How Recurring Investments Make You A Successful Investor

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The path to achieving your financial goals comes with a whole lot of discipline and determination. Here’s how to utilise recurring investments to your full advantage.

Betting on the likes of GameStop and AMC Entertainment might turn a handful of investors into overnight millionaires. But for the average Joe who is looking for stable growth, making recurring investments into stocks with solid fundamentals and business models could be a surer way to reach your financial goals.

Recurring investments are investments that you make with a predetermined frequency and amount. This ensures that you consistently invest your spare cash, be it daily, weekly, monthly or quarterly. 

With a recurring investment plan, rather than trying to time the market, you capture all the markets’ highs and lows. You are tapping on the concept of dollar-cost-averaging, where you purchase more units when the price is low and fewer units when the price is high. 

Moulding a successful investor out of recurring investments

#1 Take the emotions out of investing

Recurring investments allow you to disconnect your emotions from your investments. You invest regardless of market conditions. This helps to prevent knee-jerk selling when markets are down, allowing you to focus on time in the market instead. 

Recurring investments ensure that you continue to invest when market sentiment is bearish and the outlook is gloomy. Without an automated, regular investment plan in place, you could miss out on these dips, especially if you are too fearful to click ‘Buy’. 

#2 Grow your portfolio with baby steps

As companies grow in size, so do their revenue, profits and stock prices. For some like Tesla, Alphabet, Apple, Amazon and Netflix, they have only been scaling new heights and consistently, setting new all-time-highs with each milestone. 

Recurring investments ensure that you don’t miss out on their growth as you are accumulating their stocks every month. Imagine buying 10 Apple shares each month. That could very well amass to a handsome amount in years to come.

It also helps to manage your risk, ensuring that you invest within your financial capacity — what you can afford each month. You can opt to step up your investments by increasing your investment amount when your finances permit, such as when you receive a salary increment. 

Recurring investments also help you to manage risk, by making sure that you invest within your means each month. You can step up your investments when your finances permit, such as after a salary increment or promotion. 

#3 Diversification matters

Buying into a single stock each month is a great first step to growing your portfolio. But you can spread your risks too, by diversifying into different stocks. For example, besides buying Apple shares each month, you can pick up shares of blue chips in other industries such as Lululemon, Wal-Mart and Starbucks.

With the many investment choices at your disposal, you can set up multiple recurring plans: a plan to buy into Singapore bank stocks or Real Estate Investment Trusts (REITs) for their dividends; another to purchase US tech stocks for their capital gains.  

For further diversification, regularly invest in an Exchange Traded Fund (ETF). The S&P 500 consists of the 500 largest companies listed in the US and you may want to look at SPDR S&P 500 ETF (SPY) or Vanguard S&P 500 ETF (VOO). 

How to start making recurring investments

Start by setting up a recurring plan with your brokerage account. 

For example, with POEMS Recurring Plan, you get to choose from a vast pool of stocks and ETFs listed not just in Singapore, but also in the US and Hong Kong. You decide the frequency of your investments, either daily, weekly, monthly or even quarterly. 

This means you can buy the securities on a regular basis, all fully automated and executed by your broker. Your recurring plan or plans should take into consideration how much you can afford to invest. There is typically a minimum executable quantity and minimum order value.

Pro tip: tap on low — or zero — commission fees

POEMS Cash Plus Account is running a zero commission promotion for US stocks with contract gross values of US$2,000 or less from 1 February 2021 to 30 April 2021. This promotion is limited to the first three eligible trades traded on POEMS each day. Eligible trades are ‘BUY’ trades executed online. 

If you prefer to stick to the SGX, the cost of purchasing Singapore stocks with POEMS Cash Plus is also low at 0.08%. What’s more, there is no minimum commission from now till 30 June 2021.

Here’s an example of what that might look like: 

Singapore market: When you set up a recurring plan to purchase 1,000 Sheng Siong (SGX: OV8) shares each month

DatePriceQuantityAmount InvestedFees Incurred (0.08%)
2 November 2020S$1.661,000S$1,660S$1.33
1 December 2020S$1.561,000S$1,560S$1.25
4 January 2021S$1.561,000S$1,560S$1.25
1 February 2021S$1.611,000S$1,610S$1.29
1 March 2021S$1.66 (assumption)1,000S$1,660S$1.33
1 April 2021S$1.69 (assumption)1,000S$1,690S$1.35

After six months, you would have accumulated 6,000 shares of Sheng Siong.

US market: When you set up a recurring plan to purchase 10 Apple (NASDAQ: AAPL) shares each month

DatePriceQuantityAmount InvestedFees Incurred
2 November 2020US$109.1110US$1,091From US$5.88 flat*
1 December 2020US$121.0110US$1,210From US$5.88 flat*
4 January 2021US$133.5210US$1,335From US$5.88 flat*
1 February 2021US$133.7510US$1,337US$0 (commission free promotion)
1 March 2021US$135.20 (assumption)10US$1,352US$0 (commission free promotion)
1 April 2021US$138.60 (assumption)10US$1,386US$0 (commission free promotion)

*Flat rate charged for US trades depends on the total value of assets held in your account

After six months, you would have accumulated 60 shares of Apple, without paying a drop of commission during promotion months.

Lastly, you have the option to set start and end dates to your plans. This gives you total control and flexibility to stop when your investment strategies or financial abilities change.

Bonus option: boost your investments with the occasional lump-sums

With a low-fee account like POEMS Cash Plus, you can purchase more securities, anytime, on top of your recurring investments to capitalise on dips in the stock market. 

These lump-sum injections help you capture opportunities in the market and speed up your wealth accumulation.  

You can also make lump-sum investments whenever you have spare cash. Think of your year-end bonus. When your endowment plan matures. Or when you’re lucky enough to win the lottery!

The best time to start investing is today!

If you have idle bank balances or a piggy bank about to burst, it’s time to embark on your investment journey. The sooner you start, the longer the runway your portfolio has to grow and tap on the power of compounding. 

Make the most of the zero-commission promotion by POEMS Cash Plus Account today, for US stocks. Yes, that means free trades! 

This applies to transactions with contract gross values of US$2,000 or less from 1 February 2021 to 30 April 2021. The promotion is limited to the first three eligible trades per day. Only ‘BUY’ trades executed online are eligible. 

This article is written in partnership with POEMS.

Read these next: 
Dollar-Cost-Averaging vs Lump Sum Investing In Singapore: Which Should You Choose?
DBS, SIA & Sheng Siong: Beginner’s Guide To Blue Chip Stocks In Singapore
Investing In Exchange Traded Funds (ETFs): A Newbie’s Guide To Getting Started
Guide To Real Estate Investment Trusts (REITs), And Whether You’re Ready For It
Best Brokerage Accounts To Start Your Investment Journey In Singapore


By Ching Sue Mae
A flat white, an adventure-filled travel and a good workout is her fuel. This Manchester United fan enjoys sharing knowledge on personal finance while chasing the dream of financial independence.