Making your money work for you is essentially taking your existing wealth, and using it to make more of it. By investing, you are buying assets with the view that they will appreciate in value and help to grow your pot.
However, while the idea of investing is thrilling for some, it can be very intimidating for others. Some are stoked by the idea of how a little risk can lead to a bigger return, but others are fearful of investment and the risks it comes with.
Some of the common concerns about investing are that you can only start investing when you have saved up a lot of money, have to be an expert in reading funds and financial trends, and need to dedicate a lot of time to monitoring your investment.
While these could be true to a certain extent some 10 to 20 years ago, investing has since been made easier and more accessible, especially with a regular savings plan.
What is a Regular Savings Plan?
As its name suggests, a Regular Savings Plan (RSP) regularly invests a fixed amount of money into a portfolio of financial products such as Unit Trusts (UTs), Exchange Traded Funds (ETFs), and blue-chip stocks.
It is important to not be misled by the ‘savings’ in an RSP, as it is an investment instrument and comes with risks.
An RSP uses dollar-cost averaging to minimise the impact of the volatility of the financial products, investing the same amount of money regularly, regardless of market performance. It is believed that in the long term, your investment will average out and you can benefit from the market’s overall upward trajectory. RSPs are therefore designed for medium-to-long-term investors.
Most RSPs are open to Singaporeans and Singapore Permanent Residents above the age of 18 at the time of application.
Why invest in an RSP?
In investment, one thing everyone should recognise is that it’s highly unlikely a person will always be able to “buy low, sell high”.
To that end, making regular investments through an RSP has various benefits including:
1. Starting small
RSPs allow you to begin your investment journey from as little as S$50 a month, which also makes investing less intimidating for newer investors.
2. Disciplined investments
Once an RSP is set up, the investment is automatic and recurs monthly, making it easy for new investors to stay invested with minimal effort.
3. Avoid timing the market
Rather than waiting and thinking you can catch the best time to enter the market, you will be investing a fixed amount monthly. This way, more units of the fund can be purchased when the price is low and fewer units purchased when the price is high. This results in a lower average cost per unit, and over time, translates to higher returns when the market recovers.
4. Avoid emotional investments
Regular and systematic investments take away the emotions and psychological aspects of investing. An RSP can manage the behavioural impulses of emotional buying and selling that come from following the fund’s performance.
Fees involved in an RSP
As with any investment product, there are various fees involved. Depending on the RSPs you have chosen, the amount and fees involved can differ. The common charges include the platform fee, service fee, sales charge, also known as transaction fee, and management fee.
The platform fee and service fee are imposed on you for using a platform to invest and these are usually billed monthly. The sales charge is a fee imposed whenever you buy or sell a financial product. It can also be incurred when you make fund switches depending on the RSP you subscribe to. The management fee is a charge imposed to pay for the fund managers who are managing your investment portfolio.
Next, we look into a few common RSPs.
DBS Invest Saver
The DBS Invest Saver is a regular savings plan that “lets you invest a fixed sum regularly into your choice of investments, from as little as S$100 a month.” You can invest in ETFs and UTs through this RSP, and dividends can be credited directly into your DBS/POSB accounts.
This RSP offers five ETFs with sales charges ranging from 0.50% to 0.82% per transaction.
Among the available ETFs, the Singapore Bond Index Fund helps you gain exposure to a basket of majority AAA-rated Singapore government bonds, and the Nikko AM-StraitsTrading Asia ex Japan REIT ETF aims to replicate the performance of the FTSE EPRA Nareit Asia ex Japan Net Total Return REIT Index.
Additionally, DBS Invest Saver also offers digiPortfolio, “a hassle-free, ready-made investment portfolio that offers the perfect match of human expertise and robo-technology.” There are four portfolios available:
- SaveUp Portfolio: S$100 to start, three to six UTs, investing primarily in fixed income instruments, 0.25% p.a. flat management fee.
- Income Portfolio: S$1,000 or US$1,000 to start, equity and bond UTs, 0.75% p.a. flat management fee.
- Asia Portfolio: S$1,000 to start, portfolio of SG-listed ETFs investing across Asia with a Singapore focus, 0.75% p.a. flat management fee.
- Global Portfolio: US$1,000 to start, portfolio of UK-listed ETFs investing globally, 0.75% p.a. flat management fee.
There is also a list of UTs available for DBS Invest Saver for easy reference.
OCBC Blue Chip Investment Plan
The OCBC Blue Chip Investment Plan (BCIP) is an RSP that gives you access to blue chip shares and Singapore-listed ETFs from as low as S$100 a month. The blue-chip stocks within BCIP’s portfolio include companies on the Straits Times Index (STI) such as Singapore Airlines, OCBC, Singtel and Keppel Corporation.
BCIP also have seven ETFs for investors to invest in. The more notable ones include Lion-OCBC Securities Hang Seng Tech ETF, designed to represent the 30 largest technology companies listed in Hong Kong, and Lion-OCBC Securities Singapore Low Carbon ETF, designed to replicate the performance of the iEdge-OCBC Singapore Low Carbon Select 50 Capped Index using a direct investment policy of investing in all, or substantially all, of the underlying Index Securities.
The full list of blue-chip stocks and ETFs available for BCIP can be found here.
BCIP offers FRANK’s preferential fees starting from S$0.88 per transaction (based on an investment amount of S$100), for new customers who are below 30 years old (based on calendar year), with an initial investment of up to S$500 per product.
Otherwise, while buying any financial product with BCIP, the fees will be 0.3% of the total investment amount or S$5 per product, whichever is higher. For selling a product, the charges are 0.3% of the total sales proceeds or S$5 per product, whichever is higher. For SRS investments, a fee of S$0.35 (CDP Fee) and GST per financial product will be charged.
POEMS Share Builders Plan
POEMS Share Builders Plan (SBP) is a regular fixed-dollar amount investment plan with a minimum amount of investment is S$100 per month, subject to a minimum of S$100 per product.
SBP offers 13 ETFs for you to choose from. Amongst the 13 are the SPDR Straits Times Index ETF, which seeks to replicate the Straits Times Index, and Phillip SING Income ETF, which includes 30 high-quality Singapore-listed stocks to offer investors a cost-effective and diversified exposure to the Singapore market.
It also offers 13 REIT counters and 30 share counters, including CapitaLand Ascendas REIT which had an 8.01% dividend yield, Del Monte Pacific Limited share which had a 10.18% dividend yield, and ComfortDelGro Corporation Limited share which had a 7.57% dividend yield. (*Trailing 12-month dividend yield as of 23 May 2023)
Every month before the transaction date, your Total Portfolio Value (TPV) will be calculated. SBP’s handling fee is deducted monthly, using this formula, 0.3% per annum × TPV ÷ 12 months. The minimum fee is S$1, and the maximum is capped at S$8.88 for TPV below S$40,000, and S$5.88 for TPV above S$40,000.
FSMOne Regular Savings Plan
Fundsupermarket, also known as FSMOne, offers an RSP that features 150 ETFs on SGX, HKEX and US markets and 1804 UTs, making it the RSP that offers the widest ETF and UT selection on our list.
Amongst the list of available ETFs are VanEck Semiconductor ETF, which tracks the MVIS US Listed Semiconductor 25 Index, offering a portfolio of listed companies in the semiconductors industry. The 10-year return on this ETF is 24.855%. Another notable ETF is the Vanguard Information Technology ETF, which tracks the MSCI US Investable Market Information Technology 25/50 Index, giving you exposure to large, mid-size, and small U.S. companies within the information technology sector. The 10-year return on this ETF is 20.242%.
The best thing about FSMOne RSP is their minimum monthly investment amounts are as low as S$50. This allows new investors to easily start a disciplined investment with little effort.
With one of the lowest buying fees among all the RSPs, FSMOne RSP charges 0.08% or S$1, HK$5, or US$1, whichever is higher. However, do note that each sell order is charged at a flat S$8.80, 0.08% or HK$50, and 0.08% or US$3.80, depending on which market’s ETF you are selling. There are also various charges associated with using the platform.
There is no one-size-fits-all formula when it comes to RSPs, as every investor has a different need and aim.
If convenience is important for you, the DBS Invest-Saver and OCBC Blue Chip Investment Plan are probably the best options as you do not need to set up a separate account to receive your dividends. POEMS SBP gives you access to a wide range of blue-chip stocks and REITs, and FSMOne RSP has the biggest range of ETFs and UTs available for investors.