Should You Use Your SRS Contributions for Investments?

What is SRS?

The SRS is part of the Singapore government’s multi-pronged strategy to address the financial needs of a greying population by helping Singaporeans, Permanent Residents, and Foreigners working in Singapore to save more for their old age.

It began in 2001 and is operated by the private sector.

Unlike the CPF scheme, participation in SRS is voluntary. SRS members can contribute a varying amount to SRS (subject to a cap) at their own discretion.

The SRS contributions may be used to purchase various investment instruments like shares, bonds, unit trusts, and insurance products.

Why contribute your money into SRS?

Because SRS offers attractive tax benefits.

1. Tax Deferment
Contributions to SRS can be used to purchase investments. Returns from these investments are accumulated tax-free before withdrawal.

1. Tax Reduction
Only 50% of the withdrawals from SRS are taxable if you withdraw after age 62.

If you withdraw $40,000 from SRS at age 62, only $20,000 of the amount will be taxable. If you do not have any other income beside the above mentioned, you will not be taxed based on the Year 2018 tax rate.

Why use your SRS contributions to purchase investments instead of leaving it uninvested?

Because the default interest rate of SRS is only 0.05% per year.

If you have $100,000 in SRS account and not use it to purchase any investment, at 0.05% interest rate per year, you will only get back $101,005 after 20 years. Your total gain will be only $1,005 after 20 years.

In comparison, using SRS contributions to invest in stocks and unit trusts may give you a higher potential return of 8% per year.

If you have $100,000 in SRS account and invest it at 8% return per year, you will potentially get back $466,096 after 20 years. Your total gain will be $366,096 after 20 years.

The difference in potential gain can be as much as $366,096 - $1,005 = $365,091

While the above are estimates, it is not hard to see why using your SRS contribution to purchase investments is the faster way to grow your retirement funds.

What investments should you purchase using SRS?

We recommend a simple straight-forward SRS retirement plan that provides you with Guaranteed Monthly Income during your retirement years.

How does our SRS Retirement Plan work?

There are just 3 Simple Steps

1. Set your goals
First you need to ask yourself a few questions
1. What age do you want to retire?
2. How much monthly income do you want to receive after you retire?
3. How many years do you want to receive your monthly income
2. Calculate the SRS Contribution required
Next we will help you calculate the amount of SRS contribution you need to invest with us to generate your desired monthly income. Then you decide whether or not to proceed with the plan.
3. Implement the Plan
If you decide to proceed with the plan, we will help you implement it. When you reach your retirement age, you will start receiving the Guaranteed Monthly Income which you have set in step 1 (eg. $3,000 per month)

What other Special Benefits does your plan offer?

Other than Guaranteed Monthly Income, we also provide these additional benefits.

1. Flexibility
As your financial situation may change over time, our flexible retirement plan allows you to adjust your income payout period 2 years before your retirement age.

1. Disability Coverage
Our retirement plan also provides disability coverage and will pay out additional income in event of disability. Have a peace of mind knowing you'll never be forced to sacrifice your quality of life due to unexpected circumstances.

1. Extra Bonuses
Like most investments, our retirement plan also pays you extra bonuses if the market performs well.

Cash payment is also available for those who are interested in our retirement plan but don’t want purchase using SRS contribution.

Contact us for Free Consultation

SGAdviser is a 100% Free Web Service to help public users find the right Financial Adviser.

We specialize in retirement planning and offer Free Consultation for public users who are interested in saving and investing for retirement.

All our Financial Advisers are certified and licensed by Monetary Authority of Singapore (MAS). You are welcome to ask for the adviser's representative number, and verify his or her license by doing a search on MAS website.

What is your Free Consultation like?

Our consultation involves 3 Easy Parts.

1. Discovery
Our Financial Adviser will call you to schedule a 30 minutes appointment at a date, time, and location which is convenient for you. First, our adviser will find out more about your current financial status and retirement goals.
2. Solution
Then he or she will work out on a customized retirement plan based on your retirements goals and needs. After hearing the presentation, you decide if the solution is suitable for you.
3. Implementation
If you choose to go ahead, our adviser will help you fill in the forms to implement your customized SRS retirement plan. Rest assured that all our investments options are approved for the Supplementary Retirement Scheme.

Is your Consultation truly Free?

Yes, the consultation is 100% free.

You'll only invest your SRS contribution if you decide to take up our SRS Retirement Plan. If you don't feel your adviser's recommendations is the right fit for you, you can choose not to take it up. You call the shots.

There are no obligations for consultation at all.

So what are you waiting for?