Saturday, March 10, 2012

What to do with the excess CPF OA savings after clearing off the housing loan?

As I will be having enough OA savings to pay off my housing loan this year, it is now a good time to think of what to do with the monthly excess OA savings. I have listed down four options and will spend some time to think which the best option is to take to aid my retirement planning. Feel free to comment on my following options.

Option 1: Do nothing with the monthly excess OA savings.
Leave the excess OA savings untouched to earn interest (currently at 2.5%).

Option 2: Transfer half the monthly excess OA savings from to SA.
Transfer half of the monthly excess OA savings to SA to earn interest (currently at 4%). Leave half of the monthly excess OA savings untouched to earn interest (currently at 2.5%).

Option 3: Transfer all the monthly excess OA savings to SA.
Transfer all the monthly excess OA savings to SA to earn interest (currently at 4%).

Option 4: Invest on a private property.
Buy a private property and use the monthly excess OA savings to pay for the monthly mortgage loan.

2 comments:

Jamesneo said...

Option 1 is the best as now is still too early to transfer to SA as the funds in SA less than 40K cannot be used for investment. For OA, anything more than 20K can be used. Moreover, SA cannot be used to invest in shares, REITS, gold etfs etc. If your target investment can make more than the 4% in SA, it is best to hold the money in OA and used it to invest in shares, REITS, gold etfs and gold savings in UOB.
Option 4 is not a good choice at the moment as private property is likely to face corrections( severity is hard to gauge) within the next 5 years. It would be much better if you invest in that private property only after a significant crash even if the interest rate is higher then as any money you earned from investment from the OA and the decline of price with increased interest rate will more than offset any interest rate burden.

Freedom Achiever said...

Hi Jamesneo,

You got the point. Currently 35% of my OA can be used for investment for shares. It will be good to continue to save it for investment when opportunity comes (market crashes).

Regards,
Freedom Achiever

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