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12/25/2007

Need further proof?

Below is a post' by a 'Leongszehian' in Sammyboy that proves that there is no need for compulsory annuity scheme. After 31 Mar 2008, 1st 20k of CPF OA and 1st 20k of SA can no longer be invested Everyone should think about investing their CPF OA (unless need to pay for housing loan now) and SA, because Age 25 To 65 - 40k will grow to (3.5%) $ 158,370 (5%) $ 281,600 (6%) $ 411,429 (7%) $ 652,456 (8%) $ 970,935 A 25 year old Singaporean earning just $1,450 a month, $500 monthly CPF contribution (34.5% is current CPF contribution rate), with 60k in OA/SA/MS accounts, assuming $500 contribution never increase (no pay increase) , from age 25 to 65 - at 5% grow to 900k+, 6% grow to $1.2 million+ - So, why average CPF balance at age 55 is only 66k (median estimated to be only about 20k plus) ? Why leave money in your CPF for others to invest? The computation is up to 65 years. 85 years is another 20 years of interest. What about the minimum sum retained? What about the amount in the Medisave? All these will add up to make every Singaporean a millionaire at 85.

2 comments:

Anonymous said...

In theory yes, but as you mentioned, this is assuming that you do not take any CPF out to pay for your house or use it for other purposes.

In practice, the $500 or whatever you put into your CPF probably goes straight away to pay your housing loan which I think almost everyone does that.

So, the sums and the assumption is realistic only in theory. If only life were that simple.

redbean said...

medisave is more or less untouchable except for hospitalisation and approved uses. then there is the minimum sum of about $100k which can only be drawn down gradually, meaning still collecting interest along the way.