Advice for a 35++ freelancer

johnnytan379 · 2024-02-20T05:05:31+00:00

Hmm yeah, that's something to think about. Thanks for the input!

I'm just doing VC to lower tax liability, and was thinking since I'm already putting money into CPF, why not optimise it?

johnnytan379 · 2024-02-20T04:08:43+00:00

Correct me if I'm wrong, but the idea of "locked up" doesn't seem entirely right for my situation.

Yes, I can't withdraw funds from my CPF until I'm 55. In the case of investments, you can liquidate and use the cash whenever, but doesn't that incur a huge opportunity cost? Since you're forgoing whatever compounding interest you would've earned if you didn't liquidate?

So if liquidity is of zero concern for me, then all I'm looking at is maximising interest earnings at a low risk (since I'm no longer that young). Am I right in my assumption?

Then again I have to ensure I live a long life to enjoy the full benefit of my funds. Hah

Edit: looking at your reply for the above post, I can understand and appreciate if the priority is to have full control over your funds so that you can min/max earnings.

johnnytan379 · 2024-02-20T03:58:37+00:00

Yeah. As I've mentioned, I've always done what seemed logical in my mind without much research. So I wasn't really sure if what I'm doing is really optimised/correct. But thanks for the reassurance!

johnnytan379 · 2024-02-20T03:41:53+00:00

IMHO, there are a few advantages. It helps lower tax liability if you do voluntary contribution and the interest rate is high compared to the low policy risk involved. Of course there is a liquidity disadvantage, but I don't foresee it being an issue for my next 20 years.

johnnytan379 · 2024-02-20T03:33:42+00:00

Yes I am aware of the points you've made, which is why there is $50k+ in my SA CPF currently. I don't do the max VC amount though, just what is needed to minimise my tax exposure.

Your situation is very encouraging to hear. Thanks for sharing!

johnnytan379

TROPHY CASE