How to Maximise CPF OA
From 1 April 2008 onwards, you will not be able to invest the first $20000 in the ordinary account, and also the first $20000 in your special account. What is the purpose of investing money from your ordinary account (OA)? Well, you will earn 1% more on the first $60000 in the OA and Special, Medisave & Retirement Accounts (SMRA).
However, if you can earn more money from unit trusts and stocks, then you should take the money out. Besides, if you are planning to buy a HDB flat, HDB will wipe out all the money in your OA. Hence, to have a buffer when you make your repayments, just in case you are in the midst of changing jobs or taking time off, you will be able to sell your investments and use that money to continue to pay for your flat. This will reduce the possibility of you forking out cash to service your loans, especially when you do not have a job. Even if you have a job, the repayments may be quite high, and when you sell your investments after making money, this sum of money can go towards refinancing your loans and you will pay less interest.
With the new ruling, quickly go and apply for a CPFIS-OA with any of the three banks in Singapore: DBS, UOB and OCBC. There is no difference. What I recommend is just to get the account from them, and then you use your own other trading accounts to make your trades.
While making your trades, take note of the percentage of sales charge. Some of my friends recommended using POEMS for unit trusts, but the lower sales charges (1.5%) only apply to certain unit trusts. The rest cost 2.5%. Fundsupermart still allows me to buy them at 2%. So, just check before making your purchases. Anyway, for those who like getting freebies, by retaining at least $10000 in your Fundsupermart account, you can get a free quarterly magazine from them.
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