SRS Portfolio

[BBCWatcher]

If u have 200k cpf 50k cash 50k srs, after allocating for emergency

OK.

How would u allocate? Ur idea is good if people are cash rich then it won't make a difference but many investors have much more in cpf and SRS ( if they have been contributing)
Imagine your cash all in equities. It drawdown 50% black swan event.
50k goes to 25k

OK.

You actually need 30k or 40k liquidity now, your selling stocks here and switching it into srs at this point will not work. The drawdown already wreak your short term liquidity.

You wrote, “after allocating for emergency.” Which is it?

But OK, if you need more than $25K in your example then you obviously would tap your next lowest cost source of short-term liquid funds next. That probably wouldn’t be your SRS account, actually. Even assuming a 0% income tax rate on the early withdrawal there’s still a 5% penalty. A credit card balance transfer offer, for example, could be much more attractive. Even a little borrowing at a broker margin rate could be a better deal.

You can rebalance whatever your remaining combined portfolio is after this cash raising exercise. If you want to exchange a bond fund for a stock fund within your SRS account you certainly can.

If your argument is that you should mark your unrestricted cash long-term stock fund holding at 50% of current value for determining how much “worst case” liquidity you have, OK, you can do that. I have no objection if you want to measure liquidity that way. Of course it’s only fair to mark down bond funds, too. How about a 20% markdown for them? I don’t think measuring liquidity this way will materially affect how most people structure their holdings across SRS and non-SRS accounts, but “whatever.”

 

[yiron]

if one has investments using SRS but does not have salary or any other income, it suffices to keep SRS portfolio value max at $400k to enjoy tax-free withdrawal.

however, I'm still trying to learn how does getting an annuity plan helps (such that the SRS portfolio may exceed $400k?) it sounds kinda complicated and I wonder if any experts here can share with an example or case study... will be much appreciated

The idea is that if your SRS balance is too big such that you have to pay (significant?) income tax to withdraw the balances over 10 years, u can use the SRS to buy annuity for which only the annual annuity payout (which is much lower than the upfront premium) is taxable and can stretch beyond the 10 years. But whether that makes sense or not deoends on individual circumstances.

 

[maumu]

The idea is that if your SRS balance is too big such that you have to pay (significant?) income tax to withdraw the balances over 10 years, u can use the SRS to buy annuity for which only the annual annuity payout (which is much lower than the upfront premium) is taxable and can stretch beyond the 10 years. But whether that makes sense or not deoends on individual circumstances.

can I try to guess what it means? pls correct me if I'm wrong.

so supposed I have $600k in total portfolio value in my SRS account. if I don't buy annuity, I must withdraw $600k in 10 years, so $60k each year, of which $30k is taxable but I'll be taxed only $10k since the first $20k is 0% tax. correct?

how should I go about getting an annuity plan so that I can avoid being taxed with the $600k in the SRS account? I need to get a plan such that the annual payout is less than $40k, such that it'll enjoy 0% tax (since only 50% is taxable)? and the payout can stretch beyond 10 years from the first year of payout?

is that the effect of getting an annuity plan using SRS?

 

[yiron]

can I try to guess what it means? pls correct me if I'm wrong.

so supposed I have $600k in total portfolio value in my SRS account. if I don't buy annuity, I must withdraw $600k in 10 years, so $60k each year, of which $30k is taxable but I'll be taxed only $10k since the first $20k is 0% tax. correct?

how should I go about getting an annuity plan so that I can avoid being taxed with the $600k in the SRS account? I need to get a plan such that the annual payout is less than $40k, such that it'll enjoy 0% tax (since only 50% is taxable)? and the payout can stretch beyond 10 years from the first year of payout?

is that the effect of getting an annuity plan using SRS?

Using your example of $600k, simplistically u can withdraw $40k yearly from year 1 to year 10 and buy a $200k annuity in year 10.

But whether that’s optimal or not really depends. Some may prefer to pay the income tax to withdraw $60k yearly than to lock in a $200k annuity.

 

[maumu]

Using your example of $600k, simplistically u can withdraw $40k yearly from year 1 to year 10 and buy a $200k annuity in year 10.

oh, but the SRS account must be closed after 10 years, no? I read something like the last year's balance will be assumed to have been withdrawn and will be taxed as a lump sum.

...or will it stay open after the 10 years because I used the balance $200k to buy an annuity plan which will, for example, give an annual payout of $10k for another 20 years?

 

[BBCWatcher]

Using your example of $600k, simplistically u can withdraw $40k yearly from year 1 to year 10 and buy a $200k annuity in year 10.

But whether that’s optimal or not really depends. Some may prefer to pay the income tax to withdraw $60k yearly than to lock in a $200k annuity.

And it can’t be just any annuity. It has to be a single premium life annuity, and then only if it’s SRS approved. Since this is such a rare situation it’s hard to find a lot of information about it, but at last report Manulife’s RetireReady annuity was the only one that qualified. And only if you selected the single premium and life payout options.

 

[yiron]

oh, but the SRS account must be closed after 10 years, no? I read something like the last year's balance will be assumed to have been withdrawn and will be taxed as a lump sum.

...or will it stay open after the 10 years because I used the balance $200k to buy an annuity plan which will, for example, give an annual payout of $10k for another 20 years?

Can check this out.
https://ask.gov.sg/mof/questions/clgotv5yy00j9i908zqx7ob1s

 

[HMAN]

Where can I buy USA individual stock with SRS fund, 10 years time horizons, plenty of time to catch the uptrend.

 

[fr33d0m]

Of course SRS is for retirement planning. But without the tax incentive, why would anyone want to lock their money into SRS?

What I mean is the cons for SRS are what SRS is not designed for. Why is it even a con? A super investor benefits more not contributing to SRS. The thought for him/her to contribute to SRS is a wrong decision already.

 

[yiron]

What I mean is the cons for SRS are what SRS is not designed for. Why is it even a con? A super investor benefits more not contributing to SRS. The thought for him/her to contribute to SRS is a wrong decision already.

It is a con in that one has to weigh whether it makes better economic sense to contribute SRS thereby deferring tax at the expense of future taxation on capital gains, or pay the tax upfront and invest with future gains free of taxation.
SRS would be a no-brainer if there's no cons. Stating out clearly the pros and cons helps one better evaluate whether SRS contribution is suitable for their circumstances.

 

[weng0202]

Where can I buy USA individual stock with SRS fund, 10 years time horizons, plenty of time to catch the uptrend.

I don't think there is any individual US stock you can buy. Only one I know is the S&P500 ETF, s27.

 

[demoforce1]

why FSM1 say cannot use SRS for S27?
https://secure.fundsupermart.com/fsmone/etf/factsheet/SGX.S27/SPDR®-S&P-500-ETF-Trust

 

[rizhal]

If your strategy is same as me, i.e early of the year, reminder to do SRS for Jan Tbill or SSB.

 

[mata_hippo]

those who use DBS ibanking for SRS, only can transfer to SRS during certain hours is it? i just tried to do it and i got this message...

Sorry, we are unable to process your request at the moment. Please try again the next day during operating hours. (9009)​

​

i dun recall if i did it before during similar timings

 

[iceblendedchoc]

why FSM1 say cannot use SRS for S27?
https://secure.fundsupermart.com/fsmone/etf/factsheet/SGX.S27/SPDR®-S&P-500-ETF-Trust

They are not approved or they have not registered for it. So far poems can buy s27 using srs

 

[andyhtc]

those who use DBS ibanking for SRS, only can transfer to SRS during certain hours is it? i just tried to do it and i got this message...

Sorry, we are unable to process your request at the moment. Please try again the next day during operating hours. (9009)​

​

i dun recall if i did it before during similar timings

Sometimes server maintenance...

 

[tesarise]

those who use DBS ibanking for SRS, only can transfer to SRS during certain hours is it? i just tried to do it and i got this message...

Sorry, we are unable to process your request at the moment. Please try again the next day during operating hours. (9009)​

​

i dun recall if i did it before during similar timings

*Account opening and Top up service is only available on digibank from 0700 hr to 2200 hr (Daily) and 0700 to 1900 hr (if the last day of the month falls between Monday to Saturday).

https://www.dbs.com.sg/personal/investments/srs-and-cpf/supplementary-retirement-scheme

 

[Nofear40]

There is one BT article today suggesting that the tax free threshold might be increased

 

[highsulphur]

hi!
Why does it cost more to hold global stock (include funds such as lions global?) with SRS, as compared to cash?

because gains in SRS will be taxed the same as income whereas gains from cash investment are considered capital gains which are exempted from tax

 

[furryballs]

because gains in SRS will be taxed the same as income whereas gains from cash investment are considered capital gains which are exempted from tax

thanks!!!!!!