Why invest with SRS?

If you contribute to SRS, you should invest your SRS funds because it only gives you 0.05% bank deposit rate while sitting idly in the account.

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When you invest your SRS funds, you certainly seek higher returns from the investment. I won't constrain my returns just to avoid paying tax. Would you ask your employer not to give you a raise because it brings you to the next higher tax bracket and have to pay more tax in dollars and in percentage?

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Besides, you already enjoy tax relief up front when you do the contribution, and you can manage your withdrawal after you have retired from employment so that only 50% of your withdrawal is subjected to taxation.

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Of course you can constrain your SRS contribution such that you won't be growing your portfolio beyond $400k to totally avoid paying any tax. But beware that your are giving up tax relief now for not paying tax in the future, and the same tax dollar amount saved now is actually worth more than the same tax dollar amount paid in the future due to time value.

• Always use cash for investment

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• Topping up SRS should be the last resort to escape tax.

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• But if your $$$ is already in the account just invest.