Making My Baby a Millionaire by Age 65 With CPF Top Ups

I have been following the 1M65 movement pioneered by Mr Loo Cheng Chuan since couple years back, and after doing my due diligence and research, I am a believer of what he preaches, and also a fan! To me, having CPF is one of our privilege for being a Singaporean and we should totally optimise it fully to our advantage. Ever since my wife and I started working shortly, we have done a one-time a “huge” transfer of our OA balance to SA balance, and have been topping up our SA/MA yearly (for the tax relief, and also for compounding effect). So far so good, and we are very near in hitting the Full Sum Retirement soon which is a milestone.

Baby / FIRE

Having our new born baby girl (just delivered on 22 June 2022. :)), I wanted to start seriously planning for my baby girl so that she can have a better kickstart/safety net in her life. I think CPF is one area which Nicole & I, as parents can jointly help out our girl.

From Mr Loo’s contributed article titled “How To Make Babies Millionaires In Singapore (Using CPF!)“, we are going to follow and execute the strategy starting this year. TLDR; Basically to make your baby a CPF millionaire by age 65, you will have to contribute S$64,350 to your baby’s CPF SA account at birth and then let compounding take its course. Not everyone are comfortable doing a one time top up, so do we. Thanks to Mr Loo, below is some of the options how you can do a staggered contribution and still achieve the same end goal.

Screenshot 2022 07 01 at 7.29.25 PM

As you can see from the above chart, you have to make a one time initial lump sum top up/transfer, and then just do a disciplined annual top up for X years (X depends on your initial amount/top up). After that, just let compounding (CPF interest) take its course. As easy as ABC, you don’t need to be a financial guru.

To help re-iterate, the term 1M65 is just a “concept” or floating “goal”. It’s not mandatory. Depending on each financial situation, we don’t have to focus on getting 1M, 500K or 750k is as good too. Many of us may also have second thoughts or concerns before trying this MBM (Make Babies Millionaires) strategy. Like any investments, there are both side to the coin. The big risk is of course changes to the government policies pertaining to CPF.

In summary, my standpoint is that I feel this is a relatively “safer” and “idiot-proof” strategy, and accessible to all Singaporeans. You can still buy long term stocks/properties on behalf of your baby if you are financial savvy. MBM can form just one component of the overall strategy. As a fellow locally bred Singaporean, I do have faith in our government. In addition, CPF is a sensitive topic and is one that will steer votes from the government. Therefore, I do think government will think twice before making drastic negative changes to the CPF policy. Definitely, this is also way better than putting money in the bank which will be erodes with inflation, or in my opinion better than buying investment linked plans which are prone to risk too.

If you are considering using CPF to help your baby build a safety net, let me know what you think about Mr Loo’s MLM strategy or if you are already doing it.

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