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POSB Invest Saver: Here’s How You Automatically Invest In The Strongest Singapore Companies And Bonds Every Month

Here’s how you can automatically invest with as little as $100 each month.

 

One of the simplest ways we can start investing is via a Regular Shares Saving (RSS) plan, such as the POSB Invest Saver. If you’re wondering what an RSS is, it just means investing our savings in shares on a regular (monthly) basis.

Before going on to describe how we can invest via the POSB Invest Saver, we first need to know the main benefits of investing via an RSS plan. We highlight a few below:

1) Greater Flexibility In Choosing When And How Much To Invest

We retain full flexibility in our investment decisions even after embarking on an RSS plan. This means we can increase or decrease the amount we invest each month, choose to stop investing for a few months or even sell off our investments, at any time without incurring a penalty.

This can be extremely helpful in instances we need to take time off work or in the unfortunate event that we get retrenched. We can simply stop our monthly investments until we are comfortable to re-start it, or choose to sell it if we face financial difficulties.

If we were investing via an investment-linked policy (ILP) or an endowment plan, we may not have as much flexibility to stop our monthly contributions indefinitely or to cash out without having to bear significant financial losses.

In essence, RSS plans give us the discipline to invest a portion of our salaries each month, yet offers the flexibility to not only increase our monthly contribution, but also decrease, pause and even cash out at any point.

2) Dollar-Cost Averaging Our Investments

By investing a small portion of our salary each month, rather than a lump sum on day 1, we are actually embarking on a dollar-cost averaging strategy. This means, with the same amount of money, we buy more of the investment when prices go down and less when prices go up.

It’s almost impossible to guess when the best time to invest is, and by investing every month, we will simply get an average price. While we may not be able to enjoy large price gains in the short term, we will also be minimising the possibility of sustaining large price losses in the short term.

Read Also: Monthly Investment Plan vs Lump Sum Investing in STI ETF: Which Is Better Over 5 Years?

3) Passive Investing

Another benefit of RSS is that we take a passive approach to investing our money. Similar to dollar-cost averaging, this means we don’t try to time the market. We simply invest each month.

A true passive investing strategy also hinges on receiving market returns. The best way to do this is simply to invest in broad-based country indexes.

Read Also: Active Investing VS Passive Investing; Lump Sum VS Dollar Cost Averaging? Which Investment Strategy Suits You Best?

The POSB Invest Saver

The POSB Invest Saver offers Singapore investors one of the simplest ways to start investing via a Regular Shares Saving plan. Here is what you should know about how you can use the POSB Invest Saver to build a long-term investment portfolio.

What Exactly Is The POSB Invest Saver?

The POSB Invest Saver is one of four RSS plans currently offered by various brokerages in Singapore. The others are the OCBC Blue Chip Investment Plan, the Maybank Kim Eng Month Investment Plan (MIP) and the Phillip Share Builders Plan (SBP).

Being an RSS plan, it requires us to set an amount we intend to invest each month, and have the discipline to continue investing in it for the long-term.

Most importantly, and what differentiates the POSB Invest Saver from other RSS plans in the market, is that it does not require its investors to have a CDP account or a brokerage account to start investing in listed securities.

What Can We Invest In Via POSB Invest Saver?

We can invest in just two exchange traded funds (ETFs) listed on the Singapore Exchange (SGX) via the POSB Invest Saver. This is unique because the other three RSS plans in the market have more variety of investments that we can make.

These two investments are the Nikko AM STI ETF and the ABF Singapore Bond Index Fund. The Nikko AM STI ETF tracks the Straits Times Index (STI), made up of the 30 strongest and most liquid companies listed in Singapore. The ABF Singapore Bond Index Fund tracks a basket of high-quality bonds primarily issued by the Singapore government and quasi-Singapore government entities.

While it may seem like a limited range of investments, it can be argued that these two investments are the ones that entry level investors should be making. They are well-diversified themselves, offer a low-cost solution and provides the market return, and the offer both stock and bond investments. And importantly, they are able to deliver market returns.

Read Also: Pros And Cons Of Building An ETF-Only Investment Portfolio

These two investments also pay out regular dividends and interest respectively. These funds will flow into our designated POSB/DBS accounts that we use to pay for the investments.

How Much Do We Need To Invest Each Month?

We can start investing on the POSB Invest Saver platform from just $100 a month. We need to set up a Giro arrangement to automatically deduct the amount we set each month from our POSB/DBS accounts.

Of course, we can increase this to as high as we want, but the main draw is to take advantage of being able to invest small sums of money, while not losing out in terms of incurring brokerage charges.

Read Also: How To Start Investing With Just $100 A Month In Singapore

What Are The Sales Charges/Fees When We Invest?

We have to pay a sales charge of 1.0% when we invest in the Nikko AM STI ETF and 0.5% when we invest in the ABF Singapore Bond Index Fund.

There are no other charges, including redemption charge when we sell the investments, adjusting the investment amount or pausing our investments.

Most brokerage houses charge trading fees of close to 0.25% or a minimum of about $25, whichever is higher, for investments under $50,000. This means if we invest via a typical brokerage account, an investment of $500 will incur a trading fees of $25 as well as an additional clearing and trading fee. We will also incur a similar cost when we sell this investment.

Read Also: Singapore Online Stock Brokerage Account Fees Comparison (2018 Version)

If we invest the $500 via the POSB Invest Saver, we will incur a 1% sales charge of just $5. Furthermore, we will not incur any redemption charges when we sell our investments.

Who Should Invest With POSB Invest Saver?

Firstly, you need to be at least 18 years of age when you sign-up for the POSB Invest Saver, and are not a US Person.

Beginner investors will likely benefit the most from RSS plans. This group of investors do not have a large capital outlay, the knowledge to invest on their own, or even the time or interest to invest on their own.

People who do not have the discipline to invest on their own can also treat this investment option as a “forced” savings and investment plan. Only, they still retain their flexibility to lower, stop and even sell their investments in negative scenarios.

Those who want to invest for a financial goal, such as our retirement or paying for our child’s university education, can also use the POSB Invest Saver to start building an investment portfolio, that earns market returns, for the long-term.

Read Also: Here’s A Stress-Free Way To Start Investing For Your Child’s Future Today

More experienced investors can also opt to diversify a part of their portfolio via the POSB Invest Saver. This means that while they make their own investment decisions on individual stocks, they can also build up a diversified portfolio earning market returns to complement their riskier investments.

How Do We Monitor/View Our Investments?

We will receive monthly statements from the bank to monitor the investments we have made. More conveniently, we can log-in to our iBanking account to monitor our latest holdings and market value of our holdings.

Here’s A Step-By-Step Guide To Investing In The POSB Invest Saver

We started investing $100 via the POSB Invest Saver. Here’s a step-by-step guide to setting up your account.

First, log-in to your DBS/POSB iBanking account. As depicted in the image below, click on the “More Investment Services” under the “Invest” tab.

You will then be brought to the page below. Here, click on the option to “Set Up Exchange Traded Fund Regular Savings Plan (RSP)”.

You will then be asked to search for the funds you want to invest in. As depicted below, choose to Invest Using Cash” and search for either Nikko AM Singapore STI ETF or ABF Singapore Bond Index Fund under the Fund Name. Then click on “Search”.

Read Also: Step-By-Step Guide To Bond Investing In Singapore

There are many funds we can invest in via DBS/POSB, and we need to search for one of the two ETF investments.

We chose to search for the Nikko AM Singapore STI ETF. In the next page, we will be given some details on the fund, such as the currency, asset class, indicative price and minimum investment amount.

Click the green icon on the right to “BUY”.

On the next page, we need to input details such as our debiting account and the monthly investment amount. Here, we also see that the amount will be debited on the 15th of every month.

We then verify the details and receive the confirmation page in the next two pages.

We also see the sales charge for our transaction here. In this case, it adds up to $0.82, which is below 1%. This is because we likely will not be investing the full $100, due to the amount of units we can buy with $100. We cannot purchase fractional units.

Once we click “Finish”, we are done with the application and we can look forward to our monthly investments.

That’s it! Now you know how to begin invest in the some of the biggest and strongest companies on SGX – from the comfort of your home and with as little as $100 a month!