Should I use my spare cash to top up my CPF, invest or both? How should I decide the allocation? SRS, MA or SA?

Hi anon,

Incidentally I was just discussing this with my client earlier today since it's SRS season. You'll have to decide for yourself which you prefer. Or, you could do a mix of all 3.

To summarize key points to consider:

MA Pros

• Tax relief, 4% interest

• Can use for mediscal insurance, careshield supplements, etc

• Once BHS reached, excess contributions/interest spill to SA or OA

MA Cons

• It's quite one way. MA monies are generally unable to be withdrawn except in exceptional circumstances or for chronic illnesses, etc

• Unable to invest MA monies.

SA Pros

• Tax relief, 4% interest

• It's for your retirement!

SA Cons

• Quite one way also. There's almost no way to take out the monies anytime before 55.

• Investment options are limited, and most options can't beat the 4% interest anyway

• Withdrawal subjected to CPF rules which can be changed

SRS Pros

• Tax Relief

• Plenty of investment options

• It's for your retirement! You will definitely be able to take out at the retirement age of 62 if you open your SRS account this year, regardless of what the retirement age shifts to in future.

• You can still take out your monies in a really dire situation, with a 5% penalty. But if it was really that dire and you had $300K in your SRS, what's a 5% penalty when you critically needed the cold hard cash?

SRS Cons

• Meagre interest