CPF - OA to SA Transfer

After much deliberation, I finally decided to do it.

It's one that decision that I cracked my brains over back in January, but I think it's time I take the first step. What prompted the change of mind?

1. The market rebounded and I didn't even invest my cash, much less CPF-OA. Timing the market is harder than you think, and it's definitely not guaranteed that I am comfortable using OA to beat 2.5%.

2. I realized my CPF-SA is accumulating very slowly from Mandatory Contribution. At this rate, It is going to take forever to reach $161K, or whatever the FRS in the future.

3. Do you know you enjoy an extra 1% interest on your first $60K, but only $20K can come from OA? That means if I do the transfer, I earn a whole extra 2.5%.

4. Barring unforeseen circumstances, I probably won't be getting a flat for another 5 years. That means another full 5 years of OA accumulation.

5. I do admit I am strongly influenced by AK and several other bloggers. These guys are getting $6K-$10K in interest every year. (Some of them maxed out SA as early as 32 years old) The government is literally helping them fulfill the growing "minimum sum".

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By transferring this $20K, I would accelerate my SA account at a much faster rate.

In the first year, I would earn an extra $500+ in interest.

For 10 years, I would get an extra $6.4K.

For 20 years, an extra $15K.

By the time I'm 55, this $20K would bring me more than $20K in additional interest. That means an additional $20K towards fulfilling the FRS.

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Of course, I am well-aware of the risks. The most important ones are:

1. Less buffer for housing. I have plans to fully pay my flat with cash and minimize the usage of CPF. Still, it is definitely important to leave buffer - which explains why I'm not transferring more.

2. Political risk. Who knows how the withdrawal rules, schemes and interest rates may change in the future?

3. Possible opportunity cost if I ever want to purchase a 2nd property, and unable to withdraw until 55.

In a way, this move is a strong contrast with FIRE. With less OA, it means I have to fork out more cash for housing, and thus weaken my FIRE goals.

It's looking at a time much further in the future. I want to balance my goal of early financial independence, and also start steering the 'old age' ship in the right direction.

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Overall, I think I'm taking a prudent and balanced approach - using an amount that isn't exorbitant and I am confident of covering.

The last thing you want to worried about when you're old and sick is money. I think what I am doing is taking a small portion of early financial freedom and channeling it into greater old age security.