What is the downside of investing in ETFs?
Costly to invest small amounts regularly
Every time you buy ETFs, you’ll be charged a brokerage fee by your trading account/stock broker. The minimum brokerage fee (no matter the size of your investment) ranges from RM 7 to RM12.
While it is generally good to invest consistently, it isn’t a good idea to invest low amounts like RM100 each time as you’ll end up paying very high fees. This is why you should figure out the brokerage fee cost as a percentage of your investment. For example, if the brokerage fees is RM 8 and you want to invest RM 100. Then the upfront fee cost is: RM8/RM 100*100 = 8%. An 8% upfront fee is even higher than the typical upfront cost of investing in unit trusts (normally around 6%).
A simple guide is to invest at least RM 700 each time which will keep your brokerage costs between 1% -2% depending on your brokerage fees.