Reading your way to financial freedom
All of us started out as investment newbies. No-one was born already equipped with knowledge about personal finance, investments, savings and financial freedom out of our mothers' wombs. We were all born into this world, naked and innocent until the big bad world of finance and investments teaches us to start learning how to navigate the pitfalls in our journey towards financial freedom or pay hefty tuition fees in terms of lost opportunities, bad investments and loss of capital.
Reading your way to financial literacy
Part of the building blocks that you need in establishing a firm foundation for achieving financial freedom is to learn about financial literacy. You can also learn from talking to more experienced investors, friends and relatives who work in the industry or more importantly have achieved financial freedom and are willing to share. However, such people are not easily available on tap. What is available virtually anytime, anywhere are resources online through the internet as well as resources on paper in our well-stocked public libraries.
I have been seriously investing my own money towards my financial freedom since 2003 and I continue to read a book about personal finance, investments, equities every one to two months.
I am reading Benjamin Graham's "Intelligent Investor" one of the foremost books about investments you can find still valid today even though it was written in 1971. I have reserved a book by Martin Pring relating to technical analysis as that is one part of my investment knowledge that I need to beef up.
What are you reading today?
In order to build your foundation in financial literacy so as to achieve financial freedom, you need to read, read and read. Time is precious. You only have 24 hours a day. What will you do with it while you commute to/from work in the bus/MRT. While you wait for your doctor's/dentist's appointment. While you drop off your children at the tuition class?
Go read, read and read.
Be well and prosper.
6 comments:
Hi what is SRS scheme? I am currently 28. Is it gd for me to put the funds in? Tried to read up on it in .finatiq but dun quite understand. Thanks for all ur post on financial. Makes me plan :)
Hi Panzer,
I am currently reading Phillip Pullman's Dark Materials Series, not exactly a personal finance book but need some leisure time ! For 2008, I plan to read a few books on personal finance, instead of concentrating merely on investment.
Thanks for your blog ! Keep it up !
Regards, Musicwhiz
Hi musicwhiz
I also read for both business and pleasure. I finished reading "Hannibal" by Thomas Harris that features the cannibal serial killer Dr Lecter as well as FBI Special Agent Clarice Starling.
I think it's important to read broadly to gain different perspectives. Have started on the mother of all investment books, "The Intelligent Investor" by Benjamin Graham. http://www.blogger.com/logout.g?d=https%3A%2F%2Fwww.blogger.com%2Fcomment.g%3FblogID%3D5101611471906668860%26postID%3D9125174205897477430
Use a different account
Thx for visiting my blog!
Hi anonymous January 6, 2008 6:37 AM
From IRAS website: http://www.iras.gov.sg
SRS is a voluntary scheme to encourage working individuals to save for retirement, over and above their CPF savings.
Employers are not allowed to make SRS contributions. Contributions made by a resident individual to the scheme are tax deductible in the year following the year of contribution.
The savings including investment returns will be taxed only upon withdrawal i.e. the accumulated investment returns (with the exception of Singapore dividends) will be tax-free before withdrawal. Only 50% of the withdrawals at retirement are taxable.
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From MOF website: http://www.mof.gov.sg/taxation/srs.html
Supplementary Retirement Scheme (SRS)
The SRS is part of the Singapore government’s multi-pronged strategy to address the financial needs of a greying population, which were highlighted in the Report of the Inter-Ministerial Committee (IMC) on the Ageing Population, released in November 1999.
The SRS complements the Central Provident Fund (CPF). CPF savings are meant to provide for housing and medical needs and for basic living needs after retirement. Unlike the CPF scheme, participation in SRS is voluntary. Participants can contribute a varying amount to SRS (subject to a cap) at their own discretion. The contributions may be used to purchase various investment instruments.
With the SRS, the government hopes to encourage Singaporeans to save more for their old age, by means of voluntary contributions to their SRS accounts. The SRS will be effective from 1st April 2001. It will be operated by the private sector.
The SRS offers attractive tax benefits. Contributions to SRS are eligible for tax relief, investment returns are accumulated tax-free(with the exception of Singapore dividends from which tax is deducted or deductible by the payer company under section 44 of the Income Tax Act) and only 50% of the withdrawals from SRS are taxable at retirement.
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PG's comments:
I have avoided SRS for 1 main reason. Your money is locked up in the SRS account until your statutory retirement age. In return you defer 50% tax of your income contributed to SRS.
(continued)
PG's comments are in [...]
According to the SRS handbook,
Besides the obvious benefit of having more savings to draw on when you retire, you will enjoy the following tax benefits on contributions to SRS:
• You can claim tax relief for contributions made to SRS. Each dollar of SRS contribution will reduce your income chargeable to tax by a dollar.
[PG: This is capped to $11,475 a year. So you can only claim this amount. That gives you tax savings of effective tax rate x $11,475.]
• Investment gains will accumulate tax-free in SRS with the exception of Singapore dividends from which tax is deducted or deductible by the payer company under section 44 of the Income Tax Act, which are taxable at your individual tax rate.
[PG: I am not sure where it the benefit. Investment gains comprise capital gains, interest, dividends. Interest and capital gains are already exempted from tax, so how does this benefit me? In addition, dividends are still taxed at effective tax rate so even if you use SRS monies to buy shares.]
• Tax will be payable only when you withdraw your savings from SRS. If you withdraw your savings upon retirement, only 50% of the savings withdrawn will be subject to tax. You may also spread your withdrawals over a period of up to 10 years (or more if the statutory retirement age increases) to meet your financial needs. Spreading out your withdrawals will generally result in greater tax savings.
[PG: The tax savings is at 50%. In return, you monies/investments are locked up until statutory retirement age or should any of the allowable conditions arise for withdrawal. Early withdrawal comes with 5% penalty. This is the part that I think sucks. Your CPF is already locked in until retirement age of 62 or 67 and you want more of your money to be stuck there? Doesn't appeal to me at this point in time.]
Hi Panzer
Really thanks for your detailed explaination (answer) to my question. Reading it makes me understand the meaning of theis SRS scheme. and yeah, what u analyse is quite rite. what for putting the funds in and tie it up till age sixties. Think better off at putting esleway :)
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