smoulder wrote: ↑Fri, 16 Jun 2023 8:52 am
malcontent wrote: ↑Sun, 11 Jun 2023 10:38 am
The best way for most people to save is to not have the money available to spend in the first place. Savings should be like a bill that has to be paid every month — out of sight, out of mind… it never becomes available to spend.
This.
TH1: The moment you get your salary, you can have 2 GIROs. 1 to an investment account which will constitute your savings. The other one to another savings account to constitute an emergency fund - avoid carrying around the debit card for this account, don't add it to your GPay or whatever so you avoid spending from it. Once it builds up to the level you need it to be, you can cancel the GIRO and add that money to your investment account instead.
You might want to look up the SRS account as well - it seems quite well suited to someone with your mindset.
I would urge caution about jumping into SRS too quickly.
SRS is peculiar in the sense that investment growth (like capital gains) that would be tax free outside SRS can become taxable inside SRS. This is odd compared to other tax advantaged accounts; effectively you don’t want it to compound too long. So, other than depositing $1 to lock in an earlier retirement age, you may want to focus on investing outside of SRS in your early career when you have many decades until retirement. That is the time you should be in higher growth equity investments as well (which could grow their way to taxability in SRS). It is generally more suitable to those in mid career, who are likely in a higher tax bracket and only have a couple of decades left for compounding.
I would urge even more caution to expats, because, unless you can retire in SG and spread withdrawals over 10 years while being a tax resident… you could end up paying the non-resident rate or the resident rate, whichever is higher, on half of the final balance. And, although the upfront tax savings seem to be appealing, because SRS investments are limited to what is available locally, you are likely to pay higher fees than you’d get outside — those added fees compound too, just a 0.5% additional fee compounded over the decades can easily eat up all of the upfront tax savings, making it utterly useless.
In my case, I have no choice with SRS because my employer here changed our CPF substitute plan to SRS in 2020, so everything I would have gotten as employer contributions to CPF is now deposited into my SRS. Since I am a US person for tax purposes, there are only a few investment options that are not US tax toxic, and the absolute best one is ticker S27 traded on the SGX. So, as soon as there is enough cash to buy some S27 shares, I execute the trade.
