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Anonymous

22 Jul 2022

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General Investing

SRS or Cash to buy SSB

Will it be better to top up SRS and use it to buy SSB or just buy with Cash?

Thanks.

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Tan Choong Hwee

22 Jul 2022

Investor/Trader at Home

You can do both, but if really want to choose one, you should look at the pros and cons of using SRS over cash:

Pros: You enjoy tax relief on your SRS contribution, especially beneficial for those with high tax bracket.
Pros: Higher chance of holding your SSB to maturity for higher yield if you are more than 10 years away from the penalty-free withdrawal age.
Cons: Poorer liquidity because you would incur 5% penalty plus 100% taxable withdrawal if you withdraw from SRS before withdrawal age.
Cons: SSB coupons received would be sitting idle in SRS earning miserable 0.05% interests, unless you reinvest them (but with less investment options for SRS).

Think thru and decide which is better for your situation.

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Related Posts

1) Should I buy SSBs using SRS funds instead of cash? 2) I'm a young working adult. My tax is abt $400/year. Should I be looking at contributing to SRS now, or use my cash elsewhere?

When using SRS to buy SSB, is it a must that my CDP account and SRS account are in the same bank?

Should I buy SSB or an annuity plan using SRS?

Hi! Do you recommend FSMone or POEMS if I want to buy SG stocks? (Either cash or SRS) Is there inactivity fee involved? If I just do like 2-3 trades a year only.. thanks!

You said we use cash to repay mortgage instead of OA. How about instead, we use that cash to buy S&P500 and OA for a mortgage? Won't buying the index with cash incur lower exchange/fund fees?

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