Tuesday, 19 August 2014

The Beginning of YOUR Investment Journey [ Part 2 ]

In Part 1 of The Beginning of YOUR Investment Journey,

I mentioned that the cheapest fund tracking the STI (Straits Times Index) was Nikko AM which would have cost you $339 ++ instead of SPDR $3340+.

That's a huge difference I must say. The Singapore Government has dictated that stocks will be sold in 100 or 1000 shares / lot. That's not giving much choice to us young investors. No wonder everyone thinks that the stock market or buying shares is only for the rich and wealthy.

Why SHOULD they be the only one allowed? What about the rest of us? Don't WE get a choice to take control of our own future?

So today, I'm about to show you how you can take the first step into beginning your journey.

Firstly, you know the basic ETFs you're going to buy. Let's presume you have an monthly allowance of say, between $300 - 400. Let's also presume that you can afford at least $100 a month for your investment.

Good so far? Note: If you cannot afford $100/month, get a part time job that supplements your allowance. Remember, it's your future. What you do now in preparation, dictates what you future will be like. Most part time jobs pay between $7-9/hour.

Say you work 6 hours a day during weekends, with a pay of $7 / hour for at LEAST one day.
That's an extra $42/week. In a month, you'd get $168.

Ok moving on.

Now you want to begin your investing, as I said previously you can't just buy stocks off the shelves like you do in Supermarkets. You need to select your brokerage. What's a brokerage?

In short, a brokerage brings buyers and sellers together.

There are several brokerages in Singapore that you can purchase shares from.


But, I'm going to make a bet here that you WILL NOT buy your shares from any of them. Because the fees that they charge for your investments change accordingly to your investment value. We're talking at least $50,000 - $100,000. For a monthly investment of $100, you'd see your money getting eaten up by fees so fast you don't even have the chance to say "What?".

No, instead we want to invest a small sum of money every month without worrying too much about fees and charges.

Well, there are 2 Banks in Singapore that offer the most well known options to invest in blue chip shares without the hassle of opening security trading accounts and all that other stuff.

Remember, we want simplicity. The following options are good IF you'd rather not DIY.


Let's begin with OCBC, where you can begin investing with $100 (minimum amount) monthly.

They offer you the OCBC Blue Chip Investment Plan (BCIP).

In short, they offer you the opportunity to accumulate odd lots of shares over time instead of having to purchase 100 - 1000 at a time.

What are some of the blue chips does OCBC BCIP offer?

CapitaLand Limited
CapitaMall Trust
CapitaMalls Asia Limited
ComfortDelGro Corporation Limited
DBS Group Holdings Limited
Global Logistic Properties Limited
Singapore Airlines Limited
Nikko AM Singapore STI ETF

Notice the Nikko AM STI ETF? Yes there you go. You're welcome. Hahahaha.
Now, I'm aware of the existing fee of minimum $5 transaction fees that has many people afraid to invest because it is simply not worth it. That's almost a 5% transaction fee with $100. However, the current promotion of only 0.3% and $5 transaction fee waived will give many newbie investors an opportunity to take the first step and purchase a few counters. There's always a chance that OCBC will extend the promotion. It has done so before.

However, these information are only partial and may not be complete. I would advise anyone who is planning to try the OCBC BCIP plan to always do their own research and call the bank itself to check on the existing costs.

All that said and done, I have used the OCBC BCIP personally to gain a little experience. In short, OCBC allows you to invest in the Nikko AM STI ETF, or invest in individual blue chip companies. It's entirely up to you.

What about POSB/DBS?

Well, POSB Invest Saver also allows you exposure to blue chips. However, while similar they also have extreme differences. Why do I say that? POSB Invest Saver only allows you to purchase the STI ETF ONLY. They do not offer any individual companies. Therefore do consider the difference according to your personal preference.

It also allows a $100 monthly investment with a 1% sales charge which is about $1.

I hope that this has helped you. Some people may ask why I have not included the Philip Sharebuilders Plan. Simply put, the management fees and other fees will kill you. Similarly, it is not for when you want to invest $100 monthly.

With this 2 plans, $100 will be deducted automatically every month on the dot. This helps if you do not want to log in every month, and make a transaction. You are paying for the automated services they provide. Best of all, you do not need a certain age unlike DIY strategies which usually require you to be 21 and above.

With the current promotion, OCBC fees of 0.3% IS cheaper than POSB 1%. However, when the promotion ends and the $5 minimum fee / transaction kicks in it would be better to invest a larger amount to even it out. At the end of the day, both options offer you the chance to invest in blue chip shares without having to spend $300++ to $3000 at a go.

Do check out these 2 links. They are filled with various information and questions. When I first began, I studied these two websites too :)



Investing over a long period of time through the market fluctuations will eventually bring you decent returns as the stock market always go up in the long run.

Hope the information helps you! What should I post about next? Any ideas? Feel free to email me :)

Signing off,
Teenage Investor
Twitter: Teenageinvestor


  1. Actually, the cheapest and most cost efficient brokerage and bank is Standard Chartered. there is no min fee, and you can always buy in small or odd lots. They are the one and only brokerage that charge a percentage and no minimum fee.

    this gives small and young retail investors to invest meaningfully even with as small money as $100.

  2. Hi Numbers,
    I would agree wholeheartedly with you that StanChart is a good option. However I must disagree with you on some points.

    Standard Chartered does not allow the purchase of small or odd lots on its online platform (I've asked around) You can only purchase 1000 or 100 shares at a time. This defeats the monthly investment programme.

    While I agree that StanChart does not require a minimum fee to trade but as far as it goes, small and retail investors will find it very hard to purchase even Nikko AM with just $100 up front.

    Lastly, teenage investors like myself will find it hard to open a StanChartered account as we have to pass the Customer Account Review (CAR) test which is made compulsory by the Monetary Authority of Singapore (MAS) which involves the experience of trading at least 6 times amongst other difficult requirements. (Which i find stupid)
    If they don't offer the chance to have a trading account how can we trade to gain experience.

    That is why I have not yet recommended StanChart :) Hope this helps.

  3. I second Numbers that SCB is the best option. However, on top of no minimum commission, I think there is 1 more important issue.

    "Only full redemption of your total holdings in the POSB Invest-Saver is allowed. No partial redemption will be accepted."

    POSB does not allow partial redemption of holdings. With SCB, you can decide to liquidate some lots if you are ever in a crunch without having to sell off your entire accumulated stake. This removes emotional attachment, anchoring to previous price and the temptation of market timing with the balance of the money. OCBC does not have this issue.

    I see 3 benefits of OCBC/POSB that SCB does not have:
    1) Hassle-free automatic once a month investing
    2) Lower and less lumpy capital requirements
    3) Ability to participate in stocks with high stock prices (too expensive to cough out a few $K just for 1 lot)

    Also, with the news that SGX board lots are going to be dropped to 100 shares instead of 1000 shares in 2015, the minimum capital requirement to invest in 1 lot will be dropped 10-fold. This will directly address points 2 and 3 in the near future.


  4. Hi MH,
    I am also aware that POSB Invest Saver does not allow partial redemption as I found out when I wanted to pull my investments out. However, I guess it's a price some people are willing to pay for the convenience.

    SCB is really DIY and does not allow access easily to novice investors which makes it an otherwise less attractive option.

    I am also waiting for the good news of board lots to be dropped to 100 or even 1 but I'm also anticipating that brokerage prices may increase in response to that..

    Praying hard that SCB does not increase it's rates. SCB is suitable if you have a few thousand to purchase 1 lot at a time, otherwise it's not ideal for investors who wish to invest on a monthly basis.

    Thank you for your comment, I am honoured by the fact that my blogposts do receive seasoned investors such as yourself and Numbers as I consider myself to be a newbie investor.

    Teenage Investor

    1. HI Teenage Investor,

      In fact, I have the opposite sentiment from you regarding brokerage prices! I would imagine most brokers would compete and revise down their min comm or think of bundling comm rebates with trade activity. Most people I know have moved over to SCB already.

      Yes, I see the issue that you have with the CAR. I think they are being too cautious and that something should be done to change that. Perhaps administer an in-house test when people apply for a brokerage account, hah.

      In that sense, probably these RSPs are the best available option. Are unit trusts available to you? Index funds like the Infinity Global Stock Index Fund can be accumulated through $100 increments as well. This can be done either through an RSP or even manually on your own (but manually requires an initial $1000 investment).

      I am surprised that you did not mention the Phillip Share Builder plan though. However, Phillip does only seem economical for that if the regular investment amount is above $600.

      Haha, I am far from being a seasoned investor, I probably only have a headstart of a year ahead of you! Great to see more young people around the scene though!


  5. Hi, MH
    I did think of adding Philips Share Builder at first. But the fees alone would eat into any profits in the short term and even worse in the long term. What I have posted in this post are only for investors who wish to begin small and continue from there. As such, SCB and Philips would not be an ideal choice for them. You see, I'm trying to keep things simple for them, something that I had to struggle to find myself. And, banks provided the "easier" way without having to go down to SCB or Philip to open an account. Everything can be done online.

    I myself use SCB from time to time only because I was lucky enough to pass the test as I have previously used OCBC and POSB and thus had the required trading requirement to open an account. But again, SCB is mostly DIY and does not allow purchase of odd lots so buyers must have the discipline to save up for 3 months or so before purchasing 1 lot at one go.

    In the future, I may touch on SCB or Philip but again, I usually post things based on my own experience as I would be better equipped to share. I do not use Philip as of now because I cannot afford to invest such a huge amount every month.

    Indeed, I hope that brokerages will keep their costs down. Initially POSB 1% sales charge was more affordable then OCBC 0.3% + $5 minimum fee. But OCBC countered with a promotion of 0.3% and waived the $5. Haha burnnnn.

    Lastly, if you have a blog I would appreciate the opportunity to read / link up with you if you have written about your experience with Philip :)