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Tea with Matthew Seah: POSB Invest-Saver Account.

Wednesday, July 24, 2013

POSB's newly launched Invest-Saver Account is a Regular Savings Plan that allows us to invest via a GIRO arrangement on a monthly basis.

No securities trading account or CDP account is required. All we need is a savings or current account with POSB.

It charges a flat fee of 1% per transaction.

For more information, go to:
POSB Invest-Save Account.
NEW LINK:  HERE.

My take? In a nutshell:

If we are putting aside between $100 to $500 a month, POSB Invest-Saver is a good choice.

If we are putting aside more than $500 a month, OCBC Blue Chip Investment Plan is a better choice.
See:
OCBC Blue Chip Investment Plan.

7 comments:

Vincent said...

If you are willing to put in more than $300 per month, you should just buy 1 lot of Nikko STI ETF at Std Chartered Bank.

1 lot of the ETF currently cost about $320. At SCB, you will be charged 0.2% compared to 1% in POSB. Only inconvenience is that you cannot put in standing instruction like in POSB.

CharlieK said...

POSB doesn't have a sales charge. Doesn't that increase the threshold further?

Also, both plans determine the purchase price by dividing the total cost of purchasing shares by the total quantity of shares purchased. There may be additional transaction fees hidden in this "total cost of purchasing shares" that we may not be aware of such that the total cost ends up being higher than the stated sales charges.

Matthew Seah said...

Hi Vincent,

While you can buy using StanChart, it is not easy to do dollar cost averaging. These two accounts are primarily for young adults who have no time to trouble themselves with investing. Hence the higher fees involved as compared to StanChart.

Matthew Seah said...

Hi CharlieK,

Yes not having a sales charge for POSB is will reduce the fees to 0.5% on buy and sell effectively, if we want to compare apple with apple.

However, I am assuming that the investor taking up this accounts are buying for the long term (i.e. till retirement and beyond). In such a case, the effective fees for POSB when investing <$500/mth is 1%, while OCBC when investing >$500/mth is 1.3%.

You are right that there may be additional charge. Both accounts state that they will buy up to a threshold price and determine the average price by dividing the total cost of purchasing by total quantity purchased. Unless they fail to show the hidden charges, these are the only "additional charges" involved.

Granted that these additional charges will add up, as a "lazy/busy" person, these are the small premium to pay for the benefits involved.

Matthew Seah said...

Hi Vincent,

Although the StanChart trading account is good, I cannot use that to compare with these accounts as the features are different. It would be like comparing apple to orange. The only comparison from StanChart that I can use is its ShareBuilder Plan which I have dne previously.

There are more information and comparisons on these accounts in my previous post:
http://singaporeanstocksinvestor.blogspot.sg/2013/07/tea-with-matthew-seah-ocbc-blue-chip.html

Do check out the comments there as well.

kakaboo said...

The FAQ of POSB Invest Saver writes that when you want to withdraw your shares, you have to do it completely - no partial redemption is allowed.

I think that this should be a major factor for anyone deciding to pursue this plan, because this means that if you had been saving up for 10 years and reaped great rewards and growth and would like to just withdraw a partial sum, you can't - you have to take everything out completely, which would then be a waste of your 10 years and not much difference from an insurance investment linked policy.

Matthew Seah said...

Hi Kakaboo,

What you said may be true, but what if you want to withdraw after 2 years? How much will you receive from an ILP after 2 years?

Even after 10 years, can you be sure that you will receive more from an ILP compared to POSB Invest Saver?

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