Salary.sg – Your Salary in Singapore

At first glance, the Supplementary Retirement Scheme (SRS) appears to be a very good deal. But after a simple analysis, we will know why it is not the case.

As illustrated in today’s Sunday Times (see similar example in Finatiq), a contribution of $11,475 to your SRS account brings about a tax saving of $1,096. This is a yield of 9.6%. To the uninitiated, the yield looks impressive, and it may seem worthwhile to have the $11,475 locked up in SRS.

However, take note that the “yield” is one-time. And that you will not be able to withdraw from your SRS account until you hit retirement, which is about 30 years away for most people. (Premature withdrawals are allowed, but there’s a penalty of 5%.)

We calculated: if you instead invest the $11,475 and achieve a mere 0.31% return per year, you will make slightly more than what you would have got from the SRS tax saving. (Yes, no typos – it’s zero point three one percent).

So, unless you are extremely bad in investing, or you’re a compulsive spendthrift who needs to force himself to set aside some savings, or you simply have too much money, you can go with the SRS.

Ok, some of you may ask: can’t we use the SRS money to buy things that we are buying anway? Things like insurance come to mind.

But it seems the SRS is not designed to encourage this, as according to the MOF SRS Faq: (1) only single premium insurance products are allowed, (2) total life and TPD cover is capped at 3 times the single premium (how useful it that?), and (3) critical illness, health and long-term care are excluded (my goodness!).

Furthermore, direct property investments are also not allowed, rendering the SRS completely useless for people who aren’t interested in buying investment products from the SRS-linked financial institutions.

So again, if you already plan on buying things like unit trusts from the “pretty girl” or “pretty boy” in your bank (see wrong and right way to invest), you can consider putting money in SRS, enjoy some tax saving, and make that pretty girl happy for closing a sale (and getting a commission from it).

Otherwise, forget SRS.

About 41% of Salary.sg readers make more than $100k per annum. This is according to our poll which garnered more than 800 responses.

Out of this group of high earners, about two-thirds work in multinationals (or MNCs).

As for those who work in government-linked companies (GLCs), slightly more than one-third make more than $100k. Contrast this with those in MNCs – a whopping 50% of our MNC readers make more than $100k!

However, the worst group is the “Others”, which includes small and medium enterprises (SMEs) and of course the civil service. Less than 28% in this group make more than $100k.

Some people save a fixed amount of their monthly income and spend the rest. Others like myself spend prudently and save the rest.

Regardless of whether you’re a spend-the-rest or save-the-rest saver, you should be able to gauge roughly how much you save a month.

Though thrift and financial prudence have been extolled as good “Asian values”, I personally believe that in order to be a good accumulator of wealth, you should also invest wisely. In this day and age, being able to save a lot doesn’t necessarily mean you’ll be wealthy – what if the cash you’re holding goes down in value?

Back on topic, what percentage of your monthly income goes into your savings (which you may use for investment)?

According to our calculations, your citizenship is worth $4,511 more than permanent residents per year. For that, you have to serve NS if you are male, and watch some of your PR friends sell their HDBs for a good profit and then return to their (sometimes) cheaper home countries to enjoy retirement.
As a Singapore citizen, [...]

While some doctors and administrators are having a friendly debate, I would like to bring your attention to another interesting discussion.
A reader by the name “wonder” claims that his friends in GLCs earn double of what MNC employees earn.
I’m a little sceptical, so let’s do an unscientific poll.
Let’s compare the ratio of high earners in [...]

The STI index closed today at a year-high of 2,712.15, up more than 80% from its bottom just 7 months ago.
About a month before the market hit the bottom, I talked about exploiting the recession. STI was around 1,700 then.
And about a month after the market hit bottom, I talked about market cycle investing and [...]

The most accurate (arguably) income comparison tool on the island has been updated.
Once again, we take the data points from the latest Iras Annual Report 2008/2009 and produce the following tool that stack you up against all resident taxpayers.
In our view, the data from the Inland Revenue Authority of Singapore is much more comprehensive than [...]

According to one measure of affordability, our houses are less affordable than major cities like Sydney, Toronto, New York and even Tokyo.
The mainstream media and HDB have (unsurprisingly) claimed otherwise and probably will give 101 reasons to support their arguments.
More annoyingly, without much hint of sympathy, the media reported that “buyers can be narrowly focused” [...]

This will be a fair comparison of how good a wealth accumulator you are. Rather than comparing the dollar amount of your net worth, we will stack you up against others in terms of your net worth over income.
If a person makes $100k/year and has $500k in net worth, he’s definitely a much better wealth [...]

According to the Straits Times (Sep 19), median home prices in 2008 were about 16.3 times the median annual income that year.
The article never mentioned if 16.3x is a bearable or even realistic figure for individual households.
Using ST’s median figures for 2008, if a household making $59,400/year were to buy a $970,000 condo, it would [...]