Single Premium using SRS

[beautyseek]

Hi all

Noob thinking of deploying SRS to purchase a single premium 5-yr plan with guaranteed 1.88%. Not interested in shares, etfs or unit trusts.

Thought this is better than leaving funds idle.

Appreciate comments from experts on how this compares with other plans allowing use of SRS in mkt.


Thanks.

http://www.ocbc.com/personal-banking/insurance/campaign/singlepremiumspecial.html?utm_medium=Yahoo&utm_source=Stream%20ads&utm_campaign=OCBC%201.88&utm_content=GuaranteedReturns

 

[dork32]

Hi all

Noob thinking of deploying SRS to purchase a single premium 5-yr plan with guaranteed 1.88%. Not interested in shares, etfs or unit trusts.

Thought this is better than leaving funds idle.

Appreciate comments from experts on how this compares with other plans allowing use of SRS in mkt.


Thanks.

http://www.ocbc.com/personal-bankin...paign=OCBC 1.88&utm_content=GuaranteedReturns

srs one year is 15k. need to put more than 1 year than can buy

 

[starfish.starfish]

I not expert but At a first glance this actually doesn't have any glaring bad points.
It's like a 5 yr fixed D with nominal insurance portion.
As long as u choose the yearly payout and confirm you won't need the money for next 5 yrs and really not going to consider stocks or etf, sounds ok leh.
But didn't read any fine prints on any annual chArges front great eastern, might want to clarify first.

 

[JK1688]

It is an insurance product. Not a fixed deposit.

The capital will be locked in for 5yrs, but for the 1.88% interest, you can choose to accumulate or withdraw.

Sent from using GAGT

 

[SBC]

Did you consider to get STI ETF using your SRS fund?

 

[Bedokian]

Hi all

Noob thinking of deploying SRS to purchase a single premium 5-yr plan with guaranteed 1.88%. Not interested in shares, etfs or unit trusts.

Thought this is better than leaving funds idle.

Appreciate comments from experts on how this compares with other plans allowing use of SRS in mkt.


Thanks.

http://www.ocbc.com/personal-bankin...paign=OCBC 1.88&utm_content=GuaranteedReturns

Why not, may I ask?

 

[beautyseek]

Why not, may I ask?

May be it is a personal thing.

Unit trusts - becos need to incur mgt fees, sales charge etc

Shares and etfs - becos no time to monitor and research etc and if buy, will use cpf monies

Thanks to all who reply me.

Actually my thinking is quite the same as starfish

 

[henrylbh]

It is an insurance product. Not a fixed deposit.

The capital will be locked in for 5yrs, but for the 1.88% interest, you can choose to accumulate or withdraw.

Sent from using GAGT

Assuming a tax savings of 7%, if you chose to invest at 1.88% instead of on a product with higher return and risk, you will be better off from the 10th year onward putting the money in CPF at min of 2.5% with no risk and yet can use the money for other purposes like housing and education etc and no penalty or tax when withdrawing from 55 onwards.

 

[JK1688]

Assuming a tax savings of 7%, if you chose to invest at 1.88% instead of on a product with higher return and risk, you will be better off from the 10th year onward putting the money in CPF at min of 2.5% with no risk and yet can use the money for other purposes like housing and education etc and no penalty or tax when withdrawing from 55 onwards.

i guess some prefer to put portion of their money in SRS to do very conservative investment because of the 50% tax exemption upon reaching the withdrawal age limit. Whereas for cpf withdrawal, you need to have a minimum sum set aside first.

Pls correct me if I'm wrong.

Sent from using GAGT

 

[henrylbh]

If you can contribute to SRS with tax savings, most likely will should meet the min retirement sum with CPF from wages by 55. Ha ha may be can't even put into CPF because you may hit CPF annual limit unless you top-up SA (with tax relief) to reach FRS sooner so that whatever in OA can be withdrawn and any excess in SA above FRS can also be withdrawn (with no penalty or tax like SRS).

 

[OngHuatHuat]

i guess some prefer to put portion of their money in SRS to do very conservative investment because of the 50% tax exemption upon reaching the withdrawal age limit. Whereas for cpf withdrawal, you need to have a minimum sum set aside first.

Pls correct me if I'm wrong.

Sent from using GAGT

Actually if your income keep growing, this policy may back fire.

 

[JK1688]

Actually if your income keep growing, this policy may back fire.

what do you mean by backfire?

Sent from using GAGT

 

[OngHuatHuat]

what do you mean by backfire?

Sent from using GAGT

means you end up paying more tax if your income grow even further due to reasons like you are promoted or you set up a highly profitable business.

 

[beautyseek]

means you end up paying more tax if your income grow even further due to reasons like you are promoted or you set up a highly profitable business.

But assuming one is really retired when withdraw from SRS, there is no income, won't tax rate be very low at that time and it will be 50% at the low tax rates then?

 

[JK1688]

But assuming one is really retired when withdraw from SRS, there is no income, won't tax rate be very low at that time and it will be at 50% of the low tax rates then?

at retirement age, you can actually withdraw 40k from srs without tax if i rmb correctly.

Sent from using GAGT

 

[henrylbh]

at retirement age, you can actually withdraw 40k from srs without tax if i rmb correctly.

Sent from using GAGT

Yes no tax if you withdraw 40k from current retirement age of 62 as half of it is taxable. But there is no tax on first 20k and hence you pay no tax.

But what if you are still working at 62 and earning say 60k and you somehow got rental income of another 40k or other taxable income? Total taxable income is 120k. Then it's pay back time and may be at higher rate as tax rates will probably increase in future on those with higher income.

By that time, it's would be quite normal that those with fairly good income to continue to work to 65 or even 70.

 

[beautyseek]

Yes no tax if you withdraw 40k from current retirement age of 62 as half of it is taxable. But there is no tax on first 20k and hence you pay no tax.

But what if you are still working at 62 and earning say 60k and you somehow got rental income of another 40k or other taxable income? Total taxable income is 120k. Then it's pay back time and may be at higher rate as tax rates will probably increase in future on those with higher income.

By that time, it's would be quite normal that those with fairly good income to continue to work to 65 or even 70.

Good point.

 

[beautyseek]

Good point.

On second thot, one strategy may be to slowly withdraw, take out $40k tax-free every year until totally depleted? Max allowed is $400k over 10yr

 

[dork32]

i have already mentioned it. if your tax bracket is 11.5%, no matter what happens, there will be savings thru srs

 

[babyrobo]

i have already mentioned it. if your tax bracket is 11.5%, no matter what happens, there will be savings thru srs

how much income per year will hit 11.5%?


Am I right to say it is taxable income of between $80,000 and $120,000 for the year?