Why I Topped Up My SRS Again This Year

Merry Christmas everyone! I have made a top up to my SRS account again for this year.

At my current 11.5% tax bracket, this translate to about a $1700 tax savings for me. You can read more about other tax savings that I had here.

Of course, SRS is not a free lunch. It has its down side.

To enjoy the tax savings, the SRS money is locked up until the official retirement age at the point you first opened your SRS account. For me, that age is 62, which means my SRS money is locked up for about 18 years before I can withdraw it penalty free.

On top of that, the interest rate in the SRS account is a measly 0.05%.

Despite these downside, I still try to set aside enough each year to contribute as much as I can, ideally the maximum of $15300, every December.

This is because, in the worst case scenario where I really need the money before I turn 62, I can still withdraw my SRS monies with a 5% penalty. If that situation happens, I would likely have little to no income, which means the income tax on the withdrawal will be minimum if not zero. Hence, factoring in everything, I would still expect to be net positive overall from the upfront tax savings.

As for the 0.05% interest, there is no way i am letting my money sit idle in the SRS account.

As soon as the top up hit my SRS account, I immediately invested it into the Fullerton SGD cash fund via Endowus. Till date, the annualized internal rate of return is at 2.7%. wayyyyyy better than the 0.05%. 

This portion of my SRS acts as my war chest and stays there until the market opportunities presents themself, at which point I will gradually deploy the funds into my 100% equity funds within Endowus. This annualized internal rate of return for the 100% equity fund is around 12% currently.

So are you also considering topping up your SRS for tax savings and investing it?

If you are, remember that the contribution must be done before end of the year. I would encourage you to do it by 30 December, just to give yourself a day of buffer. 

If you have not even opened an SRS account yet, you may be cutting it a bit close to qualify for this year’s tax relief, but hey it doesn’t hurt to try.

I have written previously about the considerations I had when I first opened my SRS account five years ago, which you can read here . On top of that, banks usually run SRS account opening promotions toward year-end. For example, OCBC is currently offering a $50 cash credit if you open an SRS account and contribute at least $1,000 by 31 December 2025.

Happy Christmas again and Happy SRSing as well!

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