Last year, due to a rate hike, savers had a field day scooping up Fixed Deposits, Singapore Savings Bonds, and Singapore T-Bills. In the Singapore context, these options offer almost guaranteed returns, are SGD denominated, and provide strong interest rates ranging from 2.7x% to 4%.
Unfortunately, last year, I only managed to top up 5K into my CPF Account. I believe free cash is better invested elsewhere. That year marked the last two-year period during which I could benefit from a good SA allocation to my CPF account, enjoying higher CPF rates, as indicated in the table below.
At age 54, this is the last year to top up and get the most out of it before the Retirement Account (RA) is formed at age 55. What makes this year special compared to getting good rates in the age 55-65 band?
This is the window that allows me to hide most of my SA account funds, which enjoy a higher rate than OA, when Full Retirement Sum (FRS) deduction to form RA. Personally, I believe this should not be allowed to happen, but it does in today's scenario. Going back to Age 55-65 bands topic, there's compounding delay as it will start from age 55. Not only that, there is a larger allocation into the Medisave Account (MA), which is locked for medical use.
So, should I maximize my Voluntary Contributions to the Retirement Account (VC3AC) this year? Something to ponder about especially how's the rate will look like for next 10 years compared to OA, SA and MA accounts.
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2024-01-15
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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Not responsible of errors. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.
55 is the only chance you have to do this once-in-lifetime thing to optimise your CPF - https://seedly.sg/opinions/guide-to-cpf-sa-shielding/
ReplyDeleteYou will end up just after 55 with a full RA plus also a full SA and the SA behaves like a 4% savings account which you can withdraw at any time (something you can't get with any bank account in Singapore).
Make good use of it.
Yes. Last chance. However for my case, I do not have much CPF even though I hit FRS.
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