(This article was first published on 21 January 2018 and updated with the latest information)
This article was written in collaboration with SGX. All views are the independent opinion of DollarsAndSense.sg
If learning how to invest is on your agenda this year, then understanding how Regular Shares Savings (RSS) plans can help you kickstart your investing journey.
What Are Regular Shares Savings (RSS) Plans?
Offered by four brokerage firms in Singapore, RSS plans allow investors to start investing in the Singapore Exchange (SGX) and beyond from as little as $100 a month. For more information, you can check out the RSS Plans landing page on the SGX website.
RSS plans are an ideal way to start for new investors with limited knowledge, savings and confidence. It offers an attractive alternative to investment-linked insurance policies (ILPs), as there is no minimum time commitment required, or penalties for changing your mind, as you may not be that knowledge or confident in investing to start off with. However, for the strategy to pay off, you also need to stay vested over a long-time period.
In this article, we provide a walkthrough on how you can start investing via an RSS plan.
Step 1: Decide Which Brokerage Firm You Want To Use
In Singapore, four brokerage firms currently offer RSS plans. Here are some key features of each plan that you should know.
Number of counters available: 20 counters in Singapore market to choose from.
They include ETFs such as the Nikko AM STI ETF, Nikko AM SGD Investment Grade Corporate Bond ETF and Lion-Phillip S-REIT ETF, as well as individual stocks including SingTel, DBS, CapitaLand Mall Trust and more.
- 0.88% (for new BCIP customers below 30 years old, with an initial investment up to $500).
- 0.30%, or $5 per counter, whichever is higher (for all other customers).
* Supplementary Retirement Scheme (SRS) eligible.
Number of counters available: 4 counters in the Singapore market to choose from.
- Nikko AM STI ETF
- ABF Singapore Bond Index Fund
- Nikko AM-StraitsTrading Asia ex Japan REIT ETF
- Nikko AM SGD Investment Grade Corporate Bond ETF
- 0.82% for Nikko AM STI ETF and Nikko AM-StraitsTrading Asia ex Japan REIT ETF
- 0.50% for ABF Singapore Bond Index Fund and Nikko AM SGD Investment Grade Corporate Bond ETF
Number of Stocks: 39 counters in Singapore.
They include ETFs such as the SPDR STI ETF, ABF Singapore Bond Index Fund, Lion-Phillip S-REIT and Phillip SING Income ETF, as well as individual stocks such as Keppel Corp, Ascendas REIT, Ascott Residence Trust, UOL and more.
- For investments of $1,000 or less: $6 if two counters or less. $10 if three counters or more
- For investments of more than $1,000: 0.20% or $10, whichever is higher
* Phillip Share Builders plan automatically reinvests your dividends back into the investment plan.
Number of counters available: 8 ETFs in the Singapore market to choose from and 30 other ETFs listed in Hong Kong and the US.
The 8 ETFs in Singapore include the SPDR STI ETF, ABF Singapore Bond Index Fund, Nikko AM-StraitsTrading Asia ex Japan REIT ETF, Nikko AM SGD Investment Grade Corporate Bond ETF, SPDR Gold Shares and more.
- 0.08% or $1, whichever is higher (for counters listed in Hong Kong and the US, the minimum charge will be HK$5 and US$1)
Which Should You Use?
A common question that many new investors frequently ask is which of the four firms should they use. The answer is that it largely depends on a few key factors.
Stocks you intend to buy: Phillip Share Builders Plan offers the widest range of counters that you can invest in followed by FSMOne ETF Regular Savings Plan, OCBC Blue Chip Investment Plan and DBS/POSB Invest-Saver, which offers just four ETFs. If your intention is to just invest in ETFs, you can choose either DBS/POSB Invest-Saver or FSMOne ETF Regular Savings Plan. If you want to invest in stocks as well, you have to go with OCBC Blue Chip Investment Plan and Phillip Share Builders Plan.
If you want to invest in overseas counters, you can only do so via the FSMOne ETF Regular Savings Plan, which offers 30 ETFs listed in Hong Kong and the US, in addition to the 8 ETFs in Singapore.
Your intended monthly investment: As the fees charged by each of these brokers vary slightly, your intended investment amount each month can play a part in determining which of the four firms offers you the best rate.
The table below shows the most suitable investment amount for each firm.
|Investment Plans||Suitable Investment Amounts||Share Counters||Sales Charge / Transaction Fee|
|DBS/POSB Invest-Saver||$100 – $500||4 ETFS, including Nikko AM STI ETF & ABF Singapore Bond Index Fund||0.50% – 0.82%|
|OCBC Blue Chip Investment Plan||Above $500||20 counters, including, Nikko AM SGD Investment Grade Corporate Bond ETF and Lion-Phillip S-REIT ETF, CapitaLand Mall Trust, DBS & more||0.30%, or $5 per counter, whichever is higher|
|Phillip Share Builders Plan||Above $500 (better choice for higher no. of individual stock counters)||39 counters, including Lion-Phillip S-REIT and Phillip SING Income ETF, Keppel Corp, Ascendas REIT, Ascott Residence Trust, UOL & more||Investments of $1,000 or less: $6 if 2 counters or less. $10 if 3 counters or more|
|Investments of more than $1,000: 0.20%, or $10, whichever is higher|
|FSMOne ETF Regular Savings Plan||All amounts (better for those who prefer to include overseas investments)||8 ETFs in Singapore, and 30 ETFs in Hong Kong and the US||0.08%, or $1, HK$5 or US$1 respectively, whichever is higher|
* Note that the number of counters you are investing in will also make a difference.
Step 2: Open An Account With The Brokerage Firm
Once you have decided which firm you wish to use, you can open an investment account with the firm.
For OCBC and POSB, you can start investing in their RSS plans as long as you have an existing savings account with the bank. Simply login through your internet banking account, and click on their respective investment tabs. We managed to set up our RSS plans online with both these firms in less than five minutes.
Phillip Share Builders Plan
If you have an existing Phillip securities trading account, you can apply for this account online. Alternatively, you may complete an SBP Application Form, an Inter-bank GIRO form and apply for a POEMS trading account (if you do not have any).
FSMOne ETF Regular Savings Plan
If you have an existing FSMOne account, you can start investing in the ETFs on the FSMOne platform online.
Step 3: Ensure Sufficient Funds In Your Designated Account
The money that is used for your monthly investments will need to be withdrawn from an account.
For POSB and OCBC, this would be your savings account. If you have more than one savings account with the bank, you will be asked to designate which savings account to withdraw the funds from each month.
For FSMOne ETF Regular Savings Plan and Phillip Share Builders Plan, you will need to authorise a GIRO deduction.
Regardless of which firm you use, you need to ensure that there are sufficient funds in the account where money will be withdrawn. Otherwise, the transaction will not take place or be halted after a few months.
Step 4: Set Up Your Standing Instruction/Order
The final step is to set up your standing instruction. These would include the stock(s) that you wish to invest in each month and how much you intend to invest each time.
Your instruction/order will be carried out every month until you 1) change your instructions or 2) have insufficient funds in your savings/prefunded account to complete the order.
There is no lock-in period for your standing instructions. You may cancel or change your instruction any time you like and as often as you wish.
Step 5: Monitor Your Investments Regularly
It’s important that you do not forget to monitor your investments. An invest-and-forget attitude isn’t recommended for RSS plans, as the firm will continue making monthly investments on your behalf based on your standing instructions.
As you build up your investment knowledge and confidence, you may decide to invest in different stocks and may also increase your monthly investments. After a while, you may even decide to start picking stocks or trading on your own. Even if you do so, you may still see value in retaining a dollar cost averaging strategy via your RSS plans.
Remember, with RSS plans, you will continue to retain full flexibility and control over your investment decisions even after committing to embark on it.
If you have a question about RSS plans, feel free to ask us your question on our Facebook page and we will do our best to answer it.