Friday, January 18, 2013

Put your spare cash into CPF

f you have adequate savings and cash in the bank, it is a good idea for you to put the savings into the CPF special account or the retirement account and earn interest at 4% per annum. 

You will be allowed to withdraw the savings monthly, from age 65, through CPF Life. The money is payable for as long as you live. If you are born before 1958, you are allowed to withdraw your money in monthly installments, instead of buying CPF Life. Both options are good.

Some people are worried that CPF does not have money to pay them back. This is not true. CPF has more than sufficient money to pay back all their members.

There is also the belief that the CPF money is invested by GIC and Temasek and they make loses on their investments. This is also not true. These fund managers make a good return on their assets.

If you have spare cash, it is better to put into CPF to earn 4%. You can top up the special account and retirement account to the full amount that is allowed for yourself, spouse, parents and siblings. Check with CPF on how this can be done.

1 comment:

Sobri said...

Mr Tan. I believed this in the past and in fact did top-ups to have more than the required Minimum Sum set aside. Now I regretted it. My payout which could come soon, is tagged at the amount set aside, and to compensate for that, it would be for longer period which will put me in the 90's. Imagine what the inflation would do to that small miserable amount after so many years? I could ask for enhanced payment, but it is not calculated according to direct proportion as the amount for the MS set aside for my cohort. If I had put the extra amount in a simple FD in Malaysia, I would have got similar returns for that extra amount per month without the capital being touched despite a lower interest rate of 3.55% .

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