Regular Shares Savings Plans (RSS/RSP)
Asked on 02 Feb 2020
I know the most obvious ones would be the
sales charge 0.82% for UTs and ETFs (non-bonds),
expense ratio for ETFs (0.3% for Nikko STI, how about the REIT ETF and UT?)
What else should I note of? Taxes, etc?
Are there any hidden fees?
"Zero platform fees and management fees. Instead a sales charge of 0.50% or 0.82% is deducted from your monthly investment amount – to buy, to process corporate actions and to safekeep the funds for you."
The stock exchange taxes for trading are neglegible.
It seems that the unit trusts (mutual funds) do not have the traditional high 'initial sales charges'.
-0.82 % per transaction is a hefty fee
the form of annual management fees subtracted not by Your broker but
automatically by the unit trust company from the fund's internal value (NAV).
These annual 'hidden' fees are for the 3 example funds mentioned on the
DBS website very high:
1.44 % for Schroder Asian Income
0.78 % for Goldman Sachs Emerging Markets Corporate Bond Portfolio
1.45 % for JPMorgan Global Income Fund
Try to find a less expensive regular ETF savings plan.
And with the unit trust fees currently still so unexceptably high for prudent
investors, try to avoid unit trusts anyway.
and: calculate the above mentioned fees plus nominal SG inflation
1.45 + 0.4 = 1.85 percent/year, or
with inflation in SG expected to rise to stable 1.4% in the coming years:
You will have 1.45 + 1.4 = 2.85 % real loss per year with these investments,
very difficult to catch up with a hopefully successful (?) unit trust.
The high expense ratios of the Unit trusrts have to be taken into consideration.
These are mainly due to trailer fees, which are paid by the fund managers to the distributors for helping them sell their product. This creates conflict of interest.
You can read about it more here!