Oct 23, 2018

Cory Diary : Why are we trying to beat the system ?

Apartment loan

When I bought my apartment years ago, I wanted to have more cash flow therefore decided to tap of CPF OA. By then I have some knowledge on Good Debts.  Fast forward now, if I have to go through this again today, I would have leave CPF alone. First of all the amount I tapped is just 5% of the housing value. The hassle is not only unnecessary, and if the amount is to be compounded, I would have less saving in total as I need to pay myself the CPF interests that has been borrowed. In addition for comparison, CPF is AAA rated, backed by Singapore government. If I am to buy a private bond, it would be much lesser returns and unwarranted risk to private companies. This totally do not make sense for myself as my exposure to CPF is not major.

Minimum Sum

By age 55, I could withdraw amount above minimum sum. I would expect a number of people to do that. Let's think about it. Why are we so keen to withdraw the monies. CPF is design to support our retirement and to safe guard our golden years. So it seems illogical why people is rushing out the door once they hit the age. The main reason could be the mistrust of institutions. The other is they just want to spend it before their times are up. Both of which is illogical to me. For one, most of my monies will still be denominated in Singapore dollars. And if there are distress in government debts, even saving bank could be frozen or cut. So is either I have a stake in Singapore future or am I not. The later reason on money available to spend is not only irresponsible but there are high risk of financial difficulties if one reached 70s-90s. The one viable scenario I could think of is when I am much way above the minimum sum that drawing some out will give a better return (Not guaranteed) or lifestyle which I COULD AFFORD.

My CPF Plan

Unlike other segments where there are risks, CPF is safer than bonds of good interests. Personally to me this one of the best available investment tool available to be managed at portfolio level offering stability and respectable growth. Ironically, the lock-in is the best part of the system which provide robust protection to citizen. As most of my assets are Non-CPF it will be unlikely I will ever need to do early withdrawal. This will form a nice retirement portion to supplement my monthly income at 65. If I could exchange off min sum at 55 for higher interests, I would opt-in !

I am sorry if there are dissenting voices due to political differences therefore CPF. To me this is purely my personal judgement on financial standpoint as an average investor to go along with the system available to work with us. At the end, if there are money in my CPF-Life once I passed, that's my legacy to my children definitely but certainly I would't want to be HDB as this could mean I have failed as a parent to bring up my children sufficiently.


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