CPF Special Account

[Akula]

Hi, can i check, when Medisave acc reached max, ( think is $33.5k from 1st july) it spillover to Special acc.( a few years back it will spill over to Ordinary ) Cfm that if Special acc reached max or ceiling, be it $120k or current $99+k, it will spillover to Ordinary acc? Or to where? All this is bef a person reached 55yrs old?

 

Many Tks!

[Dumb]

Hi, can i check, when Medisave acc reached max, ( think is $33.5k from 1st july) it spillover to Special acc.( a few years back it will spill over to Ordinary ) Cfm that if Special acc reached max or ceiling, be it $120k or current $99+k, it will spillover to Ordinary acc? Or to where? All this is bef a person reached 55yrs old?

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From what I know, excess of MA will spill to SA. There is no max on SA. At 55 min sum from SA will transfer to RA and balance in SA remains. Thereafter excess in MA will spill to OA.

[Genie47]

By all means invest your SA if you are comfortable with it but don't use an insurance company's funds.

 

Investment expenses erode returns. The OA has the damn agent bank charges while the SA does not since CPFB liases with the investment house directly.

 

Choose a low cost balanced fund for SA. Currently, Growthpath series has an expense ratio of around 1.2% and is the lowest of all the SA funds. In terms of returns, GP2030 and 2040 are the highest because 60% are invested into global indexed equities. No fund manager to kachiau. What the market gives, you take minus the expense. No more no less. You will be looking at returns of around 6-7% annualized with these funds.

 

If you got more than 10yrs to 55, take the chances with the market. If less, forget it. Investing is not a miracle. Over time it looks like a miracle thanks to compounding but not that short a time.

 

And BTW, if you invest already, don't kachiau your investments. Itchy here, move here, move there. Confirm will get disappointed.

Edited September 29, 2007 by Genie47

[Cheekg98]

keep yr SA with CPF. difficult to beat the 4% returns in cpf if you put SA funds into balanced funds ...

[Cheekg98]

not many pple will be able to have 120K way before 55 ...

[Genie47]

If you got 20yrs, it is easy to beat the 4%. From 1996-2006, MSCI AC World has an annualized 16%. Assuming the balanced funds is 50:50. You are looking at 6-7%. It is easy to beat. The question is whether you have the risk appetite to just park it there and don't itchy itchy go and kachiau it.

[Cheekg98]

no point cos' SA is practically risk free ...

[Genie47]

That is a half-truth now. Previously, the 4% is risk free. Now it is pegged to the 10yr SGS bond rate which now stands at 3.3%. Bonds are not exactly risk free. Low crime doesn't mean no crime, likewise low risk doesn't mean no risk. The gahment adds the 1% and that is risk free. So how do you want it? 3.3% (as of now) pegged to a low risk instrument and only 1% to a risk free bonus.

 

You are F***ed if you take the gahment offer and you are also f***ed when you use the balanced fund. Give me the balanced fund anytime.

[Cheekg98]

risk free till Jan 2008

[Sabian]

not entirely risk free...the risk lies in the policy changes. 4% is not a sacred cow.

 

don't bet on the fact that the govt is not trying to reduce their cost of funds. otherwise they'd not be trying to tweak the formula.