How does everyone think about the ETF STI these days? Every month, i throw in $100 through DBS to buy it. However i heard the price is very high nowadays? Is it still worth it to buy into the STI? ? - Seedly
 

Investments

Asked by Anonymous

Asked on 22 Jun 2019

How does everyone think about the ETF STI these days? Every month, i throw in $100 through DBS to buy it. However i heard the price is very high nowadays? Is it still worth it to buy into the STI? ?

If yes, is there actually an optimal amount? I feel that $100 per month might be quite worthless. How about $1000?

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Tay WenHao
Tay WenHao
Level 6. Master
Updated on 22 Jun 2019

Hi how long have you been investing? Because the average for the past 6 months isnt as high as it is now. So if you actually go to the DBS website and view your ETF, you should see an 'Unrealised profit' which means that you are actually making money.

As for the amount per month, i would say maybe around $200 to $300? I know it seems like very little and insignificant but it's a monthly basis so the amount would add up after a long time.

It doesn't make sense for you to do $1000 per month unless you are earning more than $4000 because its not sustainable. Investing shouldnt take up too much of your monthly salary. You should continue saving and keep spare cash incase for a rainy day. (You dont want the situation whereby the market is bad and you need money thus selling your etfs at a loss)

Lastly to end off, NEVER SELL YOUR ETF/STOCKS if it's a loss. Just hold it and wait for it to recover. If you do your DCA diligently (monthly) you should make a profit even when the market is bad (because you will average down your cost and have a comeback when it rises)

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Question Poster

22 Jun 2019

Hi! Thanks for your comprehensive reply. Haha i do think $200-$300 is sufficient. Because right now i feel that my $100 per month is really insignificant.. What is considered long term? Is 5-10 years considered long term? Actually my main purpose is to earn the dividends from the STI.
Yinghua Liu
Yinghua Liu
Level 5. Genius
Answered on 22 Jun 2019

If you are going to put in $100 every month, it does not matter if the price is high. Over time, the cost of the units purchased will be averaged out. Time in the market is better than timing the market.

If you are doing it via DBS, the money will be deducted on 15th of each month.

Your purchase price will be based on the average subscription price on the business day after your account is debited, or such other day determined by the Bank in good faith and in a commercially reasonable manner. (Extracted from DBS Website)

https://blog.seedly.sg/dollar-cost-average-dca-sti-etf-returns/

For monthly amount >$500, you might want to consider OCBC blue chip as buying fees will be lower compared with DBS

For selling, charges is applicable for OCBC Blue chip but there is no charge for DBS Invest Saver

Below link from Seedly for your reference,

https://blog.seedly.sg/which-regular-savings-plan-is-the-cheapest/

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Ericsson Ting
Ericsson Ting
Level 4. Prodigy
Answered on 22 Jun 2019

What is RSS? 

  • RSS plan offers investors an affordable and convenient way of investment by committing a fixed amount of money on a monthly basis for a preferred share, allowing us to enjoy the benefits of dollar cost averaging

What is dollar-cost averaging?

  • When the share price is higher, we would buy fewer shares with the fixed dollar amount

  • When the share price is lower.we would buy more shares with the same amount

  • This means we automatically buy less at market highs and buy more at market lows

  • Over time, the price we paid for our portfolio of shares would be averaged out

Benefits of RSS 

1.Affordability

  • RSS allows us to buy into selected shares by investing an affordable and regular amount per month, from as little as $100 

2. Dollar cost averaging

  • RSS removes the need to time the market and trying to figure out when is the lowest point to buy

3.Flexibility

  • RSS generally has a lower cost of transaction with no lock-in period

Who provides RSS?

RSS is offered by DBS group, Maybank Kim Eng, OCBC Bank, and phillip securities

POSB invest saver however only allow you to have a choice between STI ETF(G3B) and ABF  Singapore bond fund index, unlike the other regular saving plan that allows you to choose other shares

As for me, I see the regular saving plan as a form of (dollar cost averaging)savings and defensive measure to ensure that my money continues to grow in an "average result" besides doing trading, saving and whatnots.

When you invest via dollar cost average,on some month you will purchase cheaper on others,you will purchase the sti etf more expensive

if you like to view my posb invest saver summary for every monthdo visit my blog:https://sonicericsg.blogspot.com/2018/08/post-42week-30investment-project.html

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If I had a dollar every single time a friend or client told me that the price is very high these days, I would be a millionaire.

It was too high in 2011, when the greek debt crisis was looming and fears of double dip was happening. It was too high in 2013, when the UK brexit is looming. It was too high in 2015/2016, because fears of the business cycle was happening.

Guess what? Every single one of my friends who stayed at the sidelines missed the biggest rally of their lifetime for equity.

You can be greedy at the top, but you can be greedier at the bottom that never happens.

If your investment discipline is to invest $100 a month, the best way is to stick to the discipline. Whether or not $1000 is sufficient depends on how strong your cashflow is. If $1000 is representative of 5% of your disposable income, I would argue that whether or not the market crashes should be of little to no concern to you. Largely because you will still be investing the same, if not, higher amounts when it goes down. However, if $1000 is representative of a significant sum, lets say 40% of your disposable income, than it might cause problems because you might have guaranteed events that will occur in your life which cannot be subject to market volatility and risk.

Understand cashflow first. Allocation of cashflow comes second.

Click here to find out more about me!

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Frankie Aufhauser
Frankie Aufhauser
Level 7. Grand Master
Updated 2w ago

The STI unfortunately is an underperformer, as depicted in this 10 year chart

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