Thursday, 5 January 2017

Retirement Strategy Update : 2017 CPF interest returns



2017 CPF interest Update (3 Feb 18)
Thank you CPF for growing my net eggs.

Total interest: $16,839.32 (2017) compared to $15,884 (2016)





PS: Sorry, i have not been updating as very busy with work. Below are the strategies adopted.

2016 (Previous post)
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Have you check your 2016 CPF interest? I did a check and was very happy with the interest returns for OA, SA and MA. My total CPF interest return for 2016 was $15,884

I know many Singaporeans does not believe in the CPF system but it is a really good system because I see how it has helped me to save for retirement. The CPF fund is akin to AAA bond and it is a risk free investment tool. Below is my CPF journey and strategies.

My CPF journey

Strategy 1: Transferring OA funds to SA
I made a very difficult decision last year to transfer my Ordinary Account (OA) to Special Account (SA) to hit the SA ceiling. It took me a while to decide as the action is irreversible. I did the OA to SA transfer was because i wanted my SA to earn a higher interest (4 % interest and addition 1% for the first $40,000). I wanted to use the magic of compounding to help to generate more retirement funds in my SA. I also helped my wife to transfer her OA to SA and she earned $6000 for her SA.

Strategy 2: Max out Medisave account
I max out my medisave account and received $1971.93. As i've max out the MA ceiling amount, the interest of $1971.93 was transferred to my OA account. The interest earned for 2016 means that i get my medical insurance for FREE.

Strategy 3: OA account use as a "Fixed Deposit" Account 
I received $6426.88 OA interest for 2016.  I did not invest my OA funds as i needed to use it to pay for my property.  I treat the OA account as a "FD" account and was happy with the 2.5 % interest and additional 1% for the first $20,000 in my OA account. I have linked up my OA with Peoms account and waiting for the right opportunity to invest. I will only risk it when the market provide me an excellent opportunity.

Strategy 4: Supplementary Retirement Scheme (SRS)   
I made a deposit of $15,300 into my SRS account. I opened up the account in 2012 after a friend shared with me about the benefit of SRS scheme. The strategy is to use SRS as a platform for tax relief (http://www.mof.gov.sg/MOF-For/Individuals/Supplementary-Retirement-Scheme-SRS) and at the same time to accumulate  passive income for retirement. The $15,300 was from dividends collected from my Reits portfolio and my bonus (Ps: i have saved a portion of the bonus ). I waited for the market volatility during the US presidential election and bought more Reits that generate 6-7% yield.

The above strategies have worked well for me towards building up my retirement nest eggs.  I hope more Singaporeans will appreciate and trust the CPF system and SRS.  If you are young, learn to save, invest and do voluntarily top up to your OA, SA and MA and let the compounding magic works.  You will enjoy your fruits of labour during the golden years.

Thanks for reading my blog. Wishing you a great 2017. Be happy and healthy.

Below is my CPF interest for 2016.

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