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Using the SRS to For Investment


Was asked the question of how one can use the Supplementary Retirement Scheme (SRS) for investment. What I remembered reading about the SRS said that it saves you paying for taxes, but to earn the full benefit, you have to withdraw any money placed there until retirement. If you take it out earlier, it will be taxable. Held till retirement, only 50% will be taxed.

You can open an SRS account with any of the three local banks. You can find information on SRS here:

  1. UOB SRS information
  2. OCBC SRS information
  3. DBS SRS information

This is useful if you have a high income and want to pay less taxes by channel a sum of money into the SRS where you will save from paying the tax.

This article, What is Supplementary Retirement Scheme?, that i found from Google shows a few examples where you earn $50,000 and $100,000 and shows how the SRS saves you from paying more tax.

The Ministry of Finance has a very useful and informative SRS Booklet published in September 2010 which has an extensive FAQ on what SRS is all about.

Also the OCBC Wealth Management puts up a very informative site, Interesting Insights about the SRS, that shows slightly more than $1 billion is put into SRS in 2006 and placed in unit trust, shares, insurance, fixed deposits and others like bonds. It also showed that the people who put money into SRS are getting more savvy and instead of leaving it as cash in the SRS account, they are taking it and putting it to investment. Although only 10% of the $1 billion is put in shares. 

For me, I would rather have the bulk of our money invested in shares or kept in an ordinary bank account. If you are earning a lot and want to save on paying taxes though, SRS offers an interesting perspective that you can look at.

Just remember to put the money into an SRS account by the end of the year though.

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