At what salary range should I start putting money into SRS to use for investing instead of using cash savings to maximise tax reduction? - Seedly
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Anonymous

Asked 2w ago

At what salary range should I start putting money into SRS to use for investing instead of using cash savings to maximise tax reduction?

How much should I be earning to use money in my SRS for investing?

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    Generally, at the 7% income tax bracket, ie $40k-$80k annual salary is when you can consider contributing. Below that it doesn’t really make sense.

    At the 11.5% tax bracket i.e. $80k-$120k, I’d argue is when it almost certainly makes sense to contribute to SRS.

    You can find the income tax brackets here: https://www.iras.gov.sg/irashome/Quick-Links/Tax-Rates/Individual-Income-Tax-Rates/

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    Question Poster

    2w ago

    Hello! My current income is around $45k/year, am investing about 6k/year in investments right now (will be increasing the amount in a few months time), should I place the additional 5K of my income into SRS and invest through that instead? (Since my investments are all towards passive long term holdings) thank you so much for the response by the way really appreciate it!
    Mr. Risk Averse

    Mr. Risk Averse

    2w ago

    Hi! It's hard for me to give a definitive answer; but here are 3 points I gather for from your response that might help: 1) Your income is on the borderline of $40k+, and I'm guessing with some CPF relief deductions (applies to all that contribute to CPF), your marginal tax rate would likely be 3.5%. At this rate, it makes less sense to contribute to SRS 2) There are restrictions on types of investments possible for SRS (largely skewed toward SG assets and a few options to invest globally through robos) -- you might want to check that it is even possible to implement your investment strategy within SRS 3) Is there any chance you'll need the $5k before retirement age? If there is, then better to invest cash. Also, you don't have to make the decision now and can wait till year end. Typically banks have SRS account opening promos then, and gives you a year of extra flexibility for your money!
    Thank You!
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