In Singapore, besides compulsory CPF contribution, there is also a voluntary SRS contribution. SRS stands for ‘Supplementary Retirement Scheme’, it was introduced by the government to encourage people to save for their retirement. Contributions to SRS are eligible for tax relief. The contributions can be used to purchase various investment instruments. The investment returns are accumulated tax-free, and only 50% of the withdrawal from SRS is taxable at retirement. If you plan well, withdrawal of SRS can be totally tax-free.
SRS is a good tool to reduce tax expenses (for that medium to high-income earners) and save for retirement. However, the SRS contributions, if left uninvested, can only earn 0.05% interest. In order to grow your SRS, it’s highly recommended to invest in the SRS fund. There are more investment options made available for SRS, compared to CPF-OA (explained in the previous article), for example, stocks, bonds, ETFs, unit trusts, fixed deposits, and endowment plans. My SRS investment selection criteria are the same as my CPF-OA investment selection criteria: well-diversified and low-cost. Based on this there are two options that I am recommending.
Option1: invest in S27 (SP500 index ETF)
S27 is an ETF traded in SGX, which tracks the SP500 index
- Pros: good diversification, 500 biggest US companies
- Pros: passive investing
- Pros: very low cost, expense ratio is only 0.0945%, the trading cost can be as low as 0.08% (one-time) if you use brokerage like POEM
- Cons: lack of global (non-US) diversification
- Cons: ETF is in USD, hence buy/sell are done in USD which are subject to FX spread
- Cons: ETF is domiciled in the US, hence subject to a 30% withholding tax for dividends, and hefty estate tax as well
- Cons: liquidity can be an issue due to lower trading volume on SGX
Option2: invest in the iShare index fund with Endowus
Endows are offering some iShare index funds (from BlackRock) for example Developed World Index Fund
- Pros: global diversification
- Pros: in SGD, no FX spread issue
- Pros: the fund is registered in Singapore so no withholding tax and estate tax issue
- Pros: no liquidity issue
- Cons: expense ratio is slightly higher at 0.13%, and there is a recurring 0.3% platform fee on Endows so the total trading cost is 0.43%
- Cons: the fund is not a physical index but a synthetic index so theoretically higher risk
Which SRS investment will you choose?
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在新加坡，除了强制性的公积金缴款外，还有自愿的SRS缴款。SRS 代表“辅助退休计划”，政府推出该计划是为了鼓励人们为退休储蓄。对 SRS 的捐款有资格享受税收减免。捐款可用于购买各种投资工具。投资回报累积免税，退休时只有50% 的SRS提款需要纳税。如果你计划得好，提取SRS可以完全免税。
SRS 是减少税收支出（对于中高收入者）和为退休储蓄的好工具。然而，SRS 里的钱如果不进行投资，只能赚取 0.05% 的利息。为了增加您的SRS，强烈建议投资SRS里的钱。与 CPF-OA（在上一篇文章中已解释）相比，SRS 提供更多投资选择，例如股票、债券、ETF、单位信托、定期存款、储蓄计划。我的SRS投资选择标准和我的CPF-OA投资选择标准相同：多元化、低成本。基于此，我推荐两个方案。
选项1：投资S27（SP500指数ETF）
S27是在新家坡股票交易所交易的ETF，追踪美国SP500指数
- 优点：良好的多元化，美国500强企业
- 优点：被动投资
- 优点：成本极低，费用率仅为0.0945%，如果使用POEM等经纪业务，交易成本可低至0.08%（一次性）
- 缺点：缺乏全球（非美国）多元化
- 缺点：ETF以美元计价，因此买入/卖出以美元进行，并受到外汇点差的影响
- 缺点：ETF 注册地在美国，因此需缴纳 30% 的股息预扣税以及高额遗产税
- 缺点：由于新交所交易量较低，流动性可能成为问题
选项2：通过Endowus投资iShare指数基金
Endows 提供一些 iShare 指数基金（来自BlackRock贝莱德），例如发达国家指数基金
- 优点：全球多元化
- 优点：以新元计算，没有外汇点差问题
- 优点：基金在新加坡注册，因此没有预扣税和遗产税问题
- 优点：无流动性问题
- 缺点：费用比率略高，为 0.13%，Endows 上有 0.3% 的经常性平台费用，因此总交易成本为 0.43%
- 缺点：该基金不是实物指数而是合成指数，因此理论上风险较高
您的SRS投资选择是什么？
#SRSinvestment
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