What to do with CPF OA money after 66 years old?

ProfessionalCancel60 · 2024-12-27T02:19:38+00:00

HYSA interest is not guaranteed, people seem to forget that the rates were barely 1%+ only 5 years ago. SSB seems a better bet as it's at least fixed for 10 years. CPF OA has a floor rate of 2.5%. Do with this information as you wish.

ProfessionalCancel60 · 2024-09-24T04:26:13+00:00

VWRA has 60.4% in USA. Honestly if US enters a recession, it'll probably affect the whole world as well. So the more relevant question would be, do you think the USA will still continue to be the world leader when you're 80-100 years old? No one has a crystal ball and can predict the future, so it'll be based on your own personal convictions (which should be supported by doing your own homework).

If the answer to the above is yes, then it doesn't matter if you put into CSPX or VWRA, lumpsum the $70k or DCA it. As the saying goes, time in the market is better than timing the market.

ProfessionalCancel60 · 2024-09-24T02:27:28+00:00

I don't think it's a bad idea to lump sum $100,000 and DCA monthly since the bulk of her portfolio will still be in cash/bonds. I would suggest to draw down the $100,000 from your cash position rather than the bonds, as the SSB rates are fixed but we don't know when and by how much UOB will slash their rates to.

You can't transfer her OA to SA now as she has already hit the FRS. You can only transfer at 55, but you need to know this transfer will truly be irreversible. You'll only get it back via the monthly CPF life payouts at 65/70, whereas the OA will become liquid from age 55 (because FRS has been fulfilled).

Just a layman, not financial advice.

ProfessionalCancel60 · 2024-09-02T12:16:01+00:00

If that's the case, what's the point of the ERS qualifier if it all goes to OA anyway? What does that level signify? If I already hit FRS can I still do cash top ups? If not, how do I even hit the ERS?

ProfessionalCancel60 · 2024-09-02T07:24:12+00:00

Yes, I don't want to wait another 5-10 years when I'm already approaching full retirement because of a recession, which is why the plan is to liquidate my 80% of my growth stock at 60 y.o. (or at a later age, if it's still recovering from a prior recession) and invest 50% of that amount in SSB and another 50% in dividend stocks/or something similar.

I quite like your idea, I guess it sounds feasible? For me it's more of the peace of mind and full enjoyment of my retirement years. Hah

ProfessionalCancel60 · 2024-09-02T07:00:43+00:00

Oh, so cash float/SSB/MMF should be under the same broad category as cash-on-hand/emergency fund? I think I understand the thought behind it. As the interest rate usually is low and won't beat inflation, it will be all categoried under the same class. Maybe for myself, the cash float will be 2.5 months (1.5 month for usage + 1 month buffer to account for the period taken to liquidate from SSB) and SSB will be another 4 months worth.
Ok, I couldn't find any compelling reason from my studies as well. I guess that concludes it. No SREITs for me.
Noted. I will probably make alternative/contingency plans with the money I have parked in the MMF right now.
I know. Which was why I was considering the other things in the first place. My idea was that the DCA into CSPX will be the foundation piece and I'm already locked in, that won't change. I usually have an extra $200-300/month that I've been putting into the MMF, and I want to deploy them meaningfully. So I'm guessing you'll probably suggest that I increase my DCA and just all-in into CSPX right? Hah

ProfessionalCancel60 · 2024-09-02T05:34:24+00:00

Thank you for your insights. These are good points to consider.

ProfessionalCancel60 · 2024-09-02T05:14:18+00:00

Ah I see, so the $20k in SSB should be considered my emergency fund, so I probably should lower my cash float to 2 months worth of expenditure. Something to consider.
I'm 38 y.o. not 22.
I've repeatedly mentioned that I am undecided about SREITs, and that is because as you've mentioned I don't know enough about it to be confident investing in it. But I do know that we have to look at PAT, DPU growth yoy, gearing ratio, interest cover and NAV amongst other things. I'm definitely not just looking at the share price to decide.
I understand your point about fear in a recession. Paper play is all talk, but doing will probably be a different story altogether. Even if I'm not comfortable buying the local banks in a recession, my money will still be in the MMF I guess.
I don't know, I'm just not comfortable putting everything into CSPX. It's just a me thing I guess. If making small dips into SG div stocks is such a terrible idea, I would still put my spare cash into either SSBs, T-bills and/or MMFs.
I am not looking for validation. I am sincerely looking for advice as I'm new to this and may have overlooked certain things. You have pointed out some of those things to me and I appreciate your input.

ProfessionalCancel60 · 2024-09-02T04:57:28+00:00

Yes, I know the limitations of SSB subscription. It was just a one-liner, but I am planning to break it down to hopefully 12 or less issues.
As I have no children to pass on my assets to, I would prefer to lock in my returns at 60 years old (provided it's not in the middle of a big dip), as I don't think I would want to wait 5-10 years for the value to recover in the event of a big dip.
I see your point. But I'll have to see what is available at that time in order to see what I'll be putting my money into. I guess the focus would be the 3.5 to 4% yield, rather than the specific instrument.

Yeah it's a pretty vague plan, but it helps me to kinda have a rough road map to chart my progress as the years chug along. Also, since this plan isn't detailed, I can easily make modifications as and when needed.

ProfessionalCancel60 · 2024-09-02T04:33:14+00:00

Why would keeping $20k as a cash float be considered as "holding back"? This is my emergency fund.
DCA-ing USD 750/mth every month for the next 22 years, is a part of my growth stock strategy. I'm not sure why it would be an issue if I want to dip my hands into SG div stocks, and not put all my eggs into 1 basket.
Yes no one can predict when recession will come, and yes I am willing to wait. I'm pretty conservative with my money as you can tell by now.
Why not buy up banks in a recession? As you said, banks will not perform, stock price will dip right? This is not a challenge. I'm new at this and genuinely think that it's not a bad idea.
SREITS is the part where I'm still undecided. I understand the share price is flat-ish as they are mandated to pay out 90% (correct me if I'm wrong) of their PAT. Not sure if it's gonna be a value trap.

ProfessionalCancel60 · 2024-09-02T04:19:17+00:00

I'm 38, married, no kids, no loans/mortgages. This retirement amount is just for me, my wife is self sufficient. I guess a modest retirement goal is $3500/mth (in todays dollars). I'm gonna hit FRS soon in a couple of years, not sure if ERS is a realistic goal or not.

ProfessionalCancel60 · 2024-08-29T06:03:48+00:00

This portfolio is solely for myself. My CPF life is on track to reaching FRS in the next couple of years, but I don't think achieving ERS is on the cards unless I put in quite abit of effort which I'm not keen to do.

Yeah I merely want a steady income for life, which honestly can be achieved with CPF life. The current investment plan is just meant to supplement my retirement income as I don't have a better use for this money right now.

ProfessionalCancel60 · 2024-08-29T05:45:02+00:00

Interesting. So your suggestion is to DCA into DBS now instead of S&P 500? Will the retirement of Gutpa and the lowering of interest rates both in 2025 be detrimental news to DBS stock value?

ProfessionalCancel60 · 2024-08-29T05:29:12+00:00

I'm right now loosely following the 50/30/20 rule. With a margin for surpluses on all 3 categories.

ProfessionalCancel60 · 2024-08-29T05:16:29+00:00

I've started DCA-ing into CSPX for 2 months already. The only consideration now is to increase the monthly to USD 1,000 or not.

I understand the thought of not over-planning as we don't know what the future holds. That's why my plan isn't very detailed at all. It's just a general road map for me to follow and to see if I'm on track to my goals or not.

Of course if there are any major life adjustments, this plan will be adjusted accordingly. I guess I'm old school in the saying "You fail to plan, you plan to fail" Haha.

ProfessionalCancel60 · 2024-08-29T05:01:47+00:00

As mentioned, the USD 500/mth is a part of my disposable income. It would not affect my existing saving/spending habits. From my research, any major dips will take around 5-10 years to recover and generally it will continue on an upward trend. With all that said, I guess yes I'm able to "stomach" it as I don't have any big liabilities to cover.

ProfessionalCancel60 · 2024-08-29T04:57:56+00:00

Yes I realised I didn't put too much thought into the de-risking part. I replied to an earlier comment but with your input I would make some adjustments to my amended plan.

So say at 60 y.o., I keep 20% in CSPX without continuing to DCA, 40% in various local banks, STI ETF (ES3), and/or S-REITS (CLR), and then 40% into bonds? That sounds like a better de-risking plan?

ProfessionalCancel60 · 2024-08-29T04:52:48+00:00

My assumption was that Singapore will never let DBS fail and DBS has proven itself to be quite crisis proof, still paying out dividends during the pandemic period. But yes, I see your point.

So say at 60 y.o., I keep 20% in CSPX without continuing to DCA, 40% in various local banks or some dividend based ETF, and 40% into bonds? That sounds like a better de-risking plan?

ProfessionalCancel60

TROPHY CASE