In my final weblog put up, I mentioned that I’ve already made a $4,000 High As much as my Medisave Account.
That might assist to generate extra curiosity revenue to pay for my medical insurance coverage.
4% threat free return is de facto not unhealthy and offers me peace of thoughts.
Then, the subsequent factor to ask is what about the remainder of the 12 months?
Common readers would know that for a few years, I used to be making voluntary contributions to my CPF account.
Yearly, I might ensure to hit the Annual Contribution Restrict allowed by the CPF.
That was particularly when rates of interest have been very low.
Threat free and volatility free with moderately enticing rates of interest, the CPF is a good choice to assist us construct a security web in retirement funding.
Nonetheless, up to now 2 years, some issues modified.
Bond yields moved greater and I blogged about how shopping for Singapore Financial savings Bonds may be extra enticing than making voluntary contributions to the CPF for some members.
It was definitely the case for me.
With my MA maxed out, extra of the cash from voluntary contributions would stream into the OA which pays 2.5% p.a.
Finish result’s a mean of three.0% p.a. rate of interest for my voluntary contributions.
So, I used the cash meant for my CPF to purchase Singapore Financial savings Bonds each time the latter provided greater than 3% p.a. in ten 12 months common yield.
In the direction of the tip of final 12 months, I did make a small voluntary contribution of $8,000 to my CPF account.
Why?
With Singapore Financial savings Bonds seeing decrease than 3% in ten 12 months common yields, the CPF was extra enticing once more.
At this time, I obtained a discover from CPF that the pie chart for my account is prepared.
This,
1.2M53.
Such a mouthful.
So, with some assist from greater yielding T-bills, the CPF OA cash has grown sooner.
After all, the federal government did many of the heavy lifting to develop my CPF financial savings.
My CPF financial savings may have grown much more had I made an even bigger and earlier voluntary contribution.
After all, that will have been a foolish factor to do as I may get greater returns from one other equally rated bond.
Why did not I exploit the cash for equities as an alternative if I used to be interested in greater returns?
I consider in having a significant allocation to threat free volatility free bonds.
Exchanging CPF financial savings for equities goes towards this perception.
Particularly for an individual of my age, a significant threat free and volatility free part in my funding portfolio turns into much more essential.
If the equities market ought to crash and we occur to wish the cash, folks would admire this level rather more.
To be truthful, I’ve a considerable publicity to equities and don’t want a higher publicity.
For individuals who have a a lot decrease publicity to equities and have some huge cash of their CPF accounts, it may very well be totally different.
It’s all about sizing allocation appropriately for our circumstances.
Anyway, in 2025, I’m prone to resume voluntary contributions to my CPF account with Singapore Financial savings Bonds prone to proceed the current development of providing decrease than 3% in 10 12 months common yield.
So, the CPF pie would develop a lot larger with each the federal government and myself performing some heavy lifting.
I’m 53 and I’ll have full entry to my CPF financial savings in 2 years from now.
3% p.a. for a 2 years AAA rated Singapore authorities bond just isn’t unhealthy in any respect.
If AK can discuss to himself, so are you able to.
Associated put up:
CPF or SSB?
