cash or cpf for Retirement planning singapore

Which is better for retirement planning? Using Cash or CPF to pay for house

Which is better for retirement planning? Using Cash or CPF to pay for the house?

Most Singaporean rely on their CPF to pay off the mortgage loan for their home purchases. We also understand that CPF will be the foundation of our retirement planning Singapore. The good interest rates that CPF is currently providing is something to think about whether to use Cash or CPF to fund for the house. The interest rate in Ordinary Account (OA) is 2.5%. 

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Using cash to pay the mortgage will be good if you do not intend to invest your cash savings. If you have plans to invest, please read the 3 things you need to know before investing.  You would have to relook and revisit your overall investment strategy so it will put you in a better position to decide which is better. Cash or CPF. You can view that CPF as a defensive asset class in their investment portfolio and use your cash to pay off the mortgage. It is important to have understood their risk profile and expected return before you can know what is the best asset allocation for your portfolio. 

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This set up allows you to accumulate your CPF funds and your retirement planning will use CPF life payout as the foundation for your retirement income as it is a lifelong annuity which prevents you from outliving your own resources. With an annuity, it will provide a steady and constant stream of income during their golden years regardless of the financial market condition. 

From the other view, if you are going for higher returns and willing to take higher risk, you might want to consider to pay their mortgage by your CPF and invest your cash. 

Want to find out more which is better for you in term of achieving your retirement dream and the key to financial success?

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You may check out more details on retirement planning in the articles below.