Baby Bonus, Child Development Account (CDA), CPF

"When I'm old and my memory fails me, this post serves as a reminder on what to do."

Every child born as a Singapore citizen is given a Child Development Account (CDA), with the government having the intent of cushioning expenses related to raising a child. The CDA funds can be used for certain items like paying for childcare and kindergartens, child related medical expenses, medisave approved integrated shield plans. I use this account for a different purpose, to build my daughters wealth.

The only thing that interested me was the Government's Dollar for Dollar match, up to $6k for the 1st and 2nd child. Baby bonus gave us $3k, I topped up $3k , government matched $3k, and the account began with $9k opening balance. Since I can't withdraw these funds for cash, I'll treat this as a CPF account and optimize every dollar.

The CPF website has a nice illustration on what happens with the account through time:

https://www.areyouready.sg/YourInfoHub/Pages/News-A-look-at-how-your-childs-CDA-savings-provide-for-his-changing-needs.aspx

Since we won't be withdrawing any amount from this account, by the time she's 30, based on an opening balance of $9k and the interest rates above, the amount that'll be transferred to CPF OA will be $17,489.19.

What To Do:

Once this sum hits your CPF OA, please shift it into your CPF SA, as you get a higher interest rate there. If you have spare cash in your CPF OA and still have positive inflows into the CPF OA, it is prudent to shift it to your SA to plan for your own retirement. Another post on this.

You stand to gain $24,814.72 more in interest by age 65, by investing this $17,489.19 at a 1% higher interest rate. Your housing loan does not need this $17,489.19 assistance. If it does, then you probably have made the wrong purchase, hence find a way to unwind it.

Comments

Hotel Review: Novotel Halong Bay

As I travel quite often for work, I’m going to keep a record of all the hotels I’ve stayed in, to serve as a reminder of what works and what doesn’t. It’ll make future bookings much easier. Unfortunately there was no SPG/Marriott hotel in Halong Bay area, so i ended up with Novotel. Location: Along the western side of Halong, right across some ongoing construction. Room: Decor is dark wooden, taking a spin on modern Chinese. Wood flooring and a huge king size bed that's abit hard and uncomfortable. I like the decor though. Gym: This has got to be the saddest hotel gym i've ever seen. I decided to run outside instead. Breakfast: The selection is so limited, and it's not even that good. Nice decor though. Would I return? Definitely not to this 4 star hotel. Thankfully I was only here for 1 night. Although the place is filled with Korean tourists, you can eat some basic Korean breakfast here, but that's not my preference.

Hotel Review: Sheraton Grande Sukhumvit, a Luxury Collection Hotel, Bangkok

As I travel quite often for work, I’m going to keep a record of all the hotels I’ve stayed in, to serve as a reminder of what works and what doesn’t. It’ll make future bookings much easier. Location: Right at the Asok BTS, across from Terminal 21 and the Westin. I think traffic in this area is too jammed, and will likely avoid in the future. Room: The bed is very comfortable, but the decor is quite old school. The room feels like parts of it has been modernized, but parts of it are still the same as when the hotel was built. The whole scheme doesn't gel. The bathroom is also dated and in need of upgrade. Who uses small tiles like this in bathrooms nowadays? This is so 1990s. Gym: It has a couple ellipticals and a couple treadmills. Not much selection of weight machines and the space is rather crammed. The decor is seriously old school 1990s, but I think all Sheratons are like this. Breakfast: The selectio...

Your circle of friends

I group my friends into 3 categories. Family: Those who are dearest to your heart. They will always come first. True friends: Those who you can always count on, no matter the distance or the time spent apart. They will always be there for you, to lend a listening ear, to share your feelings, to guide you through life. They may have different interests and lifestyles, but you share an unbreakable bond. Lifestyle friends: People whom you hang out with for certain type of activities, and discussions and banter will be limited to those activities. Conversations will probably center around your common activities. Lifestyles change, hence this group of friends will also change. When you're dead, people won't remember you. Celebrate people's presence when they're alive. Appreciate them and spend time with them. There's no point in throwing a bigass funeral to commemorate a life. It's over anyway. You should had made your ...

Eyes On Retirement

Search This Blog