In the past, they only used to offer RSP for Unit Trusts (UT) – which are actively managed funds by asset management companies. UTs tend to have front-end sales charges, high annual expense ratios and various other fees (e.g. switching fees, platform fees, exit fees etc).
This means that investors can now gain passive exposure to low-cost and diversified securities of their choice through a regular savings plan!
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- Minimum investment amount from S$50
- Commission per RSP purchase is S$1, HK$5 or US$1
- Up to 1 share of SGX-listed ETFs and fractional shares for HK and US-listed ETFs
- Exposure to ETF from various themes including regional equity (AxJ, Greater China, BRIC, Frontier Markets), commodities (gold, crude oil), single country equity, fixed income (US high yield, US aggregate, SG government, SG corporate, Global EM, Asia HY) and tactical plays (REIT, US tech, China tech)
Dollar cost averaging
Many investors like the idea of dollar cost averaging into their portfolios – either because of the psychological benefits of doing so or because they do not have a lump sum to invest immediately (e.g. salary contributions). Regular Savings Plans (RSP) are a great way to invest a fixed amount of money each month into a portfolio of stocks, ETFs or mutual funds; buying more when prices are low and less when prices are high.
Until last month, our options for RSP were either limited to the local banks –
- DBS Invest Saver
- OCBC Blue Chip Investment Plan (BCIP)
- UOB Regular Investment Savings Plan (UT only)
or brokerages like POEMS Share Builders Plan
The options are quite varied and each of them come with different selection of stocks, ETFs, UTs and charge differently for their services.
Low commissions on FSM One – but how low?
I was previously using DBS for their RSP – as part of the Multiplier package to lock in a higher interest rate for the Multiplier account. However, after 12 months of contributions, RSP investments no longer contribute to the investment category of the Multiplier account; and I had to use an SSB bond ladder instead.
With the recent announcement of DBS Multiplier changes which exclude SSB bond interests as a criteria, DBS is funnelling more people into using their Invest Saver – which might not be the best option.
Thankfully, FSM One launched their ETF RSP which came with lower commission rates compared to DBS Invest Saver. But how much lower?
- BUY Order: 0.08% minimum S$1, HK$5, US$1
- SELL Order: 0.08%, minimum S$10, HK$50, US$8.80
On the flip side, DBS Invest Saver charges between 0.5%-1% (0.87% during promotions for equity-based ETFs) for each buy order.
If we take a simplified assumption, with only one SGX-listed ETF purchased on both platform, and exclude the clearing/trading fees (0.0325% and 0.0075% respectively) for FSM One, then you can see FSM One is definitely more worth it for any monthly RSP amounts larger than $100.
|FSM One||DBS IS|
|Buy charges (var)||0.08%||0.87%|
|Buy charges (fixed)||1||0|
The moral of the story is that FSM One is cheap when it charges a fraction of the cost compared to what the other platforms charge for the same service.
Beware of the fee traps though
While purchasing ETFs from FSM One can be much cheaper than competitors, do note that for US-listed ETFs, there is a dividend handling fee for US-listed ETFs of 1% of gross dividend (minimum US$2.50, maximum US$25). For US-based ETFs listed in SGX, a fee of US$3 will be charged for dividend handling.
For me, I only invest in Singapore-listed ETFs on their platform so I can avoid those dividend handling fees.
The full fee schedule can be found here.
Buying and setting up a ETF RSP
Setting up a regular savings plan is very easy and you can do it with a few clicks. FSM purchases the ETF on the 8th of every month, which is a week earlier compared to DBS.
If you head over to My Account > Regular Savings Plans, you can apply for a Unit Trust RSP or ETF RSP, which is what we want to do.
You can browse the list of ETFs available for RSP across multiple categories, from regional equity ETFs to fixed income ETFs, and across exchanges like SGX, NYSE and HKEX.
You’ll find the minimum amount required for RSP on the same page as well, which starts from as low as S$50 for ETFs like STI ETF.
Clicking add RSP will add it to your purchase basket, and you can select multiple ETFs at once to purchase.
You can then enter your monthly RSP amount per ETF before checking out, which you can add or edit before the 8th of every month.
For ETFs denominated in non-SGD currencies, your foreign cash account must be separately funded in that corresponding currency before the 8th for a successful deduction.
If the 8th of the month is a business day, then the transaction date for the ETF RSP deduction is the next trading day (weekday, non-public holiday).
Otherwise, if the 8th is a non-business day, then the transaction date is the second trading day after the 8th.
My personal RSP experience on FSM One
When I want to subscribe to a RSP, I tend to look out for several factors in this order of priority:
- Low cost to accumulate
- Ease of execution
- Availability of ETFs
- Tracking and investment reporting
Cost of accumulation on FSM One’s platform is superb, as you can already tell from their low fees illustrated above. At most monthly averaging amounts, FSM One comes ahead of the competition. At roughly $1 to $2 per monthly trade, it’s definitely more affordable compared to DIY solutions.
I also like how you can subscribe to single units of ETFs, which helps you maximise your monthly investment amount.
The availability of ETFs on their platform is also much better than what the competition has to offer, which I truly appreciate. For example, people who want to invest into China and track the China A shares index passively, FSM One also offers the iShares FTSE A50 China Index ETF listed in HKEX which you can buy into every month.
Tracking and investment reporting is also slightly better compared to what DBS had to offer with their Invest Saver. FSM One’s reporting interface shows more granularity in performance reporting, and you can track metrics such as weighted average cost, P&L, portfolio asset allocation and geographical allocation.
Of course, it doesn’t offer as much as what sophisticated portfolio management and reporting solutions like Sharesight or StocksCafe where you can track metrics like dividend income and benchmark your portfolio performance against others’ or the market.
For investors looking to maximise their idle cash returns while waiting for an investment opportunity, FSM One also has a cash management solution where you can invest in sweep your excess cash into an Auto Sweep account for a higher interest earning potential and reduce the lag time when purchasing other investment products.
However, while I mostly had a great experience using their platform, I had some hiccups setting up the automatic GIRO deduction with them. They call it the Cash Top-up Plan (CAT) which should pull funds from your linked account 3 days before the RSP deduction date.
On my second month of RSP when I decided to use the CAT method of funding instead of manually transferring the funds over, the funds took 4 days to credit into my account, and my RSP failed to deduct the funds and I missed the RSP for the month of January.
I emailed and called customer support, and she explained that because it was the first deduction via GIRO, they are taking longer to map the funds to my account. Of course, that’s quite a ridiculous reason, as they could’ve batch- processed earlier or conduct some form of exception handling for such cases earlier instead of waiting.
Unfortunately, there will not be another deduction for my RSP this month.
While I use FSM One purely for dollar cost averaging into Singapore-listed ETFs because they are the lowest cost broker to offer this at the moment, FSM One – as a broker – also has a range of very interesting investment (e.g. over 1300+ funds, 700+ bonds, managed portfolios), insurance and cash management solutions. They also offer one of the lowest fees for traditional brokerage – 0.08% or minimum S$10 – similar to what Stanchart charges for each trade.
If you’re keen to open an account with them, you can sign up quickly using MyInfo via the account opening page here and use the referral code P0376099 (I get reward points if you do so!)