Contributing to a new war-chest - SRS

There were several blogs discussions on Supplementary Retirement Scheme (SRS). For example, Seedly have good articles to summarise the pros and cons of SRS. In this article, my focus will be on my personal experiences and considerations.  

My wife and I opened our SRS accounts last year with $1 top-up. There were discussions that this could “lock-in” the statutory retirement age at 62 years old which is the current prevailing age. The “statutory retirement age” is dependent on the gov policy and this age could change in future. The exact wordings on the IRAS website are as follow:

Beyond the rhetoric of retirement savings, the key benefit to me is to reduce the amount of tax that I need to pay next year! I had performed relatively well in my job this year and this was reflected in my bonus 😄 Having already done my CPF SA cash top-ups as well as donated to charity organisations, I was still exploring to reduce my tax payable further. This was how SRS become an option.

Besides simply throwing money into SRS, it is important to have an exit strategy. This is to protect the capital in case of premature withdrawal. This spurred me to consider the 5% penalty for premature withdrawal AND that 100% of the withdrawal sum will be taxed. In addition, the withdrawal sum will stack with the total income received (e.g. from my salary) for that year.

My ultimate decision is to pick a stock with potential to increase beyond 5%, so that it could minimally cover the penalty frees. My top-up amount would be dependent on the stock purchase price. 

A few months back, I bought into OCBC at around $10.68. The target sell price is at least $11.30. Alternatively I will plan to hold the stock for 2 years to allow the annual dividends of 3.2-3.8%  to cover the penalty fees.

Hopefully, this will enable my SRS to become another war-chest to invest in opportunities when they arise.

Cheers!

GoHuat

Market Watch – Optimism and Money Avalanche?

Three news caught my attention over the past few weeks.

Firstly, there was growing optimism from the trade war after US and China offered concessions to exempt some trades from tariffs. All eyes will be on the outcome of their Oct 19 meeting.

Secondly, many global central banks (Source), notably European Central Bank (ECB) this week, had decided to turn on the stimulus taps. The ECB planned to cut interest rates to -0.5%, start printing money again and buy €20M in bonds and other financial assets per month starting in Nov 2019. Looks like there would be an avalanche of liquidity flooding the market. 

Lastly, there are market expectations for FED to reduce interest rates further, especially after their meeting next week.

While the STI has risen, the volume and price increase was somewhat tamer than expected. It is likely that many investors were still assessing the market direction before deciding what to do next.

In my opinion, the Oct meeting would likely not have a firm resolution to end the trade war. But there is definitely a good chance for some positive announcements as the trade war have hurt both countries. It is also in both sides’ interest to end the year on a more positive note. I also believed that the avalanche of liquidity could artificially inject a bullish effect into the market.

I am looking into the charts of STI and DBS as market benchmarks. For STI chart, the market seems to be going slightly downtrend or sideways. For DBS chart, there is a good chance of a wedge forming, that could lead to a potential upward breakout.

In my previous post, I shared about the start of my technical analysis journey. Though I have realised gains from trades in DBS and SATS, have noted many areas of improvement after my self-reflection. To this, I look forward to making better trades next time. 😊

GoHuat

Related Post

1.       How am I starting on my Technical Analysis journey?

How am I starting on my Technical Analysis journey?

My core investment skills come from fundamental analysis. TA is relatively different and requires me to develop different skillsets. For past few months, I have been working hard to improve my Technical Analysis and trading skillsets.

Recently bought a book: “Trading: Technical Analysis Masterclass” (This is an affiliate link. See disclosure below) by Rolf Schlotmann / Moritz Czubatinski, which provides good and clear explanation of the basics. Have personally found this book to be really useful and will recommend new traders to take a look.

So how am I starting my TA journey? I first set aside a sum of money for short-term trading:

(1)   Near-term and daily needs in high deposit bank accounts

(2)  Emergency funds in short-term fixed deposits

(3)  Stocks

(4) Investment Warchest in Singapore Savings Bonds and high deposit bank accounts.

(5)  Currency

(6) Short-term trading – NEW!

This is a sum that could potentially become my “school fees”. Before each trade, I worked out a plan and identified the potential upside/downside % as well as the entry, exit and cut-loss prices. I also used indicators such as Candlestick, RSI and MACD to guide me.

While the general trend of overall stock market trend seemed bearish, I spotted potential uptrend opportunities for OCBC, DBS, Hong Kong Land, SATS Limited. Hence, I took the calculated risk to buy in and am currently monitoring the charts closely. Have earned a small profit from trading STI ETF. Not a bad start, I guess? Will share some charts and analysis in my future posts. 😊

Disclosure: The link for "Trading: Technical Analysis Masterclass" is an affiliate link. At no additional cost to you, I will earn a commission if you click through and make a purchase.

GoHuat