Why SRS accounts are a good way to save

Hi Contrarian and welcome back!

Was trying to "promote" Value Buddies on my blog but cannot be too obvious also. Am hoping other familiar people like Lark come back soon too.....

(23-12-2010, 12:05 AM)Contrarian Wrote: I never know such a replacement forum existed till today. So I rejoined, same pseudonym.

I used to save in SRS. Now I don't anymore. The sums do not matter anymore. Because the statutory retirement age is a MOVING TARGET UPWARDS. What is the point of throwing $ into a black hole just like CPF, when they keep adjusting the retirement age?

Welcome back Contrarian.

Withdrawals are penalty-free only if they take place after the statutory retirement age that was prevailing at the time of your first SRS contribution.

Hi Con san,

Nice to see you back...u r 1 of the wallstraits old timer joined in 2003 if i m not wrong.

Looking forward to see yr postings....merry christmas

> Withdrawals are penalty-free only if they take place after the statutory
> retirement age that was prevailing at the time of your first SRS
> contribution.

Thanks for the correction. I definitely won't keep 15+ years of records to prove I did this at point of retirement.

But I still see not much point putting in SRS. I checked with my broker before... you can only buy SGX stocks. The selection is not wide enough...

Hi Contrarian, I don't think one needs to keep records actively to prove the statutory retirement age that was prevailing at first contribution. It should be automatic. I assume you have been contributing to SRS in the past, so all the more I think you have already locked in the withdrawal age for yourself.

SRS can be used to invest in a range of products i.e. fixed deposits, insurance (certain kinds), stocks, structured deposits, unit trusts, bonds. You can't use it to invest in properties though.

Time of the year to revisit this topic. I am 33 this year, single with no outstanding loans. This year, I have the good fortune to have a little more earned income. Between the (a) CPF Cash Top up to the Special Account, and (b) SRS contribution, I am leaning more towards option (b) as it allows you to buy stocks listed on SGX. The recurrent costs levied by the banks is undesirable but unavoidable. The benchmark to beat will be the risk free 4% proffered by SA. Perhaps within the next 2 years I can consider taking both options.

Is there any stock limits for SRS account? For CPFIS, the stock limit is 35%

(13-11-2012, 09:15 PM)Caelitus Wrote: The recurrent costs levied by the banks is undesirable but unavoidable.

Is there recurrent cost charged by the banks? Didn't notice any

100% of the amount can be used for share purchase. But there is a max that can be put into SRS. The disadvantage is that one cannot participate in rights issue exercise if there one once contribution ceiling is reached.

Also 50% of investment return will be subject to tax, so the more you make the more you will be tax upon withdrawal. Currently, capital gain and dividend are tax free outside SRS.

(14-11-2012, 06:53 AM)Share Investor Wrote: Also 50% of investment return will be subject to tax, so the more you make the more you will be tax upon withdrawal. Currently, capital gain and dividend are tax free outside SRS.

The idea is for you to withdraw over 10 years. Say you accumulated $200,000 portfolio in SRS when you are 62 (assuming that is your penalty free withdrawer age), you can plan to withdraw $20,000 a year. If this is your only income at that point in your life, then the amount you withdraw is tax free as you will be below the tax bracket.