But there are other ways to put in
Speaker 2: more money and that's the voluntary contribution scheme.
Speaker 1: Ah OK. Talk to us
Speaker 2: about that. Yeah. So if your total
Speaker 2: your contribution in that 12 months, your contribution plus your
Speaker 2: employer's contribution has not exceeded $37,740 you can always voluntarily contribute, right?
Speaker 2: But take note that when you do that, you cannot
Speaker 2: choose which account you want to contribute into, right? So
Speaker 2: every dollar that you contribute, using the voluntary contribution scheme,
Speaker 2: it gets
Speaker 2: split into the three accounts, right? Oas A and ma
Speaker 2: according to the CPF allocation rate for your age ban.
Speaker 1: Right. It's not say, oh, ok. I'm gonna top, I
Speaker 1: have extra cash lying around. Let's top up my oa
Speaker 1: I can't do that because it goes according to the
Speaker 1: way we've been receiving our CPF contributions
Speaker 2: exactly for your age. But that is another way to
Speaker 2: put in more money into your CPF if you want to.
Speaker 1: Right. Ok.
Speaker 1: Now, at the age of 40 or so it will
Speaker 1: be about 15 years before the O A and the
Speaker 1: S A get converted into the R A, the retirement account. Right?
Speaker 1: So what's a safe sound investment move? Now that that
Speaker 1: account has been created? I have topped up my S A,
Speaker 1: it's pretty healthy. What's a safe sound investment move ahead
Speaker 1: of turning 55?
Speaker 2: Well, I mean, if by that time you have built
Speaker 2: up a sizable amount of money in your O A,
Speaker 2: despite the fact that you have used it to pay
Speaker 2: your mortgage and you have used your cash to invest
Speaker 2: and you really, really want to invest your ordinary account. Right.
Speaker 2: Then you can use the ordinary account and go and
Speaker 2: invest into the stock market.
Speaker 2: You can maybe buy a unit trust for it. I
Speaker 2: wouldn't recommend you to buy an insurance using your ordinary account, right?
Speaker 2: Because your ordinary account is already giving you between 2.5
Speaker 2: to 3.5%. Correct. Right. Because your 1st 20,000 year old
Speaker 2: is giving you 1% more So that's 3.5 and then
Speaker 2: the rest is 2.5. So you're getting 2.53 0.5%. There
Speaker 2: are very few insurance products that can
Speaker 2: beat that, right? I mean, there are of course a
Speaker 2: lot of projections, but on average, I would say that
Speaker 2: the insurance product cannot beat it convincingly. So if you
Speaker 2: want to use your O A, you can choose to
Speaker 2: invest it into funds that invest into the equity market.
Speaker 2: That should at least be like 3.54%.
Speaker 1: Ok. So that's to say I'm investing my O A
Speaker 1: as it becomes the R A of course.
Speaker 2: Oh, if you are talking about post 55 talking about
Speaker 2: post 55
Speaker 1: 55 now. Ok. What can
Speaker 2: I do? What happens at 55 is that CPF board
Speaker 2: will first go to your S A to try and
Speaker 2: take the amount of money to meet the full retirement sum.
Speaker 2: So assuming this year you are 55 the first thing
Speaker 2: CPF Board will do is they will try and look
Speaker 2: into your S A and try and get 100 and
Speaker 2: $98,800
Speaker 1: or the maximum that you have in there. Yes.
Speaker 2: Right. So if you
Speaker 2: 198,800 so the 198,800 will go into your R A. Yeah,
Speaker 2: and it's done. Yeah. Whatever is left in your S
Speaker 2: A and whatever that is left in your O A now,
Speaker 2: you can take it out if you want to. Ok.
Speaker 2: Right now, let's assume that at 55 years old, you
Speaker 2: don't have 100 and 98,800. Ok? Then they will take
Speaker 2: whatever there is in your S A put into your
Speaker 2: R A and CPA board will go to your O
Speaker 2: A and take whatever they need to make up
Speaker 2: the balance, the FRS and whatever that's left in your
Speaker 2: O A, you are free to do whatever it is
Speaker 2: as good as cash for you got it. Now, money
Speaker 2: is in your R A sitting there can't be invested, right?
Speaker 2: It will sit there until at the earliest age 65
Speaker 2: if you decide to draw down via the CPF Life
Speaker 2: scheme and that's when it happens. And
Speaker 1: that's why you're saying before we turn 55 if we
Speaker 1: have enough in the O A or healthy amount in
Speaker 1: the O A
Speaker 1: go and invest it. So you want
Speaker 2: to. So some people, they want to do this thing
Speaker 2: called shielding cash, right? So it's quite popular and for
Speaker 2: people whom they have got sufficient cash in O A
Speaker 2: and S A. So that must be done before your
Speaker 2: 55th birthday to be safe, do it. I'll say one
Speaker 2: month before your 55th birthday, right? Because it takes a
Speaker 2: while for money to come out, right? So this is
Speaker 2: what happens. So before your 55th birthday,
Speaker 2: you go to your S A and you invest all
Speaker 2: the amount that is above 40,000. Ok. Right. Because the
Speaker 2: 1st 40,000 you can't invest C off. That's right. Ok.
Speaker 2: And then you can invest it in a very low
Speaker 2: risk instrument like tea bills if you want to or
Speaker 2: a short duration bond fund and you do the same
Speaker 2: for O A. You take anything above the 1st 20,000,
Speaker 2: you go and buy that
Speaker 2: same low risk instrument it, right? So you have done that.
Speaker 2: Your S A is now left with 40 your O
Speaker 2: A is now left with 20. That's right on your
Speaker 2: 55th birthday CPF board will wipe away the 60,000 and
Speaker 2: put into your R A. Now right after that, you
Speaker 2: sell off whatever investment you have bought, ok? If it
Speaker 2: t bill don't sell, you gotta wait until six months
Speaker 2: before the mature. But if you buy other instruments, you
Speaker 2: can sell off one day after your birthday. It all
Speaker 2: goes back into your O A and S A
Speaker 2: and it becomes cash, right? But your R A has
Speaker 2: only 60,000. If you remember now, you take cash and
Speaker 2: you top up your R A up to the prevailing
Speaker 2: full retirement sum, right? So in effect, you are actually
Speaker 2: switching cash from your bank account to your O A
Speaker 2: and S A, right? It's like you're putting
Speaker 1: it in a temporary basket just to safeguard it first.
Speaker 2: That's right. That's right. That's right. And the whole idea
Speaker 2: is
Speaker 2: want as much money in your O A and S
Speaker 2: A after 55 not in your bank because after 55
Speaker 2: your O A and S A, they are like, cash
Speaker 2: their bank account because you can draw it out and
Speaker 2: at a higher interest rate. Ok. So this is something
Speaker 2: people do CPF shielding and a lot of people do
Speaker 2: it just before 55. Are you planning to do that?
Speaker 2: I've got two more years. If the board doesn't take
Speaker 2: away this feature. Yes, I'm going to do
Speaker 1: it. Ok.
Speaker 1: Hello, everyone. My name is Christina and I'm Adrian and
Speaker 1: we're the host of a podcast called Work It If
Speaker 1: you never heard of it. Well, it's a good time
Speaker 1: to tap in, in the last 20 episodes. We've discussed
Speaker 1: topics like how to negotiate for a salary increase or
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Speaker 1: values from you, which
Speaker 1: incidentally it's our top performing episode. If work consumes your
Speaker 1: life and you want some perspective on issues like management, stress,
Speaker 1: even office romance, then this podcast should be on your list.
Speaker 1: A new episode drops every Monday. Catch us on the
Speaker 1: CN AM or wherever you get your podcast.
Speaker 1: Now, Chris, I have a scenario that I wanted to
Speaker 1: get your opinion on. Ok. A newlywed couple in their
Speaker 1: late thirties, early forties buys an H DB flat. They're
Speaker 1: paying off the loan in at least the first year
Speaker 1: using full CPF. Right.
Speaker 1: There's advice out there to obviously pay this mortgage in
Speaker 1: full cash so that money in the O A gets
Speaker 1: to grow and you don't end up wiping your CPF
Speaker 1: because it's obviously best to keep at least 20 K
Speaker 1: 20,000 in the O A as you mentioned. And of course,
Speaker 1: that's what HEB and CPF advise as well. Question number one.
Speaker 1: What if full cash is not an option to pay
Speaker 1: off my mortgage loan?
Speaker 2: Basically, I mean, to be honest, very few people would
Speaker 2: have the amount of cash to pay off. Exactly. Right.
Speaker 2: I mean, I don't know of anyone at all actually,
Speaker 2: that has got the money to use cash to pay
Speaker 2: off the whole house. Yeah. Right.
Speaker 2: So the only way is really to take your CPF
Speaker 2: money to do it. There's no other option, right? And subsequently,
Speaker 2: even your monthly mortgage will have to use your money
Speaker 2: in your O A right
Speaker 2: now. Let's assume that you have got cash. Should you
Speaker 2: do it? Even if you have got cash to do
Speaker 2: it right now, it depends, it depends on what you
Speaker 2: are doing with this cash. If you are doing nothing
Speaker 2: with this cash and interest rate falls down to the
Speaker 2: level where we saw before 2022. Right. So if you
Speaker 2: are putting your savings account and you're getting like 1% 100%
Speaker 2: and you Absolutely. You're not going to do anything about
Speaker 2: it
Speaker 2: then. Ok, use your cash to go and pay off
Speaker 2: the house, right? Because it is better to leave money
Speaker 2: in the O A because you're getting 2.5 right now.
Speaker 2: Even if you do that, I would say don't wipe
Speaker 2: away all the cash always set aside money for rainy days. Right?
Speaker 2: Emergency because the advantage of cash is that he has
Speaker 2: got liquidity. O A has no liquidity. So
Speaker 2: very few, I would say very few people will do
Speaker 2: nothing with cash. They will probably find ways to invest
Speaker 2: the cash to at least beat the 2.5% 0 A.
Speaker 2: So I will say use your O A, use your
Speaker 2: cash for investment unless you are so conservative, you are
Speaker 2: not touching your cash at all. You're just leaving it
Speaker 2: in the bank or putting it under your pillow and
Speaker 2: you might as well just pay off your,
Speaker 1: I mean, it's not earning much more sitting in your pillow, right? Ok.
Speaker 1: So what about doing partial, so partial CPF partial cash?
Speaker 1: Is that something? I mean, that's obviously to help sort
Speaker 1: of cushion the blow a little bit in terms of
Speaker 1: liquidity as well as not wiping out the CPF. I
Speaker 1: think also it applies to people in their forties or,
Speaker 1: and depending on the age of the house as well.
Speaker 1: If you've bought a pretty old decaying resale flat, you're
Speaker 1: not going to be able to use your full o
Speaker 1: a up to a certain point.
Speaker 2: I mean, that's wise, in fact, if you have got
Speaker 2: cash and you have got money in your oa I
Speaker 2: would say use both also for the purpose of bringing
Speaker 2: down the loan amount, right? So that's a wise thing
Speaker 2: to do, right? So yeah, bring it down because the
Speaker 2: lower your debt,
Speaker 2: the lesser total interest you have to pay. Right? And
Speaker 2: sometimes it's not just a financial decision, right? Because the
Speaker 2: investment people like me will tell you that no, don't
Speaker 2: pay down so much. I mean, the loan rates are
Speaker 2: not high, especially if you're using the H DB concessionary
Speaker 2: loan rate
Speaker 2: which is currently fixed at 08 plus 0.1% which is 2.6.
Speaker 2: If you can invest anything above 2.6 I'll say take
Speaker 2: the loan right and go and invest your cash right now.
Speaker 2: That seems like the correct investment advice. However, not everything
Speaker 2: is financial, right? It gives you peace of mind knowing
Speaker 2: that your loans are at a minimal,
Speaker 2: you can sleep at night in peace even even if
Speaker 2: it is not the best financial decision, I think it's
Speaker 2: a good decision because at the end of the day,
Speaker 2: it's all about money is about helping you to be happy.
Speaker 2: What's the point of making all the right investment decision?
Speaker 2: But you are stressed over it? Yeah, so I would say, yeah,
Speaker 2: if you are just wanting to lower your debt,
Speaker 2: pay off your debt even though it doesn't make investment.
Speaker 1: So sleep and peace of mind over the best investment,
Speaker 1: financial decision, you think it
Speaker 2: is any time I will make that decision.
Speaker 1: That's very wise, that's really very wise, especially those in
Speaker 1: their thirties and forties, starting a family and very worried
Speaker 1: about lots of, lots of expenses. I don't have kids
Speaker 1: and I'm already worrying about how to provide for my
Speaker 1: parents when they get older and to provide for myself
Speaker 1: as well. It's a lot to think about. It's quite burdensome, right?
Speaker 1: Being the sandwich
Speaker 2: generation. Yeah, I mean, I'm 53 and I will say
Speaker 2: that when you have no debt,
Speaker 2: you have options for sure. Yeah, and that's the most
Speaker 2: important thing in life that financial
Speaker 1: freedom. So
Speaker 2: yeah, I mean you don't like your boss. We are
Speaker 2: not listening to this in office but you don't like
Speaker 2: your I like my. That's fine. Ok. Yeah, so you
Speaker 2: can set your boss, you can pursue things that are
Speaker 2: meaningful for you. So don't let that be the master.
Speaker 2: Yeah, be the master of that. So if you have
Speaker 2: to make a decision, it may not be wise from
Speaker 2: an investment standpoint, but it makes sense from the debt
Speaker 2: and peace of mind standpoint. Make it.
Speaker 1: Ok. Here's a follow up scenario. I have five K
Speaker 1: in my O A because I've wiped it out to
Speaker 1: buy the flat,
Speaker 1: but I do have 32,000 lying around somewhere in CPFIS.
Speaker 1: The investment scheme. Should I leave the latter there or
Speaker 1: should I take it back out? Withdraw it, put it
Speaker 1: back in my O A or option C take that
Speaker 1: 32,000 in my CPFIS and chuck it into S A,
Speaker 1: what's the move?
Speaker 2: It's a difficult question to answer because it all depends
Speaker 2: on what you are buying
Speaker 2: in that cpfiso. A. Right. Right. So if you are
Speaker 2: buying a lousy insurance product and it's giving you like 3%
Speaker 2: it doesn't make sense at all. Right. So take a
Speaker 2: look at the numbers. Really? Yeah, I mean, you are
Speaker 2: buying an investment that is doing very badly and there's
Speaker 2: no point leaving
Speaker 1: it there because you're just going to lose even more.
Speaker 2: Right? So I would say that if your investment is bad,
Speaker 2: then consider terminating it and bring it back first to
Speaker 2: your O A
Speaker 2: and then you can decide what to do. Of course,
Speaker 2: you can transfer to your essay if you want. That's
Speaker 2: one thing I need to say. I mean, a lot
Speaker 2: of times people will say this, I don't want to
Speaker 2: terminate their investment because if I terminate, I will take
Speaker 2: the loss, right? And I don't want to, but you
Speaker 2: don't really suffer the loss. If you are selling it
Speaker 2: and moving into something better,
Speaker 2: you only take the loss if you sell it and
Speaker 2: move it into cash, giving you 0% or 1%. Right.
Speaker 1: You're moving it into a vehicle that actually lets you grow,
Speaker 1: not only enough to make up for the shortfall you
Speaker 1: may have, but even more because you're leaving it in there.
Speaker 2: Precisely an analogy I use is that
Speaker 2: if your pill is leaking, praying and hoping that you
Speaker 2: will not leak further, is not going to help you
Speaker 2: transfer into a pill that will not leak and even
Speaker 2: have a chance to be filled again when you put
Speaker 2: water into it. Right? So if your CPR S investment
Speaker 2: is doing very badly, I will say consider selling it,
Speaker 2: move it back to O A. Now, if you have
Speaker 2: trouble paying off your mortgage, that becomes a buffer.
Speaker 2: You have no problems actually paying your mortgage. You can
Speaker 2: consider moving some to your S A to grow it
Speaker 2: at a higher interest.
Speaker 1: Ok. That's it. Right. So I have one last CPF
Speaker 1: hack that I read about that. I wanted to get
Speaker 1: your thoughts on transferring your O A savings to your
Speaker 1: S A. It's something that we've been banging on about
Speaker 1: for this entire conversation because it earns a higher interest
Speaker 1: of 4 to 5%.
Speaker 1: Is this possible to do while we have other CPF
Speaker 1: commitments at this age and where we feel like turning
Speaker 1: 55 and beyond, feels like a lifetime away.
Speaker 2: Yes, it's always good to transfer if you can O
Speaker 2: A to S A.
Speaker 2: But practically speaking, when I was in my forties, late thirties, forties.
Speaker 2: It was not possible for me to do that. Right.
Speaker 2: Because I have to service my mortgage. Exactly. Right. And
Speaker 2: I depend on it a lot. Right, to do it.
Speaker 2: And also I'm not sure whether
Speaker 2: I will lose my job. Right.
Speaker 1: Job security is a
Speaker 2: thing. And remember I say that when you top up
Speaker 2: your s a, it's like joining secret society, it's irreversible. Right.
Speaker 2: So if you're going to transfer O A to S
Speaker 2: A at that age, what happens if you lose your job?
Speaker 2: What happens if your O A runs dry and you
Speaker 2: can't pay it anymore? You o anymore, right? So I
Speaker 2: will not practically speaking at the age of 40
Speaker 2: depending on your circumstances. I will not suggest that you
Speaker 2: do a lot of transfer from your OE to your
Speaker 2: S A. Ok. Yeah, if you have cash put in
Speaker 2: slowly into your S A is your O A more
Speaker 2: like a mortgage emergency fund just in case, just in
Speaker 2: case you lose that job, you have some spare to
Speaker 2: pay your mortgage.
Speaker 1: It's just to weather. The rainy day is a little
Speaker 1: bit better. Yeah, it's just from a practical standpoint and
Speaker 1: to think about the special account, the S A
Speaker 1: more as an instrument to top up to rather than
Speaker 1: making big transfers that you, as you said, cannot reverse. Yeah,
Speaker 2: unless you are much older things have stabilized and you
Speaker 2: got no more mortgage and ok, you can consider transferring
Speaker 2: more money from OE to S A.
Speaker 1: Alright. So while investing your CPF is a long game,
Speaker 1: it's not too late yet to play when you're in
Speaker 1: your forties. As long as you plan it well, and
Speaker 1: strategize wisely, think about that sleep, that you need that
Speaker 1: peace of mind
Speaker 1: that will weather you better in the long run. And
Speaker 1: we hope that this episode has introduced you to some
Speaker 1: of those strategies. Thanks so much Chris for helping us out.
Speaker 1: Thanks for having me and thank you to you our listener.
Speaker 1: If you've enjoyed this episode of Money Talks, there's always more,
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Speaker 1: is Jacqueline Chan, Joanne Chan Tiffany Ang, Christina Roberta and
Speaker 1: I'm Andrea. He.