do u do SRS?

[snowblaze]

SA pros: can withdraw after age 55 if confident to reach FRS before 55, withdrawals not taxable

SA cons: limited access to invest so probably just get 4% interest, policy risk cus FRS increases every year (resulting in lower withdrawals after 55)

SRS pros: can invest in more asset classes and give higher long term returns (eg; 8% pa if world ETF), flexible withdrawals before age 63 (subjected to tax and 5% penalty)

SRS cons: withdrawal without 5% penalty is later than CPF, withdrawals still subjected to 50% tax after age 63 (have to consider if you want to continue working after age 63)

So it depends. But if I'm young, I would prefer SRS cus of the higher potential long term returns which makes a huge difference when compounded over a long period of time.

The main use of SRS is to increase tax relief component to reduce some taxes. I feel this will be most suitable for working adults around 30s and above on assumption they are earning an income amount which attracts higher tax brackets, hence, the incentive to reduce some tax and use that SRS to invest.

For those who just started working in their early 20s to late 20s, I assume they shouldn't have much tax burdens and therefore, investing the money directly would be more suitable.

If you see yourself jobless soon, think twice before lock your money in SRS.

5% penalty plus entire amount is fully taxable.

Shifu at which income tax rate would be ideal to top-up to SRS if I were to take out before retirement age? Assume that I take out when I have no income at all.
If the amount to be taken out per annum will be below <$20k, then could I say as long as my income tax rate when I top up is at least 5%, so that to cover the 5% penalty ?


I am assuming I no income in this scenario. For example, I must take out the SRS because lost my job in my 50s or have terminal illness before retirement age.

 

[FlyGuardX]

Yeah, I'm putting my money that I wanna invest into SRS and then use it to buy world index etf. I will save on taxes and get to invest at the same time. Kill two birds with one stone.

Does World index earn dividend?

 

[ansontao]

You do when you have extra cash for tax relief purpose, not until you have reached certain middle age though I believe.

 

[TitanSmall]

Does World index earn dividend?

depending on the one u are buying.. some a dividend distributing.. some are accumulating (i.e. dont pay out but 'reinvest')...

 

[moonlighter_sg]

Shifu at which income tax rate would be ideal to top-up to SRS if I were to take out before retirement age? Assume that I take out when I have no income at all.
If the amount to be taken out per annum will be below <$20k, then could I say as long as my income tax rate when I top up is at least 5%, so that to cover the 5% penalty ?


I am assuming I no income in this scenario. For example, I must take out the SRS because lost my job in my 50s or have terminal illness before retirement age.

Below 20k, no income tax.

It means the whole year you can only withdraw 20k. Sure you can survive?

Well, if desperate situation, you can still withdraw more with penalty and income tax.

If you are declared with terminal illness, you can withdraw tax free , penalty free. Exempted limit to 400k.

 

[Heriophant]

The funniest thing about srs is they allow foreigners to contribute to avoid tax.

Sinkies only allow to contribute 15k. Foreigners 30k.

Why funny le? FTs no CPF deduction ma

 

[weng0202]

Does World index earn dividend?

The one that I got apparently does pay dividends but very little, about 1.23%.

 

[weng0202]

Below 20k, no income tax.

It means the whole year you can only withdraw 20k. Sure you can survive?

Well, if desperate situation, you can still withdraw more with penalty and income tax.

If you are declared with terminal illness, you can withdraw tax free , penalty free. Exempted limit to 400k.

Can withdraw 40k with no taxes. Only half of it will be taxed.