Answering Singaporeans' Frequently Asked Questions On Regular Shares Savings (RSS) Plan
Regular Shares Saving plan allows investors to put in a low investment amount on a monthly basis.
This is why it is so popular among a few types of investors:
- Investors who are interested in investing using the dollar-cost averaging method at as low as $100 per month.
- First jobbers who are starting to their career and wish to allocate a small percentage of their salary to invest, while they accumulate their savings.
In this article, we look to address some of the Frequently Asked Questions (FAQ) with regards to Regular Shares Saving (RSS) Plan.
TL;DR – Answers to some of the Frequently Asked Questions on Regular Shares Savings (RSS) Plan
- What is the difference between Regular Shares Saving (RSS) plan and buying stock directly from your securities account monthly?
- What are the pros and cons of Regular Shares Savings (RSS) Plan?
- Can we put a pause on our RSS Plan if we are facing financial difficulty for a period of time?
- Can dollar-cost averaging with a RSS plan really make a profit?
- Which is the best Regular Shares Savings (RSS) plan Platform?
What is the difference between Regular Shares Saving (RSS) plan and buying stock directly from your securities account monthly?
Given that RSS plans allow investors to start investing in the Singapore Exchange (SGX) for as little as $100 per month, the fees and charges should be lower than investing such low amount directly.
To better illustrate the cost difference, here’s an example of the cost incurred when one invests $500 per month using the cheapest platform available:
- We are using $500 as an example since one needs to purchase at least 100 shares through a brokerage.
- Assuming the price of Nikko AM STI ETF is at $3.25 per share (as of 14 January 2019)
- Assuming investing into the Nikko AM STI ETF, the cost incurred when one invests $500 per month on the cheapest RSS plan is $5.
- This changes drastically should one decides to invest directly using his brokerage.
| Method of investing $100 | Fees and charges for the cheapest platform | Total Cost incurred for a $100 investment | Amount of shares received at $3.25 each |
|---|---|---|---|
| RSS Plan | 1% for Nikko AM STI ETF | $5 | 152 shares |
| Buying stocks using brokerage | Minimum Fees: $25 Additional fees: 0.275% of investment sum | $26.30 | 100 shares (since 1 lot is 100 shares) |
From here, we see a drastic difference in terms of cost at $21.30 per month. On top of that, investors can only purchase in lots of 100 shares through his brokerage.
Hence, buying stocks directly also results in the investor getting less lot of the shares since
With this, the RSS plan makes the most sense if one is looking to invest a fixed amount every month.
What are the pros and cons of Regular Shares Savings (RSS) Plan?
Like every other investment products and methods, there is an upside and downside to the RSS plan.
The pros and cons of investing using the RSS plan are that of a dollar cost averaging:
| Pros of Dollar-cost averaging (DCA) | Cons of Dollar-cost averaging (DCA) |
|---|---|
| Buys more shares when the share price is low, and lesser shares when the share price is high, with a fixed dollar amount. | Dollar cost averaging requires more transactions, resulting in more fees in the long-run |
| Requires less time monitoring since process is automated. | Lump sum investing has a chance of making higher returns. |
| Forces you to invest regularly (Lazy is not an excuse!) |
If one is taking a long term view on his investment, the pros of a RSS plan is that the dollar-cost averaging will automatically take care of downtrend or sideways market condition by buying more when the stock price is cheaper.
Can we put a pause on our RSS Plan if we are facing financial difficulty for a period of time?
One can actually terminate his RSS plan if he is facing any financial difficulty or simply wish to stop investing.
On top of that, terminating of a Regular Savings Plan is usually quite fast, with a lead time of only one working day required.
Can dollar-cost averaging with a RSS plan really make a profit?
Doubtful too, we actually did a calculation for investing into the Dollar-cost averaging method on the STI ETF over 8 years, from the year 2010 to 2017.
In fact, an investor on a $100 per month Regular Savings Plan into the STI ETF at $100 per month, he will receive a total dividend of $914.70 and a capital gain of $683.56 should he sell it in the year 2017.
Ultimately, the profitability of dollar-cost averaging with a RSS plan depends a lot on the shares that the investor chose to invest in.
Which is the best Regular Shares Savings (RSS) plan Platform?
Each RSS plan platform has their pros and cons, hence it depends a lot on what the investor is looking for.
If we are looking at the cheapest Regular Savings Plan platform, it depends a lot on the monthly amount the investor plans to invest.
| Bank/ Financial Institute | DBS Bank | FSMOne | OCBC Bank | PhillipCapital | ||||
|---|---|---|---|---|---|---|---|---|
| Regular Shares Saving Plan | Invest Saver | Regular Savings Plan | Blue Chip Investment Plan | Share Builders Plan | ||||
| How Much Does It Really Cost If You Invest In... | Nikko AM STI ETF | Nikko AM SGD Investment Grade Corporate Bond ETF | Nikko AM STI ETF | Nikko AM SGD Investment Grade Corporate Bond ETF | Nikko AM STI ETF | Nikko AM SGD Investment Grade Corporate Bond ETF | SPDR STI ETF (no Nikko AM STI ETF) | Nikko AM SGD Investment Grade Corporate Bond ETF |
| With $100 a Month in each ETF | $0.82 | $0.50 | $1 | $5 | $6 (≤2 counters) $10 (≥3 counters) |
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| With $500 a Month in each ETF | $4.10 | $2.50 | $1 | $5 | $6 (≤2 counters) $10 (≥3 counters) |
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| With $1,000 a Month in each ETF | $8.20 | $5 | $1 | $5 | $6 (≤2 counters) $10 (≥3 counters) |
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Read more: Which Regular Savings Plan Is The Cheapest? POSB vs OCBC vs POEMS vs Maybank Kim Eng
Should one be looking to invest across overseas shares, Maybank Kim Eng’s Monthly Investment Plan is the only one that offers overseas counters.
Interesting content on Regular Shares Savings (RSS) Plan
- Should I invest all via Lump-Sum or Regular Savings Plan (RSP)? What is the best method to rebalance and how?
- How do I calculate my returns for STI ETF if I’m investing into it each month via a Regular Savings Plan (RSP) & DCA?
- Is it possible to cancel my POSB regular savings plan and re-sign up to qualify for extra interest under the ‘Investments with DBS/POSB’ category for the Multiplier account?
