Is POSB Invest-Saver the lowest cost way of purchasing STI ETF on a DCA basis?

Yes haha you are completely 100% correct. :) The 1% may seem like alot.

However, the short story here is whether you are investing an enough amount to make your transaction fee low enough below 1%. For example with a typical brokerage, if you were to transact every month on your own... it would cost you between $10 to $25 for every trade. haha Means that you will need to invest alot more each month. $200 to $300 won't cut it :)

For the $10 to $25 fee to make sense, it would mean that you will need to invest $1000 or $2500 every month. (because if you work backwards this is 1%) hahaha. Probably you will not be able to have enough left to eat or drink properly. So the other way would be to do a lump sum investment.

To give you a further understanding here: you can read this.

For the STI ETF, there are two main ways you can buy:

1) Lump sum Investment (LSI)

You can do this by using your brokerage account. Compare the lowest fees here. It’s usually between $10 to $25)

• Step 1: Have a Bank account with either DBS/POSB, OCBC, UOB or FSM/POEMS and a CDP (central depository) securities account (Free to set up)
• Step 2: Apply for a brokerage account with any of the providers as above, such as DBS Vickers or OCBC Securities.
• Step 3: Enter the amount that you are interested to buy for that counter and submit it
• Step 4: A few days later, your stock will be allocated to your CDP account which will be tracked on whichever platform you chose

Example: With DBS Vickers as the brokerage account ($25 per transaction)

2) Dollar Cost Average (DCA)

This option is actually simpler to setup compared the above method, primarily due to the idea that you won’t need a CDP account. The bank holds these funds on your behalf. You can also refer here to a table where we compare the different providers with different fees.

• Step 1: Have a Bank account with either DBS/POSB, OCBC, Maybank or POEMS
• Step 2: Apply through iBanking, the money that you invest will be deducted from your linked bank account
• Step 3: Towards the 15th of month, you will automatically buy the STI ETF based on your preference amount
• Step 4: Receive a monthly updated report on your investments and dividends quarterly

Example: With POSB Invest-Saver buying the NIKKO AM STI ETF

Expense ratio is basically all the fees the fund house use to manage the ETF in a given year, and it is different from the commission fee / sales charge of 1% levied by POSB when you buy into the ETF.

There are actually 2 STI ETFs available to purchase, one by Nikko AM which you can purchase via POSB's Invest Saver programme, and the other by State Street. Maybank KE's Monthly Investment Plan offers access to both ETFs from S$100 a month, and also charges 1%. Both POSB and Maybank will offer the cheapest way to buy into the STI ETF.

For global ETFs, if you can access Interactive Brokers or TD Ameritrade, these will offer the lowest commission for access to US Market where you can find a lot of ETFs. Only thing is the 30% withholding tax for dividends paid out by these. For me, I'm paying USD$0.015 per share or minimum USD$5 when I buy US shares using my TD Ameritrade account. This is like my yardstick for low cost.

Hope the above helps.