Squeeze more $$$$$ from cpf special a/c
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We were talking at the coffee house other night, apparently for the last 4 years year my female friend an unmarried single has been transfering the entire balance in her ordinary account to special account.
She never tells us but Within our group we think she quite high income bracket earner, earning around 4k per mth. Assuming her income never changed for last 4 yrs we compute her build up. and compares insterest earned in ord vs spec a/c.
Ordinary a/c 2.5%
Special account 4%
Her total CPF contribution from monthly income of $4000 based on 20% is $800 into 12mths is $9600 per annum
Therefore to make long story short
Amt-$ special-a/c-$ Year ttl-spec
9600 384 1 9984
9984+9600 783.36 2 20367.36
20367.36+9600 1198.69 3 31166.05
31166.05+9600 1630.64 4 42396.69
ttl interest earned in special a/c = 3996.69
And to make a short story long
Amt-$ ord-a/c-$ Year ttl-ord
9600 240 1 9840
9840+9600 486 2 19926
19926+9600 738.15 3 30264.15
30264.15+9600 996.60 4 40860.75
ttl interest earned in ordinary a/c = 2460.75
difference = 1535.94
Based on CPF FAQ, the special account is to allow you build up cash pile before retirement. But also the FAQ says once monies transferred it is irreversble, I take it to mean you cannot transfer back and cannot touch until you reach retirement.
Is it a good idea to do something like that even for a few years? -
You cannot transfer the entire balance from CPF ordinary a/c to CPF special a/c.Originally posted by KumSioJui:We were talking at the coffee house other night, apparently for the last 4 years year my female friend an unmarried single has been transfering the entire balance in her ordinary account to special account.
Is it a good idea to do something like that even for a few years?
Do not forget that you also need to have a limit before you can withdraw your CPF money at your old age.
If she's young, and has no intention of using her CPF ordinary a/c, then by all means go ahead.
The magic of compounding will work in her favour.
However, given the fickleminded nature of our govt, there's no guarantee you can see your CPF money if they continuously raise the minimum sum and reduce the withdrawal limit.
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It really just depends on if you think you can get better than that 4% and if you need the $$$ to use it on housing or education. I think I have better options than that. And I like to keep things flexible.
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dun even have much $ left in the ordinary a/c after deducting housing loan...let alone transfer to special a/c
