Sunday, April 6, 2014

Future Ang Pao? Post-Secondary Education Account

Earlier this month, I got a letter from the Ministry of Education regarding this Post-Secondary Education Account (PSEA) that I have.

This PSEA is basically roll over from any of the Edusave Account money that I had when I was a young boy studying in the Singapore school system. Strangely, I did not use up all the money in my account after I had left Junior College. I don't think any of the money was used to pay for my University tuition fees.

Anyway, the bad news about this PSEA is that I have some money in it. When I'm 30, the account balance will be transferred over in my CPF OA account. So, this money is money that I pretty much won't be touching for a very long time.

However, there is a plus side as well. The money in the PSEA account will also generate interest, and the interest rate is pegged to the CPF OA account as well! That means this small balance will be producing rates of 2.5% annually until I turn 30 and the money is transferred over to my CPF OA for custody.

Since I have 6 more full years before I turn 30, by my calculations... I shall be getting a very nice $1400 ang bao from my younger self, with help from the government of course! I'm sure I will forget this amount in a few weeks time and I will be pleasantly surprised when I'm 30. The money is better off compounding there, than just sitting in my bank account doing nothing. I'm glad that I have unseen money working for me. Huat ah!

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