The Money Decision

Every year, our money loses its value to inflation. And to ensure its value does not depreciate, it has to work against 3% p.a inflation. Think about this, for every $1000, we lose $343 in 10 years; for every 100k, one loses 34k to inflation!

Hence it is definitely useful to work around making our hard earned money work for us. Having talked to Eugene, it boils down to two options: work with risk, or work with time.

Lower risk = Longer Time

Shorter Time = Higher Risk 

These following options looks workable with low risk, yet bears restriction on flexibility of cash flow.

# Putting Savings into Savings Account 

With OCBC 360 Account, one earns up to 2.2 % interest by fulfilling criteria such as $500 expenditure/mth; crediting salary and paying 3 bills with the account. And 1% for me, since salary cannot be credited into the account, which means missing out on 1.2% interest rate. 

# Putting Money into Fixed Deposit 

While it gets more returns than some Savings Account, with 1.2%  to 1.8% interest p.a, it locks the money away for 5 years, which kills the possibility of property purchase or car purchase in the short term.  

#Getting an Endowment Plan

This usually involve shelving away savings for a decade, earning about 2.5% interest rate. Singles like me would be strapped. Neither can I get a car, nor a property with ease should I gets married within ten years. 

#Putting Money into CPF Ordinary Account 

One can top up to a cap of about 20k per year into Ordinary Account. These money earns an interest rate of 2.5%, more than many of the savings account. Drawback: it cannot be withdrawn. Winning factor: It can be used to buy property. 

#Putting Money into CPF Special Account (Retirement Fund) 

Money earns 4% interest rate currently, and can only be withdrawn after 55 years old. To qualify for a monthly payout of $1750 - $1900 after 55 years old,  one must have at least about 241k in the Special Account. Money that will sit and beat inflation, all the way until about 3 decades later. It means, I may be restricted with reducing mortgage, and have to lose more on housing loan interest. 

The Awkward Late 20s

Single. Possibility of getting a property at 35, or within the next 5 years. Possibly of getting a car within the next decade. Wants to beat inflation, yet adverse to risk taking. Needs liquid cash on ultra big ticket items within the decade. This portfolio is really a tough nut to crack. 

How to strike a balance, really?