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Note: The following does not constitute investment advice. Please kindly do your own due diligence before doing any form of investments. Please kindly refer to the full disclaimer here

  • What is 1M65?
      • It is a strategy that capitalises on topping up your CPF balances and parking your savings within CPF Special Account (SA) and MediSave Account( MA) to allow for it to earn an attractive interest rate of 4% p.a to reach a million dollars as a couple by 65 years old.
  • How to achieve 1M65?
      • By your early 30s, simply achieve S$130,000 in savings with your combined balances of your CPF SA and MA and let the magic of compounding do the rest.
  • What does it mean by combined balances in SA and MA?
      • For members aged below 55, CPF is comprised of 3 accounts: Ordinary Account (OA), Special Account (SA), and Medisave Account (MA).
      • The interest rate paid by SA and MA is 4%
      • Hence, it is recommended that both of these accounts get maxed out as soon as possible to leverage the high-interest rate of 4%
  • What are the other key requirements of 1M65?
    • Easier to achieve as a couple (read: $500k by 65 years old for each individual as a couple)
    • The couple does not get divorced along the way
    • Both individuals earn a monthly salary of at least $6,000 each until retirement
    • Don’t spend too much on your property
  • CPF Bonus 1% interest: Must I keep 20k in OA to be eligible for bonus interest? Or can the first $60,000 all be in SA to be eligible?
  • What are the limits I can top up my SA and MA to?
    • The current limit for SA is the Full Retirement Sum (FRS) (S$181,000 as of 2020 and the current limit for Medisave account is the Basic Healthcare Sum (BHS) (S$60,000 as of 2020).
  • What happens after I turn 55?
    • Any amount above the FRS (S$181,000 as of 2020) can be withdrawn
    • You do not have to withdraw all your withdrawable savings at one go. You can withdraw, whether in full or partially, as frequently as you like, and at any time after turning 55. If you do not have an immediate need, it is better to leave it in your CPF accounts to earn attractive interest of up to 6% per year, instead of a bank account earning low interest. These savings can be treated as a “rainy day fund” which you can draw upon any time when needed. With PayNow, the savings you withdraw will reach your bank account almost instantaneously.
    • For more information, refer to CPF FAQ here
  • What are the potential drawbacks of 1M65?
    • Any cash top-ups into the SA and MA is one-way only and is irreversible, hence it reduces your liquidity until you are 55 years old
    • Monies in your SA and MA can only be used for very specific uses – SA for Retirement and Investment, and MA for Healthcare
  • What happens once you reach FRS in your SA?
    • Once you have reached FRS in your SA, the overflow from MA will go into your OA
    • You will no longer be able to make any cash top-ups into your SA. However, your SA balance can still grow through the following:
      • Interest earned from SA balance
      • SA Contribution from employment income
  • What happens once you reach BHS in your MA?
    • Once your MA reaches the BHS, your MediSave savings will be transferred to either your SA (below 55 years old) or RA (above 55 years old).
    • Below 55 years old – Special Account:
      • If you have set aside the prevailing FRS in your SA, your MediSave earnings will be transferred to your OA
    • Above 55 years old – Retirement Account:
      • If you have set aside your FRS or at least your BRS with a property in your RA, your MediSave savings will be transferred to your OA.
    • More information here
  • What are the tax reliefs involved with doing a cash top-up to my Special Account?
    • You can enjoy $8,000 tax relief per year of assessment if you have performed a cash top-up to yourself, and a further $8,000 tax relief (read: total $16,000 tax relief) if you have performed a cash-up to your loved ones. Namely:
      • Parents or Parents-in-law;
      • Grandparents or Grandparents-in-law;
      • Spouse; and/or
      • Siblings.
    • Important note:
      • For each Year of Assessment (YA), a personal income tax relief cap of $80,000 applies to the total amount of all tax reliefs claimed (including any relief on cash top-ups made). There will be no refund for accepted cash top-up monies. Please evaluate whether you would benefit from tax relief on your cash top-up before you make an informed decision on whether to make a cash top-up.
  • Which account should I first top up? MA or SA?
    • There are a few schools of thoughts on which account to top up first, but one merit of topping up MA first is that the monies can be used for medical treatment (medical care and hospitalisation treatment) and payment of medical insurance, which may work better in your favour especially if you are younger, since the funds will be locked in for a considerable period of time, and the usage of MA funds are more flexible in the context of daily life.
  • Housing: For BTO, should I take a HDB loan or Bank Loan?
    • Upon application of your BTO, opting for a HDB loan is a clear choice because you can always have the option to go back to bank loan anytime when you start servicing the loan. In addition, you pay only 5% of the down payment instead of 10% with a bank loan (Time value of money).
    • Beyond that, upon receipt of keys, it is entirely up to the individual’s risk appetite. For many years, the interest rates of bank loans have been lower than HDB’s loan of 2.6%p.a. (as at time of writing). However, there is no guarantee that this will always be the case.
    • In addition, with HDB loans, it is easier for you to do financial planning as the rates will remain stable. There are also no repayment penalties with HDB loans, and HDB tends to be more forgiving in the event of a late repayment of your loan
  • How do I ensure my CPF monies will be distributed according to my wishes in the unfortunate event of my passing?
    • The CPF nomination scheme allows for you to decide who to allocate the money to and in what percentage allocations.
    • You can make your nomination online or in person at CPF centres
      • Do note that CPF savings (balances left in a deceased member’s Ordinary, Medisave and Special/Retirement Accounts) do not form part of the estate and are not covered by a Will.
  • Which CPF LIFE plan should I go for?
    • Kyith from Investmentmoats has done an analysis on this here.
    • To quote his points,
      • Choose Basic if:
        1. You expect your life expectancy to be short
        2. You treasure your loved ones well-being more than yourself
        3. You have no idea about your life expectancy, this is a decent choice as well
      • Choose Escalating if:
        1. You expect your life expectancy to be long
      • To “break even” on your CPF Life, you should strive to live till 75 to 77 year old
  • If I only heard about 1M65/4M65 when I am older (e.g. >55 years old), what should my priorities be?
    • I believe that even if you cannot achieve 1M65 or 4M65, maximising your SA/RA account would still help you build up your savings powerfully for retirement. You could also learn from this experience and ensure that your kids are not missing out on 1M65, by topping up their CPF Special Accounts from young.
  • Can we and should we top up a child’s CPF account?
    • Yes, every Singaporean child has a CPF account when the baby bonus is credited. As such, the parents can top up their CPF account from young and the time horizon for their retirement would be very long for them to enjoy the power of compounding. At the current level of SA interest rates, a S$80,000 deposit at birth would help the children to yield S$1M when they retire at 65years old.
  • How does 4M65 work?
    • Note: The following does not constitute investment advice. Please kindly do your own due diligence before doing any form of investments.
    • The same basic principles from 1M65 apply:
      • Achieving FRS as a couple as early as you can, preferably by your early 30s
      • Both individuals earn a monthly salary of at least $6,000 each until retirement
      • Don’t spend too much on your property
    • Over and above the strategy of 1M65 above (which is to max out your SA + MA as early as possible), one can consider investing your spare OA monies into a well-diversified market index for potentially higher returns. Over a long period of time, the monies should yield a high enough rate of return to help you achieve a high sum upon retirement.
    • In order for this to succeed, the principal sum for investment should also be high, hence one may consider paying for housing using cash instead of relying heavily on your CPF OA.
  • CPF Investment Scheme (CPFIS) eligibility: How much do I need to set aside in each account before I can invest?
  • Should I try to do stock picking or go with any other instruments to beat the CPF-SA interest rate?
    • There are risks involved with everything. CPF-SA is one of the few vehicles in the world that offers 4%p.a. guaranteed returns, albeit with Policy risk and Liquidity risk.
    • If you have to invest, an approach suggested by Warren Buffett is to track a broad-based US index over a long period of time (i.e. 20 years or more). It is not easy for retail investors to beat the market through stock picking.
  • If I am interested to invest in a broad-based index, such as the S&P 500, how can I do so?
      • We are not making any recommendations. But if you are using cash, we are aware that fees are among the lowest with the CSPX ETF on Interactive Brokers (IBKR)
      • For CPF funds
        • Today, as far as we know, Endowus is the only provider who offers the purchase of the S&P 500 through the Lion Global US Infinity US 500 fund.

        • Do kindly note there are other considerations when picking different ETFs and funds. Including volume and expense ratio, etc

  • If I am interested to invest in the S&P 500, which ETF can I consider?
    • We cannot recommend what you should do. But for Mr Loo, he thinks that with any ETF, he prefers for himself one with a high level of assets, (at least US$10M) high liquidity (in terms of high trading volume), low expense ratio, and low tracking error.
    • To minimise withholding tax, one potential ETF that Mr Loo favours for himself is VUSD. VUSD is an ETF that tracks the S&P 500 and is Irish-domiciled. Singaporeans investing in the US market are taxed 30% on our dividends as the U.S does not have a tax treaty with Singapore. One way to go around this is to invest in Irish-Domiciled ETFs. These Irish-Domiciled ETFs benefit from the US/Ireland tax treaty rate of 15% on dividends. The VUSD is an example of such an ETF.
    • Do note that certain ETFs are Accumulating (i.e. dividends are actually reinvested back into the funds automatically), while some are Distributing (i.e dividends are distributed to investors).
    • An example of an Accumulating ETF is CSPX, while an example of a Distributing ETF is VUSD
  • What is CPF-SA Shielding, and why is it recommended?
    • This is relevant to people approaching the age of 55, and not for those who are already over the age of 55.
    • At the age of 55, your Retirement Account (RA) will be formed with monies from SA and OA, in that order. As we know, OA monies earn 2.5% p.a. interest, while SA monies earn 4% p.a. Hence, we would want to retain as much money as possible (i.e. shielding) in the SA in the formation of RA
    • To do this, we simply try to invest monies from the SA into short-term, but safe investments so that your capital is protected. The 6-month or 12-month T-bills are a possible vehicle to do this.
    • Important note: Timing is of the essence. The shielding must be in effect on your 55th birthday, hence, if you were to buy a 6-month T-Bill, ensure that the maturation is after your 55th birthday. To purchase T-bills, simply head down to your agent bank’s main branch to apply.
  • Where can I learn more about CPF and its schemes?
    • CPF has compiled a very useful page of FAQs here for your reference.
    • You may also drop a question on the 1M65 Singapore Telegram group to clarify any questions not addressed here, or in the FAQ.



Have a question? Loo is always happy to chat. Drop him a note below and he will get back to you as soon as he can.
You can also join his 1M65 Movement chat group at t.me/Loo1M65