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Tea with Matthew Seah: OCBC Blue Chip Investment Plan.

Tuesday, July 2, 2013

I am constantly looking for people who are good writers and who have a savvy for investments. 

Some of you might remember reading an article about a young investor in the most recent issue of The Sunday Times. 

Matthew Seah is only 25 but what he has achieved is far more than what I did at his age.

I discovered the following Monday that I had actually been chatting with him for a few days already and that he is also a regular reader of my blog, having commented in a few of my blog posts before as well. 

I could not reconcile the Matthew who commented in my blog posts with this Matthew whom I have just started chatting with recently because I always thought he would be much older.

Well, I always say that I am a frog in a well. 

I just discovered (again) how small my well is.

I asked Matthew if he would like to do a blog post for ASSI and he kindly obliged, choosing to write a piece on OCBC Blue Chip Investment Plan. 

This blog post shows how logical he is in his approach and how sound he is in his ideas. 

I certainly hope that this is the first of many blog posts in ASSI to be penned by Matthew.


The Business Times reported on 25 Jun 2013 that,

“OCBC Bank announced today the launch of the OCBC Blue Chip Investment Plan ("the Plan"), a regular investment plan that allows retail investors to purchase Straits Times Index (STI) stocks for as little as S$100 a month.
Investors can use cash or, funds from Central Provident Fund (CPF) or Supplementary Retirement Scheme (SRS) accounts to invest in one or more stocks from a selection of 19 Mainboard STI stocks and one STI Exchange Traded Fund (ETF).

OCBC Bank also saves first-time investors the hassle of opening securities trading and Central Depository (CDP) accounts by buying the stocks on their behalf on a pre-determined date every month.
The 19 stocks were selected as they are included in the CPF Investment Scheme (CPFIS) from the entire portfolio of 30 blue chip stocks in the STI.”

For more details, see: OCBC Blue Chip Investment Plan

This investment plan is targeted at young working adults who do not have a lot of cash to buy one lot (1,000 shares) of blue chip. One lot of blue chips can cost somewhere between $600 (Golden Agri) to $43,000 (Jardine C&C). OCBC has kindly left out those STI components that are fairly affordable, stocks valued less than $1, as they cost less than $1,000 per lot to purchase.
This investment plan employs the Dollar Cost Averaging technique where you invest a fix amount each month, regardless of the share price.  Dollar Cost Averaging allows you to buy more when the price is lower, and consequently less when the price is higher.
Investopedia does a good job of explaining this technique: Dollar Cost Average.

What should a young working adult buy?

I am assuming the a young working adult to be enthusiastic, ambitious , full of drive. Thus, he/she would not have much time to do any due diligence when it comes to investing. He/she would not want to add more stress to his life by trying to beat the market. Trying to beat the market requires lots of control over your emotions, which might not be easy for a young investor who has not experienced the greed associated with rising prices, nor the fear associated with falling prices.
As such, I recommend investing only in the Nikko AM STI ETF. Investing in Nikko AM STI ETF would allow you to own all 30 STI components at once, hence eliminating the hassle of choosing the individual counter. Investing in the ETF also allows sufficient diversification to weather financial shocks to some extent.

The components of STI are reviewed semi-annually by FTSE Group to ensure that non-performing companies are replaced. E.g. NOL was removed from STI and replaced by IHH on 13 Sep last year. By investing in Nikko AM STI ETF, you can be sure that you are investing in the best 30 companies (or perhaps the 30 better than average companies) listed on the Singapore Stock Exchange.

While the Investment plan may be good, you should also consider the charges involved.
The charges involved are as follows: 
Click on pic to enlarge.

So the charges involved for investing each month is 0.30% or $5 per counter, whichever is higher. It might seem difficult to understand, but here’s a chart to help you.

Click on pic to enlarge.
As you can see, the fees are pretty high, at 5% when you invest $100 per month ($5 is higher than the 0.3%, thus the fee incurred in this case is $5). However, the costs involved is greatly reduced to an optimal 0.30% when you invest $1666.67 per month (In this instance, 0.3% is also $5) or more.

What this would mean is before you can even make any money, you will need to pay OCBC a fee of up to 5%. Whatever that is left will need to grow by 5.3% before any profit can be made (after paying 5% fees, you have $95 left. In order to get back to $100 using $95, the returns needs to be 5.3%). This kind of charges are the same when you open any other trading accounts, but the fees incurred may vary.

I feel that any fee below 1% of your invested capital is manageable as long as you are really holding for the long term. Hence please invest at least $500 per month if you are taking up the OCBC Blue Chip Investment Plan, and invest only in Nikko AM STI ETF for sufficient diversification.

Visit Matthew's blog:
Compounding for a better future.

Related post:
Inflation adjusted retirement income plan.


Serendib said...

nice analysis - matthew is clearly far more knowledgeable than when I was his age! It would be useful to compare it to alternatives like Philips' Share Builder Plan and StanChart Online trading too. OCBC still has a few missing details (like how are dividends treated?)

Unknown said...

Hi Serendib,

The dividends are treated like how a normal shareholder will receive the dividends on a pro rated basis.

More information could be found on point 10:

Unknown said...

Hi Serendib,

Philip's Share Builders Plan do not have a percent-based comission for investment less than $1,000. As such the fixed handling fee of $6.42 per transaction is more costly than OCBC's BCIP. There is also a 1% dividend fee incurred when dividends are received. Hence OCBC would be a better choice.

StanChart's Online Trading do not have a minimum comission, only a percent based. While i is good to have a percent-based only fee (at 0.2%, its also lower than OCBC), the minimum number of shares you can purchase on SGX is one lot, so that would cost anywhere between $600 to $43k as mentioned.. If you are buying into STI ETF, then it would still cost $3k per transaction. So if one have sufficient savings (eg. save up untill u can buy 1 lot of STI ETF), then he/she could go for StanChart.

*p.s. Philip's Share Builders only has STI ETF which is an SIP, while OCBC's BCIP has Nikko AM STI ETF which is an EIP.. more paperwork needs to be done before a new investor can invest in SIP.

ryan said...

1 lot of Nikko AM STI is 100 shares. Hence, assuming the price of 1 share is 3.19, it is still cheaper to buy thru stan chart (commission 0.2%) compared to OCBC (0.3%).

Unknown said...

Hi ryan,

Thanks for reminding me! I failed to see the 100 at the end of its name (I confess, I didnt check it out on SGX)

Unknown said...

what is the difference between nikko am etf anf sti etf other than the lot size? pls enlighen thanks

Unknown said...

Hi Unknown,

Nikko Am STI ETF (I’ll use Nikko from here onwards) was originally founded by DBS Asset Management Ltd.
It was bought over by Nikko Asset Management Group and subsequently renamed as Nikko Asset Management Asia Limited. You can find this in DBS Asset Management’s website:

STI ETF (I’ll use SPDR from here onwards) is founded by Standard & Poor’s Fianancial Sevices LLC under the SPDR® ETFs and is managed by State Street Global Advisors Singapore Limited.

While both strive to replicate the STI, SPDR does a better job in replicating the weightage of the individual STI components due to its larger size. (SPDR: 370mil compared to Nikko: 130mil)

Expense ratio wise, SPDR again is better at 0.30% while Nikko has an expense ratio of 0.48%.
This mean that the dividends collected on SPDR is slightly higher than the dividend payout on Nikko. (expenses are paid by the dividends collected)

Highlight sheet of Nikko:
Highlight sheet of SPDR:

Serendib said...

Hi Matthew, thanks for the clarification. The OCBC platform looks good as long as you're just buying 1 counter!

Unknown said...

It more expensive If I do it on my own by buying through the odd lot market. There are actually economic of scale doing it through the scheme.

Unknown said...

If one was to do it on it's own. Not mentioning the brokerage, the unit share market also has higher selling price compare to the spot market.

Unknown said...

Hi Serendib,

Indeed, this plan is only good for buying 1 counter...

That is why I only recommend buying Nikko AM STI ETF, whih offers sufficient diversification across all 30 STI component stocks

Unknown said...

Hi Desmond,

Thank you for pointing out that there are other platforms available, but are uneconomical compared to BCIP.

There are several platforms in the market for saver-investors. It is important to understand the terms and conditions to determine the pros and cons of each platform.

The different platforms serves different purposes and it is the investors responsibility to determine which is the best suited for his own saving/investment requirements.

Unknown said...

Hi Mathew

Does it mean that STI ETF is better than Nikko AM STI ETF since SPDR can can do a better job due to its size and have lower expense.

Unknown said...

Hi KY,

STI ETF does give a higher yield. In 2012, STI ETF distributed 95cts/share, while Nikko AM distributed 65cts/share.

Serendib said...

Hi Matthew, indeed buying the index is the way to go..especially for those starting out. In fact that was what I was doing - buying SPDR STI ETF through SBP. At that time the DBS ETF was just starting, wasnt supported by SBP (not surprisingly) and was poorly structured (it allowed for synthetic replication, which I believe is no longer the case). It was AK71 who got me into buying other counters, especially dividend/REIT stocks!

AK71 said...

Hi Serendib,

I am innocent, I say! It must have been my evil twin. :(

Anonymous said...

Hi Matthew,

I came across this Plan, introduced by a friend. I would like to ask on your opinion on the minimum 500 a month.


Unknown said...

Hi thatonlinestore,

I have mentioned that one should invest at least $500 per month for OCBC's BCIP. At 500 per month, your effective fee is 1% for as long as you hold them. When you close your account (assuming you are holding Nikko AM STI ETF for the long term and never sell any shares in between), you will pay another 0.30% fee for an effective rate of 1.3%.

By that logic, if one were to buy and hold Nikko AM STI ETF for 30 yrs, the total invested capital is $180,000, while the total fee is:

30yrs x 12 months x $500 x 1.3%
= $2,340

In my opinion, a 1.3% overall fee is easy to stomach.

However, the optimal fee is 0.6% (0.3% x 2), which is attainable by investing $1,666.67 or more per month. This amount is difficult for young adults to save up every month considering their starting salary might be around 1-3 times this amount, thus accounting for 33-100% of their income.

Unknown said...

Hi Mr Matthew,

I am a student about to go to uni. I would like to invest in some ETFs which track the index, but the amounts I have are not large. Do you think it would be better for me to buy one or two lots of the STI ETF via StanChart, or use the OCBC BCIP to buy the Nikko AM STI ETF if the amounts I am willing to invest periodically are $500 or less? I would be pleased if you can suggest any other options as well.
Hope to hear from you soon, thanks!

Unknown said...

Hi Mr Matthew,

If I have a maximum of $500+ to invest (perhaps every 2-3 months), do you think it would be good for me to buy 1-2 lots of the SPDR via StanChart, or buy the Nikko through OCBC's BCIP? I would be pleased if you have any other suggestions as well.

Hope to hear from you soon!

Unknown said...

Hi Wei Long Goh,

There aren’t many regular investment plans that allows you to invest in individual stock counters. BCIP and Phillips’ ShareBuilder are the only ones I know of available at the moment.

For dollar cost averaging to work, you must be able to buy more shares when prices are low and fewer shares when prices are high. OCBC BCIP does a great job to help you buy in odd lots (less than 1 lot, ie 38 shares or 71 shares instead of 100 shares for 1 lot of Nikko).

Since you can save less than $500 per month, the fees as a percentage of your savings invested will be higher than 1%.

If you were to open a StanChart Trading Account, you have to buy at least 1 lot each time. The dollar cost averaging does not work as well here. As an example, you saved $400 and Nikko is $3.30 this month. You can only buy 1 lot. Next month, you saved another $400, Nikko dropped to $3.10. You will still be buying 1 lot. The following month, you saved yet another $400 and Nikko surged to $4.00. You will be buying yet another 1 lot. Your dollar cost averaging will not be as effective in this case.

To round up:

If you do not mind the additional costs, you could use OCBC BCIP. BCIP requires a commitment to save up a fixed amount each month (deducted monthly from your OCBC savings account.)

If you want to use StanChart, then I would suggest you save up at least $1,000 and invest in Nikko using Stan Chart each time you have $1,000 in investible cash.

Investing in Nikko using StanChart will only cost you 0.2% commission. 1 lot of Nikko is 100 shares, while 1 lot of SPDR is 1000 shares. So by using StanChart, you can only afford to buy Nikko AM STI ETF.

Ultimately, it’s still your choice as you weigh the pros and cons of each alternative.

P.S. The key to dollar cost averaging is NOT the regular timing, but the FIXED amount invested each time.

Cory said...

Don't laugh at me. I have traded more than 140 trades for the 1st half years but frankly speaking I do not know how to buy STI Index in SGX literally LOL

It doesn't tell how many shares, and how it is traded at all. Neither could i decipher anything from the index counter description. Is not like i am desperate to trade on it but there aren't much user friendly motivation to urge me to.

Unknown said...

Hi Cory,
STI index is formulated by FTSE group. They will review the STI constituents semiannually and if any constituents were to delist, another company on its reserve list will take the vacancy.

The reviews can be found here:

As for the weightage, it can also be found on FTSE’s website here:

One way to buy the Straits Times Index is to buy the individual constituents according to their weightage shown above. That’s assuming you are very rich to buy them. As an example, SIA’s weightage in STI is 0.36% according to the website (as at 29 Mar 2013). In order to mimic the STI, you have to buy the smallest weighted constituent as 1 lot (minimum shares required unless you are using odd lot trading accounts). Thus, you would have to buy 1 lot of SIA for $10,210 to make up 0.36% of the STI portfolio. And the full cost of your STI portfolio would be $10,210 / 0.036% = $2,836,111.11!!

The other way to buy the Index is to buy a STI ETF which has sufficient capital to replicate the STI for you. Buy buying 1 lot of STI ETF, you will be buying all 30 constituents at roughly the same weightage as the FTSE STI. i.e. 0.36% of 1 lot of STI ETF is made up by SIA.

Cory said...

Maybe i am not clear enough. I really mean literally i do not know how to buy it.

To give you a better picture.

1 lot is 1000 shares for STI index ? or 50 ? or 100.
What is the counter name ?
1 share how much ?


Unknown said...

Hi Cory,

Sorry about that haha.

STI ETF (SPDR) is trading under symbol ES3. 1 lot is 1000 shares, equivalent to 1 STI, since STI ETF is 0.001x STI (1000 x 0.001).

Nikko AM STI ETF is trading under symbol G3B. 1 lot is 100 shares, equivalent to 0.1 STI, since Nikko is 0.001x STI (100 x 0.001).

Unknown said...

Hi cory,

The price you see for STI ETF is actually NAV/share, just like a mutual fund/unit trust. As mentioned, each share is valued at 0.001x STI.

Cory said...

thanks ! Now we are getting somewhere. :)

AK71 said...

Dear Mr. Cory,

Please check your mail for our invoice for services rendered.

Thank you for the business.

(no signature required)
Mr. Matthew Seah

Unknown said...

Hi all,

POSB has just launched its Invest-Saver account. commission is at a flat rate of 1%. Personally I eel that it is pretty high. Nonetheless, for investments below $500/mth, POSB's Invest-Saver is actually cheaper than OCBC's BCIP

For more info:

AK71 said...

Hi Matthew,

Another guest blog post on the way, perhaps? ;)

Aquarius_jan2004 said...

Hi Matthew,

Which one would u recommend if i wanna open an POSB Invest-Saver account/ocbc BCIP ? Other than fee/monthly amt to invest as a considersation factor?(As i'm new to kind of investment)

How long should i keep this investment in order to see my return ?

Or should i consider Standard Chartered Trading?

Kindly advise. Thanks :)

Unknown said...

Hi Aquarius_jan2004,

I can’t recommend which account to open as I do not know the amount you intend to fork out monthly. The two accounts are the same in most aspects, except the fees.

As for the holding period, the longer the better.

Research have found that while stock annual returns can swing wildly in any year, from roughly -100% to +100% (I cannot recall the numbers, but that is a pretty close call), when held over longer periods, the deviation in the returns narrows.. As you approach a 10-year holding period, the average returns per annum are almost always positive. If you hold even longer then it would be closer to the market average of 6-10%p.a. I would recommend you keep this investment as long as possible to reap the benefits.

I believe I have made sufficient comparison between these accounts and Standard Chartered Trading Account. It really depends on your motivation to take the effort or not.

If you are the lazy type, OCBC and POSB can help automate the process.. All you need to do is to ensure your savings account from which they transfer the money from is sufficient each month.

If you’d like to take effort to do it yourself each time you have sufficient funds to buy 1 lot of Nikko STI ETF, then Standard Chartered would be a better choice as the fees are much lower.

Everything discussed thus far about the investing account are all theories. In practice, I cannot recommend anything for anyone because I do not know what are the individual's risk profile, their willingness to relinquish control of their money, saving habits, reactions to fear and greed, etc.

Aquarius_jan2004 said...

ok. Thanks. Hope it's not too late for me to start my investment.

(By chance, i happen to see your blog. Thanks for sharing information.)

MissSimple said...

Hi Matthew,

Im a poly student w/o a stable income and i thought of investing Nikko AM STI ETF.

I been thinking if i saved $100/month,should i open a StandChart a/c to buy one lot of Nikko since the dividend is better.Subsequently when i saved the money to buy another one lot.

Or i should just open a POSB a/c and let them do all the transactions and set the limit $100/mth.

Which is better??

MissSimple said...

Hi Matthew,

Im a poly students w/o a stable income and i thinking about investing Nikko Am STI ETF.

Let say i discipline myself to save $100/month.

Should i go for StanChart trading a/c after i saved the money to buy one lot where the dividend is higher. Subsequently i buy another lot when i saved the money.

OR just go for POSB invest saver a/c?

Unknown said...

Hi Aquarius_jan2004,

I'm glad that I am of some help. It's never too late to start investing. I'm happy that you take action instead of maintaining status quo.

Unknown said...

Hi MissSimple,

Since you have no income, POSB will not be suitable for you unless you can be sure that you can fork out $100 every month.

As such, I would suggest you open a Standard Chartered Trading Account and buy 1 lot each time you have sufficient cash. Standard Chartered Trading Account has lower commission fees than POSB, but at the cost of you putting more effort to enter a 'BUY' transaction.

Unknown said...

Many thanks for the info and inputs you have given to each. They really helped someone like me with little finanical skill set.

My question is - OCBC allows SRS to be used for the BCIP. However, I understand the charges are more. Given that scenario, what would be a better investment plan then (given that by cash, it is $1.6K or more)?


Unknown said...

Hello Matthew,
Many thanks for the inform posted. It is really helpful for someone like me with so little finanical knowledge and skill set.

My question is about the use of SRS to buy into OCBC BCIP. I understand the charges are more. What would be investment one should put in to minimize this cost (similar to the $1.6K you have suggested).


Unknown said...

Hi James Lim,

Since you are using SRS, are you intending to withdraw before retirement age? If not, may I suggest spliting half your annual contribution for SRS into 12 equal parts? This way you will be putting half your SRS savings to potentially provide 4-8% p.a. (For a truly long term, you should look at the returns of STI over a period of 30 years or more as a guild.)

I prefer a minimum of $500 a month for OCBC BCIP. Anything less, you might want to open another SRS account with DBS/POSB.

While you can choose use everything in your SRS, I would prefer you seek advise from a CFA on asset allocation, lest u sue me when you lose money.

FZ said...

Hi, I would appreciate it if any one of you experienced investors can advice me.

At present, I'm a 20 yr old poly student who's also working part-time with an idling cash of $3k as of now. It is safe to say I will not be needing it for the next 4 years.

What is suggested to be done with it? I am very much interested to put it in stocks but unsure of what's recommended for a beginner. Specific blue chip companies or STI ETFs? Objective is to earn more than leaving it idling in savings account. Dividends shall be seen as a bonus and not a die-die-must-have.

Lastly, which brokerage/firm/bank should I approach? Stand chart?

I'm turning 21 in Jan 2013. Don't mind waiting til then to be able to do something "noble" like investing LOL!

Unknown said...

Hi Freeza,
You could open a Standard Chart Trading account and buy 1 lot of STI ETF.

FZ said...

@Matthew Seah, I heard that a transactional account with Stand chart is needed in order to open a trading account with them? is that true?

Unknown said...

Hi Freeza,


diamonds. said...

Hi Matthew,

Am new to investing. Can I check how what is the difference between BICP and unit trusts.

And also I understand if I'm doing periodic investing of less than $500 POSB is better than OCBC because of the charges that are incurred.

Correct me if i'm wrong!


Unknown said...

Hi diamonds,

BCIP allows you to invest in imdividual companies or STI ETF, while unit trusts invest in a selected portfolio determined by the fund manager.

If you were to compare STI ETF and unit trust, STI ETF is a PASSIVE fund which tracks the Straits Times Index while a unit trust is an ACTIVE fund which buys/sells shares of companies which may not be a component of the STI. For more info on unit trust, click here.

Historically, active funds tend to underperform passive funds due to their fee structure.

You are right that POSB is better than OCBC when you invest $500 or less periodically.

You might also want to click on the other 2 links at the end of this blog post, under the 'See also' section.

Victor Low said...

Just wondering, if say a person invest the optimal $1700 per month regularly with OCBC BCIP for 20 years with dividends reinvested on Nikko AM STI ETF ONLY. By the end of the 20 years quite alot of the ETF units will be accumulated. Will liquidity be an issue for this ETF when one finally decided to sell?

Unknown said...

Hi Victor Low,

Nikko AM STI ETF is fairly illiquid due to its buy and hold nature. If you look at the historical charts, there are periods of no volume. On days where the volume is in excess of 100k, the price does't change much.. So my guess is that institutional players are all waiting for retailers to sell.

The same goes for STI ETF, but STI ETF has a higher liquidity.

Victor Low said...

Hi Matthew,

If that is the case, isn't liqudity (ease to sell) a major concern for people who are going with BCIP on ETF for the long term?

Another doubt I have here is, would DCA be superior to lump sum investing? Why not just save a regular sum dilligently every month and build up a considerable war chest? When market crashes, we will just lump sum invest on various undervalue asset classes for the long term. Wouldn't the returns be far more superior?

Yes I reckon DCA probably takes out the market physchology as everything is automated but having a focus strategy for lump sum investing and sticking to it might not neccessary be very harmful to the mental health? or so I thought.

Cheers and have a good day. :)

Unknown said...

Hi Victor Low,

The liquidity I mentioned is based on transacted volume. The market depth for ETFs are pretty deep considering several funds and institutions need to maintain the ETF portion of their portfolio. Going by this, it shouldn't be much of an issue if you don't mind selling at a lower price.

Lump sum investing is indeed superior to DCA, but it requires more work. Not everyone has the discipline to save and allocate a portion each month into a war chest/opportunity fund.

Personnally, I do not use any of the investment/savings plans and do lump sum investing on companies which I deem to be undervalued.

Just like there are many roads which lead to Rome, there are many roads that leads to wealth. Different people have a preference on the road they choose, and DCA on index ETFs is just one of the road which you may choose.

William Foo said...

Hi Matthew,

Good day to you. I have followed most of your blogs and im hoping you could help me decide on to continue or to stop my bcip. This is my situation.

I have invested in BCIP with only $100 per month for as a start. But I am able to save another $400 to $500 occasionally.

In your opinion:

1. is it better for me to open standard chartered and get Nikko AM STI ETF for my extra $400-500? They say dont put all your eggs in one basket.

2. Or put all my extra to BCIP also?

3. Or widraw my BCIP, and all put to Nikko AM STI ETF because i can occasionally buy 2 lots at one transaction.

Im asking for your views. Thanks...

Unknown said...

Hi William Foo,

When you say you are invested in BCIP, are you investing in Nikko AM STI ETF as well?

Since you are investing only $100/mth, might I suggest you use POSB's Invest Saver instead. The commission for $100 is lower, at $1.

Regardless of the outcome of the bank, the shares you have bought will still be in your CDP account, thus I would say you're still putting your eggs in one basket.

Since you are able to save up a bit, may I suggest you do lump sum investing instead? This may require you to execute the trades yourself and the execution is subject to your emotions. One way to do invest a lump sum is to open the Standard Chartered Online Trading Account.

William Foo said...

Hi again Matthew,

Im sorry i forget to inform you. For BCIP, i have invested at Singapore Telecom only. My sole reason is, at least it wont be affected if one or two companies under Nikko AM will shall I say goes down. (Touch wood). Although i think of it that way, i am also convinced by you that Nikko AM STI ETF is good because of the big companies under it and i have seen that banking has a bigger percentage. To be honest, im undecided where to invest really.

Aside from this, i have set aside $5k on my savings account for emergency fund. I just keep it idle there. Shall I touch it also? I have itchy hands but still able to control.

CHEERS... will i am F.

Unknown said...

Hi William Foo,

Diversification will reduce your risk. It's still up to you to decide what to invest in.

Emergency fund is for emergency, thus it should you might want to set up another savings fund for investing.

William Foo said...

Hi Matthew,

Thanks to you.. i applied at POSB's invest saver last night starting at $200.

By the way, i have seen your port dated 30th of September 2013. How i wish you could write a blog talking about the very first day you started investing, the ups and downs you encountered, how you manage them. And most of all how you manage your time being a an investor, a student, a friend, a youngster, a blogger, etc... thanks.

Unknown said...

Hi William Foo,

Diversification will reduce your risk. It's still up to you to decide what to invest in.

Emergency fund is for emergency, thus it should be left untouched, less any urgent need arises. You might want to set up another savings fund for investing.

Unknown said...

Hi Willian Foo,

Well, keep hoping!

I might post one when I feel like it =)

AK71 said...

Since OCBC Bank launched the shares savings plan in July this year, the number of sign-ups has doubled over the period from August to October.

While such plan makes investing a lot simpler and more accessible, analysts say investors should still evaluate their investments regularly.

OCBC's investment plan allows investors to start investing in a range of 20 Singapore blue chip stocks from just S$100 a month.

Investors can use either cash or funds from their CPF or Supplementary Retirement Scheme (SRS) accounts.

Freedom said...

I was hoping that OCBC will consider to incorporate a DRIP structure to their BCIP and allows investor to have that option.

It will certainly be beneficial to the investor.

Unknown said...

Hi Freedom,

You may want to try giving OCBC constructive feedback for them to consider =)

Freedom said...

Hi, Matthew.

I have sent an email to OCBC and they replied that they will look into it.


Unknown said...


faddy said...

Hihi Matthew,
I read the above remarks with much interest.thanks for the clear breakdown of the STI ETF and NIkko AM STI ETF. I am considering to use my SRS savings ($500/1mth as recommended, looking at holding for 10 to 20 years) to buy Nikko or STI ETF. Am aware about the retirement contraints (can only reap by retirement age).
My qn is: since u mentioned that STI ETF is better in terms of liquidity and lower expenses, isn't it better to place my choice in STI ETF than Nikko? is it STI ETF is more ex (1 lot=1000shares), that's why investing in Nikko is a more feasible choice?
My only investment portfolio only involves investing under my CFA

Unknown said...

Hi faddy,

STI ETF is indeed a better choice. However, both POSB and OCBC only offers Nikko AM STI ETF for their respective regular investment accounts

mel said...

Hi Matthew,

Thank you for the information & comparison!

Currently, OCBC is having the promotion till 30 September 2014, pay only the regular fee of 0.30% when you buy or sell through BCIP. The minimum fee of S$5 per counter per transaction is waived.

Will it be wise then to invest in OCBC BCIP over POSB BCIP?

Also, how long should the investment on BCIP be?

Thank you!

Mel T

Unknown said...

Hi Mel,

Since we are going to invest for the long term. I suggest you do not look at the waivers (it only last 2 more months) and focus on the actual costs instead as the actual costs are what you will be paying for the next 5, 10, 20, 30 years.

Studies have shown that the risk of capital loss is greatly reduced the longer you stay invested. As such you should be holding it for the long term, preferably longer than 10 years.

Hope this answers your questions.

P.S. Past performance is not a guarantee to future returns, but you can use past performance as a rough estimate of your future returns.

Unknown said...

Hi Mel,

Since we are going to invest for the long term. I suggest you do not look at the waivers (it only last 2 more months) and focus on the actual costs instead as the actual costs are what you will be paying for the next 5, 10, 20, 30 years.

Studies have shown that the risk of capital loss is greatly reduced the longer you stay invested. As such you should be holding it for the long term, preferably longer than 10 years.

Hope this answers your questions.

P.S. Past performance is not a guarantee to future returns, but you can use past performance as a rough estimate of your future returns.

mel said...

Hi Matthew!

Thanks for the prompt response!

Is investing in BCIP is the best method to start for young graduates like myself? I'm a low risk taker with minimal savings. I was reading up on investing and plenty of articles/blogs seem to point in the direction of mutual funds.

richard said...

hi Matthew,

in regards to DCA, will it be better for me to:

1. allocate 1k per mth to buy spdr through SCB, rollover the excess to next month(since scb can only buy whole lots and not odd lots)


2. buy 300 lots every month through SCB

i believe option 1 is more effective as a mean of DCA, and will generate better returns for me in the long run?

richard said...

hi Matthew,

another comparison that i seek yuor advice for, since you are really knowledgable on ETFs and DCA:

using OCBC BCIP, will it make a difference in the long run if i DCA with 2k every 2 months instead of 1k per month? reason for doing this is so that i can maximize my cost to buy in, as 1k will incur 5 dollars (0.05%) whereas 2k will incur 6 dollars(0.03%)

Unknown said...

Hi Richard,

Option 1 is indeed a better choice of the 2.

The main factor for DCA to work its wonders is the FIXED investment amount.

Unknown said...

Hi Richard,

I don't think OCBC BCIP allows bi-monthly investment. i.e. Investing once every 2 months.

As long as you invest with the same amount each time, investing 1k/mth or 2k/2mths should give similar returns (excluding fees).

Given that a larger investment amount has lower fees, a larger investment amount would result in a slightly higher return.

Unknown said...

Hi Matthew,

I have some doubts, hoping you could help.
1. Reinvestment of the dividends.
POSB does not reinvest the dividends. POEMS do reinvest the dividends. But ocbc bcip, I couldn't find any details. Does ocbc reinvest?
2.if I'm going to invest cash 1500/mth, I loss $5 every month, and a further 0.3% on my investments when I sell them, say after 10 years.Is this correct?

Thank you once again for your guidance.

Unknown said...

Hi Matthew.

I have some doubts, was hoping you could help.

1. Reinvestment of the dividends.
POSB does not reinvest the dividends. POEMS do reinvest the dividends. But I couldn't find any details if OCBC does this. POEMS do reinvest the dividends automatically. Does ocbc reinvest?

2. If I'm going to invest cash $1500/mth for 10 years. I will loss $5 monthly and a further 0.3% on my investments when I sell them at the end of 10 years, is this correct?

Thank you once again for your guidance.

Unknown said...

Hi Ananth Pillai,

OCBC does not have dividend reinvestment option.

By $5 a month, I am assuming you are looking at OCBC here. Yes, you will lose $5 a month and a 0.3% commission when u sell after 10 years.


And So I Think... said...

Hi Matthew,

Reading your post on Etf and OCBC and standard chartered rates was very refreshing because I'm also doing research on these.

I have about $500-$800 per month to invest. Would you recommend that I open a brokerage with Standard Chartered or OCBC?

What's attractive about SC is that the charges are so low compared to OCBC. However the drawback is I'm not so sure about having my shares in their own custodian account and not put in my CDP account. Do you think it is 100% safe? What is they go bankrupt or pull out of Singapore one day? If I open with OCBC, should I do a monthly automatic deduction or monitor the market and buy my own? Are the charges different?

Do you have any investment strategy for someone of medium risk appetite who started very late like 40yrs old? Is it better to go with a monthly deduction or 'buy my own?'

Lastly would you recommend that I park my emergency funds with the new Singapore Bond Share as there is no penalty for withdrawal at any time? Can treat like bank account.

Thank you for your time.

Unknown said...

Hi And So I Think,

In finance, there is no one-size-fit-all solution. Would you like to share more about the proportion of funds allocated to different assets such as:
1. investment properties;
3. bonds;
4. derivatives;
5. REITs;
6. alternative investments;
7. fixed deposits;
8. cash

I would think that custodian accounts are safe, but definitely not 100% safe. By using SC, you can transfer your shares from the custodian account to your CDP account for a fee. However after the transfer is completed, the transferred shares will not be available for trading using SC.

POSB offer a better regular investment plan compared to OCBC. Would you still prefer to choose OCBC over POSB?

On whether to do automatic deduction or manually buy into STI ETF, it depends on your level of motivation and time available. Automatic removes all the hassle and emotions. Manual requires a lot more discipline to enter when markets are falling and some effort in monitoring the market.

For a medium risk appetite, I would suggest allocating 50% to stocks, 30% bonds, and 20% cash/FDs for warchest/emergencies.

On emergency fund, this is a tough one.. Generally, it would be better to park your emergency fund in Singapore bonds. But if you believe you might need to withdraw within the first 2 years, it would be better to keep the funds in short duration fixed deposits (13 months or less)


SF said...

Dear Matthew,

I chanced upon your blog and this is really an insightful read. I have also benefited much from the comments from other readers. I hope it is not late to to ask you 2 questions I have in my mind before I start with OCBC's Blue Chips Investment plan.

1. Why is it more feasible to invest in 1 counter like Nikko AM Singapore STI ETF (G3B)? Is it okay to also invest in another counter on top of that like Keppel Corporation Limited (BN4)?

2. You mentioned the golden amount of $1666.67/mth. What if I can only sustain this for 2 years as I have currently ($20k worth of savings). After this, what measures do I adopt? Do I drop the amount invested every month or stop the monthly amount invested and hold on to my existing shares accumulated over the past 2 years?

Thank you for your time in reading my comments and I look forward to hearing from you.


Unknown said...

Hi SF,

As for your first question, the Nikko AM STI ETF is a fund that invest in all 30 companies that comprises the STI. So by investing in Nikko AM STI ETF, you are effectively diversifying into 30 different companies by just buying a single counter. You could invest in another counter if you so wish to.

For your second question, I would suggest you go for POSB/DBS to invest as the fees are fixed at 1%. With POSB or DBS, you can invest with as little as $100/mth and the fees will still be 1% or $1. For more information, you could look at the links at the end of the blog post to find out more.


Unknown said...

Dear Matthew Seah.

Good day , was going through the above comments and found more relevant to me as i have invested in OCBC BIP , am considering 1600/month to equalize the minimum fee of 0.3% or 5$.

Was looking for some advise and your expert view , can this be used for short term to sell ( ie BCIP ) will that help in returns or any value in holding these for 2 years and sell. As am not looking for long term solution and also i don't have a CDP account so thought of investing in BCIP.
Your view would be really appreciated


Unknown said...

Hi Praveen V,

Firstly, I'm definitely no expert.

If you do have $1600/month to invest, then perhaps OCBC is good enough.
Anything less, POSB would be the preferred choice.

Regular investment plans are for holding long term, preferably more than 10 years.
I wouldn't recommend that you hold for 2 year and sell thereafter. Market movements might mean you may sell at a loss after 2 years.


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