Hi guys, I admit I'm not the most financially savvy guy you know, but I do have more than sufficient knowledge to engage in an intellectual kopitiam talk.
Sharing some tips to make the most of your money!
1) Supplementary Retirement Scheme (SRS)
Did you know, other than bearing children and topping up CPF for self/dependents, there are other ways to reduce your personal income tax? SRS is such a gem! Thanks for my old friend CT for sharing with me (he had vested interest though), I signed up for it and saved not a meagre amount in tax payable!
Find out your total chargeable income, which is your total earned income less deductibles and reliefs:
A few illustrations:
Scenario 1)
Your total chargeable income is $40k-$80k.
If you invest $10k into SRS, you save $10k x 7% = $700!
Scenario 2)
Your total chargeable income is $80k-$120k.
If you invest $10k into SRS, you save $10k x 11.5% = $1,150!
Scenario 3)
Your total chargeable income is $91,000. Say you did not put money into SRS. Your tax payable (refer to 4th row of the Table above) is $4,615 which is made up of:
- First $80k - $3,350; and
- Next $40k - $11k x 11.5% = $1,265.
However, should you have transferred $12,000 into SRS, immediately your taxable income ($91,000 - $12,000 = $79,000) would have been downgraded to the next lower bracket! Your tax payable (refer to 3rd row of Table) would have been $3,280:
- First $40k - $550; and
- Next $40k - $39k x 7% = $2730.
So you would have achieved cash savings of $4,615 - $3,280 = $1,335! No questions asked!
-----------------------------------------------
The above illustrations show that the more you earn, the more savings SRS provides. Sounds very good right? But like anywhere else, take free sample and give freebie also must have a limit right?
a) The maximum amount per year one can deposit in SRS is $15,300.
b) Well, of course the SG Gahmen doesn't give free lunch (with the SG Savings Bonds a surprising exception); there is penalty for withdrawing the money before 62 yo; and even if you withdraw after 62, you can't withdraw 100% overnight. Do read up and find out more on SRS (https://www.iras.gov.sg/irashome/Schemes/Individuals/Supplementary-Retirement-Scheme--SRS-/).
c) And some may argue the opportunity cost of locking in that amount of money is very high. Say one buys REIT stocks with $15k, the returns p.a. are estimated 5-8% = $750 - $1200. Well, good news for you - you may use your SRS money to buy stocks and unit trusts, and also endowment plans! So I think the only disadvantage of locking in your money in SRS is if you need significant cash in the mid to long term? E.g. changing car, purchasing 2nd property, starting a biz etc.
2) Keep a repertoire of Credit Cards handy - always!
Illustration: the overrated Passion Card
When I paid $12 to sign up for a 5-year Passion Card membership some years ago, it was only for 1 benefit in mind - it gives you $1 off KFC chicken set meals. Considering I need only 2 years or less to eat 12 KFC meals, it was an economic decision.
<2 12="" a="" at="" ause="" card="" centres="" community="" courses="" does="" eat="" economic="" for="" how="" is="" kfc="" know="" lame...="" like="" often="" one="" otherwise="" p="" passion="" purchase.="" quite="" sign="" this="" times="" to="" up="" was="" years="" you="">
But anyway my Passion Card is the POSB-linked one, so it's just in my wallet as it doubles as my ATM cum Ez-link card. And anyway last weekend we dined at Sakae Sushi, I was footng the bill when the cashier asked if I had Passion Card. I flashed it and YES I GOT $10 off my final bill!!!! Before discounts my bill was like $48, so the discount worked out to be like 21% off WOW!? Yes, #dontsaybojio, flash your Passion Card at Sakae Sushi and enjoy $10 discount with min. spending of $40 before taxes and charges.
Signing off for now,
the giam siap Singaporean uncle
Sharing some tips to make the most of your money!
1) Supplementary Retirement Scheme (SRS)
Did you know, other than bearing children and topping up CPF for self/dependents, there are other ways to reduce your personal income tax? SRS is such a gem! Thanks for my old friend CT for sharing with me (he had vested interest though), I signed up for it and saved not a meagre amount in tax payable!
Find out your total chargeable income, which is your total earned income less deductibles and reliefs:
 |
| Source: https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/ |
A few illustrations:
Scenario 1)
Your total chargeable income is $40k-$80k.
If you invest $10k into SRS, you save $10k x 7% = $700!
Scenario 2)
Your total chargeable income is $80k-$120k.
If you invest $10k into SRS, you save $10k x 11.5% = $1,150!
Scenario 3)
Your total chargeable income is $91,000. Say you did not put money into SRS. Your tax payable (refer to 4th row of the Table above) is $4,615 which is made up of:
- First $80k - $3,350; and
- Next $40k - $11k x 11.5% = $1,265.
However, should you have transferred $12,000 into SRS, immediately your taxable income ($91,000 - $12,000 = $79,000) would have been downgraded to the next lower bracket! Your tax payable (refer to 3rd row of Table) would have been $3,280:
- First $40k - $550; and
- Next $40k - $39k x 7% = $2730.
So you would have achieved cash savings of $4,615 - $3,280 = $1,335! No questions asked!
-----------------------------------------------
The above illustrations show that the more you earn, the more savings SRS provides. Sounds very good right? But like anywhere else, take free sample and give freebie also must have a limit right?
a) The maximum amount per year one can deposit in SRS is $15,300.
b) Well, of course the SG Gahmen doesn't give free lunch (with the SG Savings Bonds a surprising exception); there is penalty for withdrawing the money before 62 yo; and even if you withdraw after 62, you can't withdraw 100% overnight. Do read up and find out more on SRS (https://www.iras.gov.sg/irashome/Schemes/Individuals/Supplementary-Retirement-Scheme--SRS-/).
c) And some may argue the opportunity cost of locking in that amount of money is very high. Say one buys REIT stocks with $15k, the returns p.a. are estimated 5-8% = $750 - $1200. Well, good news for you - you may use your SRS money to buy stocks and unit trusts, and also endowment plans! So I think the only disadvantage of locking in your money in SRS is if you need significant cash in the mid to long term? E.g. changing car, purchasing 2nd property, starting a biz etc.
2) Keep a repertoire of Credit Cards handy - always!
Illustration: the overrated Passion Card
When I paid $12 to sign up for a 5-year Passion Card membership some years ago, it was only for 1 benefit in mind - it gives you $1 off KFC chicken set meals. Considering I need only 2 years or less to eat 12 KFC meals, it was an economic decision.
<2 12="" a="" at="" ause="" card="" centres="" community="" courses="" does="" eat="" economic="" for="" how="" is="" kfc="" know="" lame...="" like="" often="" one="" otherwise="" p="" passion="" purchase.="" quite="" sign="" this="" times="" to="" up="" was="" years="" you="">
But anyway my Passion Card is the POSB-linked one, so it's just in my wallet as it doubles as my ATM cum Ez-link card. And anyway last weekend we dined at Sakae Sushi, I was footng the bill when the cashier asked if I had Passion Card. I flashed it and YES I GOT $10 off my final bill!!!! Before discounts my bill was like $48, so the discount worked out to be like 21% off WOW!? Yes, #dontsaybojio, flash your Passion Card at Sakae Sushi and enjoy $10 discount with min. spending of $40 before taxes and charges.
Signing off for now,
the giam siap Singaporean uncle
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