SRS was a topic I used to blog about pretty often.
I have not been blogging about it as much since I have not been making contributions in recent years.
Reason is because I no longer pay income tax.
If we are still paying income tax, contributing to our SRS account makes sense to enjoy some tax relief.
Of course, we want to put our SRS money to work or we would get a very miserable interest rate.
For many years, I used the SRS money to buy plain vanilla endowment policies.
They were savings plan with some insurance thrown in.
In fact, I still have one or two of those with NTUC Income using SRS money.
In recent months, I also used the money to buy T-bills with yields being so much higher than a couple of years ago.
Dividends paid by my investments in stocks using SRS money are used for this purpose.
Yes, I also use SRS money to buy stocks of businesses which I think make good investments for income.
I have blogged about this before and shared what kind of stocks I would buy with SRS money.
Basically, the businesses must be good income generators with strong balance sheets; nothing which is likely to do rights issues.
The very practical reason is because we must have the excess funds in our SRS account to take part in rights issues.
This can be difficult to ensure.
I shared my SRS portfolio of stocks before but that is outdated by now.
See:
Win and win again with SRS.
I had SATS in the portfolio.
Of course, regular readers would know that I sold it shortly after it announced the decision to buy WFS.
SATS just didn't have sufficient resources to do what they suggested.
They had to raise funds from shareholders.
It was something unexpected.
So, I took the opportunity to sell when there was a bounce in the stock price.
In place of SATS, there are ComfortDelgro and OCBC in my SRS investment portfolio now.
This is what the portfolio looks like now:
Based on the purchase prices, it is not difficult to guess that DBS and ST Engineering have been in the portfolio for some time now.
So, like what I did?
Paid less income tax and put the money to work to generate more tax free passive income?
We can certainly win and win again with SRS.
If AK can do it, so can you!
Reference:
How AK used his SRS money?
Hi AK
ReplyDeleteThanks for talking to yourself again! Have given me some food for thoughts on what to do with the SRS (besides recycling them in 6mth Tbills)
I am considering putting them into those 2Y SavvyEndowment from DBS.
Need to be careful about picking multi-baggers or high yield dividend growth shares in your SRS investments - else will end up paying tax, due to the windfall, when finally do the compulsory 10-year drawdown of the SRS account after "retirement".
ReplyDeleteSome might consider this happy problem but if have spectrum of investments, then better to use SRS for those safer types with lower yield and leave those with higher yield outside of SRS.
Sorry to hijack this post.
ReplyDeleteI've been a silent avid follower and attending your "evening with AK71" almost every year. Wanted to check if you have any teasers regarding this? Thanks!
Hi Yv,
ReplyDeleteAnother pot of gold to help fund our retirement.
I like. :D
Hi relac1234,
ReplyDeleteA happy problem is still a problem. ;p
There isn't any "compulsory" drawdown age for SRS savings.
However, you are right in that we have to complete withdrawals within 10 years once we start the process.
My plan is to leave the SRS account untouched unless I run out of resources to fund my retirement.
Hi ang,
ReplyDeleteCoincidentally, someone just asked me if there would be "Evening with AK and friends" this year?
I am feeling rather lazy and will play by year.
Maybe, next year? ;p
Hi AK71, please don't be lazy! Hope you we can have one this year!
DeleteHi ang,
ReplyDeleteLaziness is hard to control. ;p
Ak shifu, thought of nibbling a bit on Fraser's logistics & commercial trust .. wonder if you talk to yourself..
ReplyDeleteHi C,
ReplyDeleteI really have zero incentive for adding to my positions in REITs at current prices.
It is unlike during the Global Financial Crisis or during the years of ultra low interest rates.
My eyes are still on the banks. ;p
Hi AK, had a real hard look at all the banks. DBS seems to be the standout one. Higher dividend yield and ROE. Hopefully the share price drop 10% after the bonus share as some has mentioned. :p
ReplyDeleteCapitaland looks interesting for a deep value play. AK, are u looking? 😀
ReplyDeleteHi HH,
ReplyDeleteI will release a video this evening regarding DBS in response to what some other social media influencers have said.
My plate is quite full.
Not looking at other stocks. ;p