SRS investment

Invest in stocks or even cpf would be better

Agree to wait a few more years when your annual income is higher

First things first, opening an SRS account with a minimum of $1 is a definite yes, as it locks in the withdrawal age. Retirement age is set to increase to 65 by 2030. Therefore the earlier you open the account, the earlier you would be able to withdraw your $$ without penalty.

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SRS in not an investment but merely a vehicle you could use to help reduce your tax. As your information is limited, I have to make the following assumptions :

• $55K in your earned income
• CPF contributions relief of $11000
• Earned income relief $1000
• No other reliefs

Based on the above, you will be taxed a total of $710 :

• $500 (First $40,000) + $210 (Next $3000 @ 7%)

If you are in the habit of saving your money in the bank, then you will be able to save $210 simply by putting $3000 into your SRS account (In the first year). Funds being transferred to SRS are tax free (up to $15300 per year). Personally, I consider it as a good form of investment, as there isn't many investment instruments which offer guaranteed return of 7% return.

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Looking at your question from another view, it is not worthwhile to simply leave your money in the SRS account, as it offers very little interest. To provide you with better returns, you could choose to invest your money from the SRS account in blue chip shares, REITS or other investment instruments. There are restrictions in the type of investments you could do with your SRS account e.g. no crypto currency investments, but there is enough variety for you to choose from to make reasonable returns.

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IMHO, it is not a all or nothing game. SRS account is definitely worth considering if you are saving the money for long term. DO NOT, I repeat, DO NOT use SRS account to save for your rainy day or a short term goal. If you need the money before your retirement, it will be better to invest your money directly into more liquid investments.

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I hope it helps you, even if just a little bit.

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Yes, it is probably worth it, as long as you invest the money every year. However, it's not going to be worthwhile maxing it out at your income level and age. Also, if you open your SRS account now then you lock in the date at which you can start making penalty-free withdrawals, which is currently 62.

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Say you keep it simple and just average into ETFs, putting $100 per month in. Assuming an average return of 7% compounded over 30 years you'd have about S$125,000 at age 62. If you increase that monthly amount as you get pay rises you've got a strong prospect that you'll have a lot more when retirement comes around.

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Of course, inflation will have taken its toll, but it's still OK. And it'll be a useful supplement to your CPF retirement money. Definitely a better investment than Lotto or 4D!

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