Regular Savings Plan (RSP) in Singapore: Pros and Cons

Key Takeaways

"I can't start investing without a huge amount" may be one of the greatest misconceptions of many investors. For as little as $50 to $100 each month, even the average Singapore investors who may not have extensive knowledge of investing can begin their financial journey with the regular savings plan.

This article will answer the following questions:

1. What is the regular savings plan(RSP)?

2. How does RSP work in Singapore?

3. What are the pros and cons of RSP?

4. How to start your regular saving plan with moomoo?

What Is Regular Savings Plan (RSP)

A Regular Savings Plan (RSP) or Regular Shares Savings (RSS) Plan allows you to regularly invest a fixed amount of money into a variety of financial products such as stocks, ETFs, and Unit Trusts.

The principle of a regular savings plan lies in the dollar-cost average approach, indicating investing a fixed dollar amount at regular intervals over time. The efficiency and long-term benefits of a regular savings plan are self-evident. Let's say you invest $50 every week. Amidst the volatile market, your $50 can buy fewer shares when the market is up and more shares when down. Over time, this strategy is expected to lower your average cost per share compared to the amount you would have paid for lump-sum investing when shares were more expensive than the average.

ETF investment is the perfect vehicle for this accessible, beginner-friendly approach. Low-cost, diversified ETFs let you build a well-balanced portfolio across global markets, sectors, and asset classes without needing a large lump sum, making them ideal for Singapore investors looking to grow wealth gradually. By pairing your regular savings plan with a curated ETF portfolio, you can also leverage dollar-cost averaging (DCA) with ETFs to mitigate market volatility, turning small, consistent monthly contributions into sustainable long-term growth through strategic ETF investing.

How RSP Works

Investors with a valid Moomoo SG universal account are eligible for the Regular Savings Plan. Let's use two hypothetical examples to compare the results of the Regular Savings Plan and the Lump Sum Investing.

Suppose Bob would like to buy 100 shares of stock XYZ, and the current stock price per share is $5. <div style="text-align: center; margin-top: 32px; margin-bottom: 16px;">    <a href="https://openaccount.sg.moomoo.com/setup-page/index" target="_blank" style="display: inline-block; background-color: #ff6600; color: #ffffff; font-size: 18px; font-weight: bold; text-decoration: none; padding: 14px 40px; border-radius: 50px; box-shadow: 0 4px 12px rgba(255, 102, 0, 0.3); transition: background-color 0.3s ease;">      Start RSP with Moomoo    </a>  </div>

With dollar cost averaging

With lump sum investing

(These examples are hypothetical and provided for illustrative and educational purposes only. No recommendation is made.)

It is obvious that over 5 weeks, Bob could have bought 67 shares in total with the Regular Saving Plan, which is better than the 60 units he would have gotten from investing with the lump sum investing method.

Regular Savings Plan - Pros

Start small

With the regular savings plan, investors are allowed to start with relatively small amounts of money, making it an opportunity for those who may not have large sums of capital to invest upfront.

Minimize the impact of bad timing

Market timing can be a challenging endeavor even for seasoned investors. The regular savings plan may potentially mitigate the issue with dollar cost averaging. By investing a fixed amount of money at regular intervals, investors can reduce the risk of investing at an inferior time through the large sum investing.

Disciplined approach

Based on regular contributions, the regular savings plan can be seen as a disciplined approach. In addition, it may help investors stick to their investment goals regardless of market volatility.

<div style="text-align: center; margin-top: 32px; margin-bottom: 16px;">    <a href="https://openaccount.sg.moomoo.com/setup-page/index" target="_blank" style="display: inline-block; background-color: #ff6600; color: #ffffff; font-size: 18px; font-weight: bold; text-decoration: none; padding: 14px 40px; border-radius: 50px; box-shadow: 0 4px 12px rgba(255, 102, 0, 0.3); transition: background-color 0.3s ease;">      Start RSP with Moomoo    </a>  </div>

Regular Savings Plan - Cons

Potential to miss out on certain opportunities

While the regular savings plan may be some investor's choice for long-term investing, they may be less effective for capitalizing on short-term market opportunities.

Lack of diversification

Some regular savings plans may have limitations in terms of diversification, especially for those tied to specific assets, such as one individual stock or fund. In other words, the regular savings plan may expose investors to higher risks if these assets underperform.

Start Your Regular Savings Plan with Moomoo to Get Rewards

All shares that support fractional trading are eligible for RSP. The minimum order amount for RSP is USD 10. Moreover, investors are allowed to make changes to the RSP, including the frequency, amount invested, or cancellation. However, any modifications made after 9:00 AM on the day of planned execution(Eastern Time) will take effect from the start of the next trading day. You can even estimate your potential returns using the RSP Calculator on the moomoo app: for example, a weekly $100 investment into GLD would yield a calculated rate of return of 38.06%.

With simple 4 steps, investors can set their regular savings plan on Moomoo SG and get rewards!

Can't wait to try? Click to start your regular savings plan with moomoo now!