Yes you can!
There are so many ways to invest these days. One of them and the most common one is to buy companies’ equities or known as stocks. Apart from cash, as Singapore residents, you have the alternative to buy companies’ stocks using SRS.
Singapore residents refer to Singapore Citizens, Singapore Permanent Residents and those who are legally has either work pass or stay pass to work and live in Singapore.
Disclaimer: Pardon my financial language and literates if they looked or heard funny to you as I am not a financial expert/savvy, nor I am a broker of some sorts nor I am a government agent. I don’t try to sell you anything here. I’m just a person who care about saving my hard-earned money for my future and my retirement and someone who are willing to share the experience to the masses for (hopefully) the greater good. Treat this article for your education purpose only. Should you choose to follow whatever I’m about to tell you here, do it at your own risk! I won’t be held responsible for any loss/damage it may incur to you.
What is SRS?
If you are here, landing on this article, most likely you knew what SRS is already. But just in case, you have no or less idea of what SRS is, it is short for Supplementary Retirement Scheme. It’s a kind of initiative from Singapore government to its resident where any money (up to certain ceiling) top-up to this account, will have not-only tax relief but also chance to get exempted from tax. The money stored inside the SRS account do not and in fact should not just sit on the account. You can use the tax-relief and tax-exempted SRS money to fund various investments. One of them is to buy stocks. Furthermore, SRS is not a CPF, but has some similar traits to CPF. While CPF is mandatory for Singapore Citizens and Singapore Permanent Residents, SRS – like it’s name Supplementary – is totally voluntarily.
Why you want to use SRS to buy stocks? What are the advantages?
In short: for double returns*.
Here’s the long explanation and why I put the asterisk sign there on the double returns.
Return #1: Like I mentioned earlier above, topping-up some amount of money to SRS account gives you a certain degree to get tax relief and getting exempted from income tax. In fact last year, doing this method (topping up SRS) combined with other methods, last year I managed to paid 40% less tax despite I was getting increase in my salary. In case you are interested to know more, here’s the article that detail every steps I did to get discounted taxes. So the 1st return is coming from the tax relief/exemption. If the income tax is $1000, you have $400 in return. If you have $5000 in income tax, using the same formula, you can get $2000* in return (* – I over-simplify the tax calculation, simply by multiplying the 40% less tax – actual numbers could be different, but the important thing here is you get the idea).
Return #2: You get it from the dividends or stocks appreciation. While everyone who invest is always aiming to get dividends and/or stock appreciations, but in reality that’s not always the case. Nobody can 100% predict where the market is going, so there are always be ups and downs. In bearish time (read: market is down), you may not get any dividends nor stocks appreciation. You even can lost the whole principal (read: your sum money) in the event the company you are invested in goes bankrupt. This is why I put asterisk when I said getting double returns.
Both returns are what make investing using SRS is like getting double returns.
Here’s how you can buy stocks using SRS Account and Money
Please read the disclaimer I put at the beginning of this article before continuing – if you haven’t read it. These are based on my experience, which may or may not be 100% suitable for you, you may want to use these steps as a generic steps to find and discover more options that suits perfectly for you.
So here’s what’s needed for you to start buying stocks using SRS Account and money and get the double returns.
1) You need to have the SRS Account. In Singapore, there are only 3 banks have this type of account. They are DBS/POSB, OCBC and UOB. Detail steps to open SRS account, you can get it here.
2) You need a brokerage account that accepts investing using SRS account. On top of that, you need to ensure the broker is allowing you to buy stocks using SRS accounts because not all brokers available here in Singapore allows you to buy stocks using SRS money. One that I know and used is DBS Vickers.
3) You need to link your brokerage account with your SRS account. Just for your information, if let’s say the brokerage account is DBS Vickers, it’s not a must to have your SRS account in DBS too. They are inter-change-able. And because of that reason, once you have your SRS account opened and brokerage account opened, you need to link them both. If you are using DBS Vickers, I have the detail step by step on how to link the SRS account to the DBS Vickers account, read it here.
4) You need to activate the SRS account to be used to transact. In my case, even after I successfully linked my SRS account to my brokerage account, I was unable to execute any trades. As it turned out, I need to activate it first. In case you are using DBS Vickers, here’s what you need to do to activate the SRS account to be used for trading.
That should be it. Now with all setup, you can trade stocks using SRS account and money for double returns!
What are the markets available for SRS Account?
That really depends on your brokerage account. On my case, using DBS Vickers, I am allowed to transact in the following markets: U.S., Canada, Hong Kong, Singapore, U.K., Australia and Japan. However specific to invest using SRS account and money, I only use it for Singapore market.
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