Thinking about growing your wealth through regular contributions, but worried you’ll get it wrong?
You’re not alone. I know how confusing investment products in Singapore can get.
Here’s what you’ll learn from this post:
- What a Regular Savings Plan (RSP) is
- How it works (and why even busy professionals can use it)
- The pros and cons
- Where to start your own RSP in Singapore
- How to pick a plan that suits you
Did you know that not all “savings plans” actually help you save?
Stick around, because I’ll break down the truth behind regular savings plans, and what you need to watch out for.
What is a Regular Savings Plan (RSP)?
In simple terms, it’s an investment tool that lets you put a fixed amount of money, say $50, $100, or any amount you’re comfortable with, into selected investment products every month.
Think of it as setting your money on “autopilot”.
Each month, your chosen sum is automatically invested, whether the markets are up, down, or somewhere in between.
You don’t need to worry about market timing, tracking trends, or making grand decisions.
The plan does the heavy lifting for you.
Most RSPs in Singapore let you invest in things like exchange-traded funds (ETFs), unit trusts, blue-chip stocks, and even Real Estate Investment Trusts (REITs).
How does a regular savings plan work?
First, you decide where your money will go.
In Singapore, the options are pretty solid.
For instance, you could put your money into the Nikko AM Singapore STI ETF (tracks the Straits Times Index), the Singapore Bond Index Fund, or even a basket of local blue-chip shares through the OCBC Blue Chip Investment Plan.
There are even regular savings plans (like those from FSMOne or POEMS) that let you dabble in overseas markets, think US stocks or global ETFs, if you’re feeling adventurous.
Once you’ve decided where to park your money, you pick a fixed amount you’re comfortable setting aside each month.
This could be as little as $50 or $100, depending on the platform you choose.
And no, you don’t need to remember to do it every month, this is the best bit.
The RSP will automatically deduct the set amount from your bank account.
Every month, that contribution is used to buy units of your chosen investment.
And it’s not just about smoothing out prices.
Regular contributions mean your investments also get a chance to benefit from compounding.
That’s when your returns, dividends, interest, or capital gains, get reinvested, so you start earning returns on your returns.
It doesn’t look exciting at first, but give it a few years and you’ll see the snowball effect.
That’s really all there is to it.
Who are regular savings plans suitable for?
Regular savings plans aren’t for everyone, but they’re spot-on if you fit any of these profiles:
- Beginners to investing: If you’re just starting out and feeling a bit lost, RSPs are one of the most straightforward ways to get your feet wet, no need to know all the jargon or track market trends daily.
- Busy folks: Maybe you don’t have the time (or let’s be honest, the patience) to constantly monitor the stock market. RSPs are largely “set and forget”, making them ideal if you’d rather spend your evenings anywhere but glued to market charts.
- Long-term planners: If you’re in it for the long haul, think retirement, children’s education, or simply building wealth over time, an RSP fits nicely. It’s not about quick wins, but about growing your money slowly and steadily.
- Those on a budget: Not everyone has thousands to spare. The beauty of RSPs is that you can start with small sums. Whether it’s $50 or $100 a month, you can begin building your investment portfolio without breaking the bank.
If any of these sound like you, an RSP might just be the easiest way to kickstart your investing journey.
Why invest with regular savings plans (RSPs)?
Let’s face it, saving and investing can feel intimidating, especially if you think you need to fork out a huge lump sum just to get started.
Here’s why more Singaporeans are jumping on the RSP bandwagon, and why you might want to consider it too.
1. Start small, build big
Most RSPs have low minimums.
With platforms like FSMOne, you can start with just $50 a month, and most bank plans only ask for $100.
That low barrier means you can dip your toes in, get the hang of investing, and increase your contributions later if you want.
2. Take advantage of compounding
One of the biggest secrets to building wealth isn’t timing the market, it’s time in the market.
RSPs let you steadily put money aside every month, so your investments have time to grow and compound.
Imagine earning a bit of interest or dividends each year, then earning interest on those gains too.
Over the years, even small amounts can snowball into something much more substantial, thanks to the power of compounding.
3. Dollar-cost averaging
Trying to “buy low, sell high” sounds great in theory, but in real life, it’s just stressful.
Most people can’t predict when the market will hit rock bottom or soar to new heights.
With Dollar-Cost Averaging (DCA), you invest a fixed sum every month, no matter what the market’s doing.
That means you’ll buy more units when prices are low and fewer when prices are high, helping to even out your average cost over time.
If you’ve ever worried about buying at the “wrong” time, DCA takes that headache away.
4. Automated, consistent investing
Life gets busy.
Most RSPs run on autopilot. Once you set it up, the money comes out of your account and goes straight into your investment every month.
This “set and forget” approach helps you build good investing habits, even if you’re naturally forgetful or easily distracted.
5. Keep your emotions in check
It’s all too easy to panic-sell when markets drop or get greedy when things are going well.
RSPs take emotion out of the equation.
By sticking to your monthly plan, you avoid rash decisions and let your investment strategy do the work, rain or shine.
If you’ve ever found yourself hesitating to invest because it seems too complicated, or you worry about picking the “wrong” time, a regular savings plan is about as simple, and as stress-free, as it gets.
What are the downsides to regular savings plans?
Now, while regular savings plans (RSPs) come with plenty of perks, it’s only fair to talk about the less glamorous side too.
Like all investments, RSPs aren’t perfect.
1. They’re really built for the long term
RSPs work best when you stick with them through the ups and downs.
If you suddenly need to withdraw your money because of an emergency, say, job loss or a big hospital bill, you might find yourself selling when the market’s taken a hit.
That’s when you could face a loss.
RSPs don’t offer guaranteed returns.
If you exit during a downturn, there’s a chance you’ll get back less than you put in.
So, it’s wise to only invest money you won’t need in the short term.
2. Limited investment choices
Depending on where you open your RSP, you might find that your choices are a bit narrow.
For example, some plans only let you invest in a handful of ETFs, a short list of blue-chip stocks, or just a few unit trusts.
If those particular assets have a rough run, your investments might take a hit too.
You could miss out on potential gains elsewhere just because your options are limited.
And let’s not forget, some platforms charge higher fees for certain products, which can quietly eat into your returns over the years.
Pro-tip: Always check the fine print before jumping in!
3. Minimum fees & investments
You’ll also want to keep in mind things like platform fees, minimum investment amounts, and how easy (or difficult) it is to make changes to your plan.
Some platforms make it simple to switch funds or pause your RSP, but others may tie you in for a while, or make it a bit of a hassle.
In short, regular savings plans are a great way to invest for the future, but they aren’t magic.
If you need flexibility, or you’re after a huge range of choices, you might want to look at other options.
Consider a robo advisor or talking to a financial advisor who would be able to provide you with a wider range of investment options.
Alternatively, use RSPs as just one part of your overall investment strategy.
Where to start regular savings plans in Singapore?
If you’re thinking of getting started with a regular savings plan, you’re actually spoilt for choice in Singapore.
You’ll find options across banks, brokerages, and digital platforms.
Here’s a quick list of where you can set up an RSP:
- DBS Invest-Saver
- OCBC Blue Chip Investment Plan (BCIP)
- POEMS Share Builders Plan
- FSMOne Regular Savings Plan
- Saxo Regular Savings Plan
- dollarDEX
- Robo advisors
- Through licensed financial advisors (like ours)
You’ll just need to pick the one that suits your style, investment goals, and comfort level.
Each comes with its own platform features and selection of products.
How to select the right regular savings plan for your investment?
Choosing the right regular savings plan (RSP) isn’t as complicated as it sounds, but it does help to be systematic about it:
- Define your investment goals: Are you saving for retirement, your child’s education, or just hoping to grow your wealth? The clearer your goals, the easier it is to pick the right plan.
- Assess your risk tolerance: Not everyone can handle the same level of market ups and downs. Think honestly about how much risk you’re willing to take on.
- Compare fees and charges: Some platforms sneak in hidden fees, platform charges, sales charges, management fees, you name it. Even small fees can eat into your returns over the years, so always read the fine print.
- Evaluate the investment options: Look at what you can invest in, ETFs, unit trusts, blue-chip stocks, or a mix. Make sure the plan offers assets you’re comfortable with (and actually interested in).
- Start small: There’s no shame in starting with a low monthly sum. It’s a great way to get a feel for the process without overstretching your budget.
- Check for convenience: Does the provider make it easy to set up, track your investments, and make changes if needed? Some have handy mobile apps; others are a bit old-school.
- Research provider reputation: Stick with platforms or banks that have a solid track record and good reviews. You want your money in safe hands.
If you get these basics right, you’ll be well on your way to picking an RSP that fits your style and helps you stick to your investment journey for the long haul.
I covered more on basic investment fundamentals in my beginner investment course – Investing Starter Kit.
Frequently Asked Questions
How much to invest each month?
How much to invest each month really depends on your own financial situation and goals.
Some people start with as little as $50 or $100 a month, especially with regular savings plans in Singapore, since the entry barriers are low.
The key is to invest an amount you’re comfortable with and can stick to consistently, without stretching your budget.
Many use the 50/30/20 rule as a guide: 20% of your income goes to savings and investments, but you can always adjust based on your needs and what feels manageable for you.
What is the minimum amount required to start an RSP in Singapore?
The minimum amount required to start an RSP in Singapore usually ranges from $50 to $100 a month, depending on the provider.
For example, FSMOne lets you begin with just $50 monthly, while plans like DBS Invest-Saver and OCBC Blue Chip Investment Plan typically require $100.
Each platform sets its own minimum, so it’s worth checking before you commit.
The beauty is, you don’t need a large lump sum to get started, just a small, regular contribution is enough to kick off your investment journey.
Can I switch funds or ETFs within my RSP?
Yes, you can switch funds or ETFs within your RSP, but the process and flexibility depend on the provider.
Some providers may have restrictions, require advance notice, or limit how often you can make changes.
It’s always a good idea to check the specific rules before choosing an RSP platform, as switching might come with fees or minimum holding periods.
What are the risks of investing in an RSP?
The risks of investing in an RSP are similar to any investment. You could lose money if the market drops, especially if you need to withdraw during a downturn.
There’s also the risk of limited investment choices, depending on the provider, which can affect how well your portfolio performs.
Some RSPs may charge higher fees, which can eat into your returns over time.
And while regular investing can smooth out market ups and downs, returns are never guaranteed.
What happens if I miss a monthly contribution?
If you miss a monthly contribution to your RSP, most providers won’t immediately penalise you, but your investment for that month simply won’t go through.
Some banks or platforms may send you a reminder or try to deduct the amount again the next month.
However, if you repeatedly miss payments, your RSP could be suspended or even cancelled, depending on the provider’s policy.
Missing contributions also means you might miss out on buying units at lower prices during market dips, which can affect your long-term returns.
Always check your provider’s rules to know exactly what happens.
Conclusion
So there you have it! A regular savings plan (RSP) is really one of the simplest, most accessible ways to start investing in Singapore.
We’ve covered what an RSP is, how it works, the pros and cons, and who it’s best suited for.
You’ve also got a handy list of where to get started and some tips on how to pick the right plan for your own goals.
If you’re someone who wants to grow your money steadily, without having to constantly watch the stock market or risk a big lump sum, an RSP can be a solid place to begin.
Of course, everyone’s situation is different, and it’s normal to feel unsure when there are so many choices.
Still feeling lost or want a bit of help making sense of it all?
No worries, just reach out and we can connect you with one of our trusted financial advisor partners!
It’s completely free, and there’s no pressure to commit to anything.
Sometimes a quick chat is all it takes to put your mind at ease and point you in the right direction.
