When I first got my flat, there is no 20K buffer arrangement, I wipe out my OA. I didn't keep a buffer of several thousands by investing it away, maybe because I am confident of the security of my job.
My first decision in on the allocation of payment of OA to our mortgage. I wipe out my OA monthly contribution and my wife pay the balance. The rationale is my wife can stop working temporarily if she is pregnant or if she needs to take care of kids.
When the HDB officer mention there insurance payable etc, I smile and say there is bonus which will increase CPF contribution monthly too.
My first working decade, especially the first 5 years, my CPF account is a joke. It never really grow, I kinda of even secretly blame myself and wife for this arrangement.
I had plenty of people asking me why I didn't try to pay off mortgage earlier when I am in the workforce 6-7 years, I always replied that there is no rush la, the interest is low, when the truth there is nothing much to pay down anyway.
Looking back, I am happy I made the decision because my wife finally made the decision to left her job to do private work. She feel secure about her CPF when I explained that her interest earned is enough to pay for her monthly mortgage, it makes her more at ease about her financial security.
Call me MCP, I am proud that I can provide for my family. It gives me self-esteem.
As I climb the corporate ladder, my CPF buffer increase, I start to make some voluntary transfers from OA to SA. Thinking the 1.4 percent interest difference make sense.
Looking back, I am an idiot. I have mortgage in excess of 150K and causing me interest of 2.6 percent and I am transferring 10K, 5K, 2K etc to my SA.
Only when my SA hit the ceiling prohibiting transfer that I realise I am better off clearing my mortgage slowly.
I could have together with my wife, clear the mortgage, but we did not.
I wanted to have a buffer now, as I no longer feel so secure about my job. Not really because I might be shown the door but more like I might throw in the towel. I also wanted OA to be of certain amount so that as and when if I do need some money for my child education, it is one possible option. (I rather not take that option though)
Anyway, to cut the story short, I think a lot of discussion on CPF has been about Maximizing returns, I think it is equally important to understand how CPF can be used to addressed our needs before we talk about Maximizing returns.
Next, we can calculate all we want, but there is no need to fret too much over it. A lot depends on luck. Policy changes risk aside, I married early. Just 1 year into my working life and we bought a resale flat. I was damn lucky. Just 1 year working, how much capital do u think I have then? But the BTO and resale gap is very small after subsidy for leaving near parents is considered. It is almost neligible, less than 20K or even 10K and the location for resale flat is better. (Near the mall) it is just pure dumb luck.
Policy changes and tweats to CPF have been too frequent for my comfort. While we do what we can to take advantage of the CPF system, we have to remember 人算不如天算。
Until now, all the policy changes are for the better, or at least justified in economic sense. I dun bash CPF for the sake of bashing, many who bash it won't be able to handle the monies on their own well. Yes. I said that, bite me.