Who's contributing to their SRS account this year?

Poll: Are you contributing to SRS this year?
You do not have permission to vote in this poll.
Yes
56.25%
9 56.25%
No
18.75%
3 18.75%
Don't have an account
25.00%
4 25.00%
Total 16 vote(s) 100%
* You voted for this item. [Show Results]

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#1
I wonder if tax incentives to top-up family members' CPF accounts has any cannibalistic effect on SRS contributions...
Reply
#2
i dont like the idea of topping up money in the SRS. Assuming i am 30 years old now, assuming i can get a one-off benefit of say 10% tax relief but i have to lock in my $$ for a long long time, easily another 30 years, hmmm, it restricts the use of my $$, i cant use it to buy a house, i cant use it to buy overseas shares, seems like i lose more than i gain
Reply
#3
Before tax investment is always superior to after tax investment. Buffett talked about it at length in one of his AR. Penalty for early withdrawal is not so severe depending on situation and tax bracket.

In general if you are investing for retirement, maxing CPF special account as a quasi bond portfolio and using SRS as an equity portfolio, especially intrinsic value investing for the long term, is good idea for a simple retirement plan.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#4
This year, I started contributing to SRS. I intend to use the monies to invest in shares. I have also made a contribution to a family member's SA account. This will reduce my tax bill.
Reply
#5
Only if you intend to start a SRS account, then it is better to start your first contribution early. This is because withdrawals are penalty-free only if they take place after the stautory retirement age that was prevailing at the time of your first SRS contribution. The statutory retirement age for all SRS members is currently at 62.

Recently there are media reports of Singaporeans live longer than people in other tropical countries. I leave it to you to connect the dots.
Reply
#6
for me, i contribute primarily as a means to reduce my income tax, as well as contribute the maximum to all my CPF accounts. otherwise, it's just paying more money to ah gong.
Reply
#7
Is it true that it would be more useful for those in higher tax brackets?
Reply
#8
(20-11-2012, 06:46 PM)belgarathc Wrote: Is it true that it would be more useful for those in higher tax brackets?

SRS offers tax incentives. I assume it is more beneficial for those in higher tax brackets.

At the same time, MOF also limits the annual contribution. IIRC, the current annual limit is S$12k-13k, so it is means for middle class group, instead of top earners
“夏则资皮,冬则资纱,旱则资船,水则资车” - 范蠡
Reply
#9
To me, SRS seems like a good plan for those who dabble in their own investments (little interest if parked in SRS without further investment), have a relatively high pre-retirement income (higher % savings) and have little retirement income (since SRS withdrawals are taxable).

I hope these calculations are correct.

Savings under 7% bracket:

12,750 x 7% = 892.5

Savings under 11.5% bracket:

12,750 x 11.5% = 1466.25

Savings under 15% bracket:

12,750 x 15% = 1912.5

Savings under 17% bracket:

12,750 x 17% = 2167.5

Savings under 18% bracket:

12,750 x 18% = 2295

Savings under 20% bracket:

12,750 x 20% = 2550

Reference: http://iras.gov.sg/irasHome/page04.aspx?id=1190
Reply
#10
Yes indeed, I believe the calculations are correct for immediate tax savings. Will have to keep in mind though that withdrawals would thereafter be taxable at half the applicable rate of your tax bracket in the year of the withdrawal.

Think I'll be opening an SRS this year-end. Notwithstanding the ltd investment options, I can still invest locally on a long-term basis.
Reply


Forum Jump:


Users browsing this thread: 1 Guest(s)