Dollar Cost Avg with Lowest Fee

[arcaninx]

Hi everyone

I am thinking to invest every month using SRS.

Option 1 is ETF on STI index
OPTION 2 is ETF on S&P 500

Do anyone know the cheapest way to invest as above?

Thanks

 

[tangent314]

I am thinking to invest every month using SRS.

Option 1 is ETF on STI index
OPTION 2 is ETF on S&P 500

Do anyone know the cheapest way to invest as above?

I've looked into this before and from my limited research, I've concluded that DCA likely won't work for SRS, the minimum commission will just kill you. Most of the brokerages have minimum commission of $25, and the ones that are lower either don't support SRS or the lower min commission doesn't apply to SRS.


There are only 4 ETFs approved for SRS:
SPDR Gold Shares
SPDR Straits Times Index ETF
Nikko AM Singapore STI ETF
ABF Singapore Bond Index Fund


If you want to invest in S&P 500 with SRS you will have to find an equivalent UT and pay additional fees.


IMO the best way to go would be to invest lump sums into SRS to buy STI ETF, and buy IWDA or other foreign ETFs using cash. And don't forget you can also get tax reliefs up to $7k/year by transfering into your CPF SA for fuss-free 4% interest.

 

[Mecisteus]

Option 2: Your best option is through

https://unittrust.poems.com.sg/all-about-funds/fund-finder/?fc=526701

 

[BBCWatcher]

That unit trust is still pretty expensive, though, at up to 0.725%/year. Ouch. At least it's one of the better unit trusts in terms of expenses, but that's not saying much.

Another big problem with that U.S. S&P 500 unit trust is that the fund managers have to pay the 30% U.S. dividend withholding tax if I'm not mistaken, not the preferential 15% treaty rate available with Irish domiciled funds. So your total returns are going to suffer if I'm right.

I agree with Tangent314. In addition, I recommend SRS only after you've fully exploited more attractive tax reliefs and government grants, such as the Child Development Account, CPF Medisave top-ups, and CPF Special Account top-ups (in that order, I'd say).

Also, not that I believe much in market timing, but by traditional measures of valuation (the Shiller PE ratio, as a notable example) the S&P 500 is pretty richly valued right now. If you believe those traditional measures then the STI is pretty reasonable right now. Maybe the best you can do with SRS funds is a lower cost STI fund, then deploy your external monies more globally and also at lower cost.

 

[Time-to-retire]

I think if your SRS account is with OCBC, you might be able to DCA with ETF for Nikko AM Singapore STI ETF. Cheers

 

[Time-to-retire]

Please see this post if helpful: https://heartlandboy.com/invest-srs-in-etf/

Sorry, just trying to help. TY

 

[BBCWatcher]

I think if your SRS account is with OCBC, you might be able to DCA with ETF for Nikko AM Singapore STI ETF.

Yes, OCBC calls it (misleadingly, in my view) their "Blue Chip Investment Plan" (BCIP), and they offer the Nikko STI ETF (symbol G3B). They don't offer the SPDR Straits Times Index ETF which has a slightly lower management fee. Also, they charge a commission of 0.30% plus $0.37, subject to a minimum of $5.37. (Those figures include GST, and that's the commission for either buying or selling.) The minimum purchase increment is $100/month, but of course at that level you'd be paying a whopping 5.37% commission. Ouch.

 

[tangent314]

Probably not too bad if you DCA $15300/12 = $1275 a month. That's ~0.42% commission

 

[BBCWatcher]

Probably not too bad if you DCA $15300/12 = $1275 a month. That's ~0.42% commission

It is, but how about $2,550 every two months? That'd be ~0.31% commission.

 

[alexchia01]

Hi everyone

I am thinking to invest every month using SRS.

Option 1 is ETF on STI index
OPTION 2 is ETF on S&P 500

Do anyone know the cheapest way to invest as above?

Thanks

DCA is good when you start where price is low. DCA is lousy when you buy at the high. Currently market is too high for DCA. Don't do it.

 

[BBCWatcher]

Currently market is too high for DCA. Don't do it.

How do you know the market is "too high," for DCA or for anything else? You have a crystal ball?

By traditional measures, such as Shiller PE ratios, Singapore's stock market (what we're talking about here) might be the most attractive developed country stock market. See here for one such analysis. Nobody can really predict the future, which is rather the point of DCA'ing, but I don't think we have any real evidence that the STI is overheated right now.

 

[tangent314]

DCA is good when you start where price is low. DCA is lousy when you buy at the high. Currently market is too high for DCA. Don't do it.

Please ignore this guy ^, obviously doesn't know what he's talking about.

 

[swordsly]

How do you know the market is "too high," for DCA or for anything else? You have a crystal ball?

By traditional measures, such as Shiller PE ratios, Singapore's stock market (what we're talking about here) might be the most attractive developed country stock market. See here for one such analysis. Nobody can really predict the future, which is rather the point of DCA'ing, but I don't think we have any real evidence that the STI is overheated right now.

Please ignore this guy ^, obviously doesn't know what he's talking about.

Since we are on this topic, can I just seek both your opinions on the content of this video?

I dont know if BBCW can understand.
Basically it's saying what Alex mentioned about + how the averaging effect will start becoming less significant over time.

 

[Trazora]

Sales charge for DBS RSP fully refunded.

https://www.dbs.com.sg/personal/promotion/investing-in-unit-trust

 

[Mecisteus]

I read POEMS also has 0 sales charge now.