04 July 2011

The Moneytree and its many branches

Since I strive to make it a point that my monthly expenses stay below my monthly take home pay, bonus is then an affair of choices.  What should I do with my bonus?  It seems the competing demands are a plenty:

1. Contribute to my spouse's CPF-SA account (up to $7,000) and benefit from income tax benefits and 4% returns.

2. Contribute to my spouse's CPF-MA account since it is below the threshold, and benefit from 4% returns.

3. Contribute to my kids' Fundsupermart accounts and build up their unit trust portfolio for their education funds.

4. Pay down my mortgage (2.6% loan interest) and reduce the monthly instalment payment to build up my CPF-OA (gaining 2.5% interest).

5. Contribute to my own unit trust portfolio or in my trading account to buy more good dividend paying stocks. 6-10% returns with associated higher risks.

6. Save up and keep in a Money Market Fund for vacation expenses.

7. Leave it the bank savings account, earning peanuts, but with ready cash-on-hand as part of my contingency funds.

The answer is likely a combination of above - probably 1, 3, 5, 6 and 7. 

It doesn't make immediate sense right now to do 4 since interest rates are still low. 

I guess I will not go for 2 either, unless I've maxed out my spouse's CPF-SA and there is no better place to make more than 4% returns.

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