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AK: Use CPF Savings or Cash to Pay for Our Home?
Aspire, Thought Leaders | 03 December 2015
Articles (41) Profile

I remember telling a friend who was disgruntled with the fact that that we don’t really have a choice about our CPF: It is like being married and not liking our mother-in-law.

We can kick our mother-in-law in the butt if we divorce our spouse. We can kick the CPF in the butt if we give up our citizenship.

Fortunately, I rather like my mother-in-law, er, I mean, the CPF.

Some might not have mandatory contributions to the CPF for various reasons and might wonder how the CPF fits in their lives?

Here is one example:

Dear AK,

I accidentally came across your blog only this year, and I find it very sensible and rational. So, I took few weeks to read all your past articles since Day 1 (I think).

Need your advice or please to talk to yourself.

I’m a self-employed & have been doing max voluntary contribution (VC) to CPF for some years to service our HDB mortgage through our CPF…

We have no intention to fully pay maybe until when we buy our 2nd property

My question is: What is the downside to continue doing VC with the ultimate aim of buying a 2nd property using CPF (provided that I’ve set aside the Basic Retirement Sum needed in SA)?

I’m confused about the paying back CPF and the accrued interests part when & if I were to sell the property.

Am I worse off as compared to those who bought using cash???

Awaiting your enlightenment

Thank you 


My reply:

Hi D,

Welcome to my blog. I am glad you enjoy my muttering and mumbling. ;)

With regards to the CPF, people must remember that it is really meant to help Singaporeans fund our retirement.

For people who do not have sufficient cash on hand or other means, they could use their CPF savings in the Ordinary Account (OA) to help pay for their homes but that is not the primary purpose of the CPF.

However, for people with sufficient cash on hand or other means, especially in an environment of low interest rates, they don’t really have to use their CPF savings to purchase their homes. They should look at their CPF savings as a back up only to be utilised in case they have to. Well, at least that is how I look at it.

There is an opportunity cost to using our CPF money meant for our retirement to purchase real estate whether for own stay or investment.

I would do VCs to my CPF account if I were self employed because I want some sense of financial security in retirement down the road and not really for anything else.

I will share our conversation in my blog and a few related posts to see if we could generate an exchange of ideas with other readers. :)

Best wishes,

It is very often a matter of perspective.

How we look at something would determine the way we treat it.

AK is a Singaporean stock market investor and a popular blogger. His blog was created with the intention of educating investors and sharing his investing journey with the target of having a more secure financial future in an uncertain world by creating a stream of reliable passive income with high yields.

Please click here for more information about this author.

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