What is POSB Invest-Saver?
It is an investment product from POSB also known as a Regular Savings Plan (“RSP”) that allows you to invest via a GIRO arrangement on a monthly basis. An RSP allows you to buy units of an ETF through a disciplined approach by investing an agreed upon amount regularly each month. By allowing you to accumulate a portfolio for yourself at a potentially reduced cost, you would not need to start with a huge initial capital.
Who is it for?
This plan is basically designed for consumers who:
- may not be able to fork out a huge capital
- want to be able to grow their long-term savings
- are looking at diversifying their portfolio of investment products
- may want a really simple way to invest their monies
How much do you need to invest?
There is no minimum initial investment amount required for an Exchange Traded Fund (ETF) Regular Savings plan. However, there is a minimum monthly investment amount of $100. As unreal as it may seem, all you need to start investing is just S$100 a month which is relatively a small amount.
What are the counters?
With this plan. you can now invest in either Singapore Bonds or Blue Chip Stocks, via two Exchange Traded Funds; Nikko AM Singapore STI ETF and ABF Singapore Bond Index Fund which are listed in the Singapore Exchange.
According to POSB, when you invest in the Nikko AM Singapore STI ETF, you are investing in Singapore’s top 30 companies including Singapore Exchange Ltd, Singapore Airlines Ltd and Singapore Press Holdings Ltd. As a collective, they are known as Singapore’s blue chip companies and their performance is represented by the Straits Times Index (“STI”). The constituents of the STI are reviewed every half-yearly. Additionally, when you invest in the ABF Singapore Bond Index Fund, you are investing in a basket of high-quality bonds mostly issued by the Singapore government or government-linked bodies such as the Land Transport Authority and Housing & Development Board.
How do you pay for an ETF RSP?
Payment for your Exchange Traded Fund Regular Savings Plan purchase can be made by debiting the funds from your existing Personal or Joint-alternate Savings, Savings Plus, Current or Autosave accounts.
Following which, click on the account that you wish to use as the debiting account. Once that is done, a GIRO arrangement will be created for the monthly debiting of the specified amount from your account. This usually happens on the 15th of every month. Do ensure that you have the necessary amount required for them to proceed with the transaction.
If you are doing this for the first time, you will start to see the amount credited to the investment account after the 18th of the month.
What are the charges/fees?
As we all know, 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. Unlike them, you only need to pay a sales charge of 1.0% when you invest in the Nikko AM STI ETF and 0.5% when you invest in the ABF Singapore Bond Index Fund.
Do note that there are no other charges, including redemption charge when you sell the investments, adjusting the investment amount or pausing your investments.
This means that if you invest $100 on Nikko AM STI ETF, you only need to pay $1 sales charge and $0.50 sales charge if you invest $100 in the ABF Singapore Bond Index Fund. However, if you invest $100 in any typical brokerage account, you’ll have to pay trading fees of $25 exclusive of additional clearing and trading fees. Also, do note that you will also incur a similar cost when you sell that investment.
How to monitor/view your investments?
The bank send monthly statements for you to monitor the investments that you have made. Alternatively, you can log-in to your iBanking account to monitor the latest holdings and their market value.
We have created a step by step guide on applying for the Nikko AM Singapore STI ETF in the video below. Do note that this process is the same when you are applying for the ABF SG Bond fund.
- Log-in to your DBS/POSB iBanking account and click on the “More Investment Services” under the “Invest” tab.
- Select “Set Up Exchange Traded Fund Regular Savings Plan (RSP)”.
- You will then be asked to search for the funds you want to invest in. Select “Cash” as the preferred option.
- There are many funds that you can invest in via DBS/POSB, therefore you need to search for one of the two ETFs.
- Search for Nikko AM Singapore STI ETF under the Fund Name. Then click on “Search”.
- You will be given some details on the fund, such as the indicative price and minimum investment amount.
- Select the “Buy” icon to proceed. You will then be shown a disclaimer and hit “OK” to continue
- You are then required to input details such as the debiting account and the monthly investment amount.
- You are required to verify the details and receive the confirmation page in the next two pages.
You will also see the sales charge for the transaction. As you are unlikely able to invest the full $100, due to the amount of units you can buy the sale charge would amounts to $0.82, which is below 1%. Do note that you are not able to purchase fractional units. Once you are done with the application, click “Finish” and you can look forward to your monthly investments.
I have documented my journey using this product and three months in, I would say that this product is for beginners who do not have the financial muscle of seasoned investors. With low fees and low cost of entry, it’s perfect for students, new to the employment market as well as those who have spare change.