Lower Risk Investments With SRS

Given the high interest rate environment we are in, low-risk investments for Supplementary Retirement Scheme (SRS) funds seem to make sense, and I found a few ways risk conservative investors can use their SRS funds for returns in a lower-risk manner. In case you are not familiar with it, SRS is a tax deferment scheme that allows you to contribute some of your savings and get tax relief on them.

After enjoying your tax savings, however, one thing to note is that the SRS account only generates a miserable 0.05% p.a. interest rate. If you do not invest your funds, you may have saved some tax, but the value of your money is eroding in value, especially with inflation as high as it is. Here are some ways you can consider putting your SRS funds to use.

Fixed Deposits

Fixed deposits are a popular way to invest your savings given the high rates presently, and it is indeed one of the approved products for SRS investments. Unfortunately, most of the fixed deposit options with high interest rates are for cash only, with a couple available for CPF. Fixed deposits offered by local banks for SRS savings somehow have low interest rates compared to those purchasable with cash, and I’m not quite sure why this is the case.

Do share with us in the comments or Telegram if you find any compelling fixed deposit options for SRS funds.


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Singapore Savings Bonds (SSBs) or Treasury Bills (T-Bills)

If you are risk averse, SSBs or T-Bills are a close alternative to fixed deposits, and these should be very familiar to most in recent months. SSBs offer up to 10 years of higher interest rates and allow you to withdraw your funds at any time. On the other hand, T-Bills come in 6 or 12-month variants, which may be more suitable if you want to invest your SRS savings in the short term.

For those who wish to lock in a higher interest rate for a longer term, SSB is one of the rare instruments that both guarantees around 2 to 3% p.a. rate for 10 years, and is also available for SRS investment. The funds are also very liquid, and thus I prefer SSB for my idle SRS savings, and I can withdraw them to put towards higher risk investments periodically.

Insurance Savings Policies

Another option to consider is insurance savings plans. These plans are short-term, usually for two to three years, and provide guaranteed returns upon maturity. They work quite similarly to fixed deposits where you place your money and get your capital back with returns at the end of the tenure.

For instance, DBS offers a two-year, 4% p.a. plan, and this works with SRS savings too.

However, while short-term insurance endowment products are pretty decent, they are not to be confused with long-term savings products that insurance companies sell. Some of these products can be bought with SRS, but I would recommend staying away from them.

Long-term insurance savings products tend to come with high upfront costs and commissions, and lock your funds in a relatively conservative portfolio for a very long time. While your SRS funds is indeed meant for long-term savings, the funds are still fairly liquid and can be withdrawn if the situation calls for it. Locking your funds into a long-term savings plan, however, significantly decreases your liquidity. The returns of such policies are also quite subpar for something so long term.

Cash Management Accounts

Cash management accounts are typically offered by roboadvisers as a way to give higher returns on someone’s cash holdings. Do note that such funds are invested in investments funds like money market funds or even short-term bond funds which are low risk but in no way guarantees your capital or returns.

Riskier cash management account funds with more bond exposure do run the risk of losing one’s capital, but such accounts tend to give you positive returns if you can hold it for a longer period of time such that the underlying bonds can mature.

In any case, such accounts project around 3 to 4% p.a. interest depending on the risk level of the account, and I feel that it does not give significantly more return than things like t-bills or even SSBs at the moment. As such, I don’t really feel the need to use a cash management account for my SRS funds at the moment.


Ultimately, we have to recognise that the SRS account is meant for retirement savings, and chasing high-interest rates may not be the best option since such rates may not last for the long term.

In my opinion, the best way to deal with one’s SRS funds is to invest for the long term. While investing tends to be volatile in the short-term, it should grow your funds in the long-term to give you the returns needed for retirement.

I will be talking more about the ways one can invest effectively, so stay tuned and subscribe to the Telegram for such content.

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