Current choices for investing in STI ETF

[galapogos]

Hi,

I'm trying to get started on passive investing, in particular investing on the STI. I did a bit of reading up, and so far it seems there are 2 ways to invest in the STI.

1. SPDR STI ETF
2. Nikko AM Singapore STI ETF

To my knowledge, SPDR is more established (founded in 2002) while Nikko AM was only founded in 2009. SPDR also seems to track the index closer, but Nikko AM has a slightly lower expense ratio. I don't think these matter very much in the long run. Nikko AM also has a smaller lot size of 100 vs SPDR's 1000, which is great for a first time investor like myself. Another point I uncovered is that I need some qualification or certification to buy SPDR. All this seems to point me in the direction of Nikko AM.

Then, there are 3 platforms to invest in the Nikko AM.

1. POSB Invest Saver
2. OCBC BCIP
3. Standard Chartered

To my knowledge, POSB has a 1% buy fee, no selling fee. OCBC has a 0.3% or $5 min buy/sell fee, and Standard Chartered has a 0.2% buy/sell fee, but is more DIY.

So, POSB seems to be the best choice if buying up to $500 a month, and OCBC is cheaper after that. Standard Chartered seems great as well, in fact, it's the cheapest, but people seem to say it's more DIY rather than automatic. What are the cons of Standard Chartered?

 

[sgbanking]

Hi,

I'm trying to get started on passive investing, in particular investing on the STI. I did a bit of reading up, and so far it seems there are 2 ways to invest in the STI.

1. SPDR STI ETF
2. Nikko AM Singapore STI ETF

To my knowledge, SPDR is more established (founded in 2002) while Nikko AM was only founded in 2009. SPDR also seems to track the index closer, but Nikko AM has a slightly lower expense ratio. I don't think these matter very much in the long run. Nikko AM also has a smaller lot size of 100 vs SPDR's 1000, which is great for a first time investor like myself. Another point I uncovered is that I need some qualification or certification to buy SPDR. All this seems to point me in the direction of Nikko AM.

Then, there are 3 platforms to invest in the Nikko AM.

1. POSB Invest Saver
2. OCBC BCIP
3. Standard Chartered

To my knowledge, POSB has a 1% buy fee, no selling fee. OCBC has a 0.3% or $5 min buy/sell fee, and Standard Chartered has a 0.2% buy/sell fee, but is more DIY.

So, POSB seems to be the best choice if buying up to $500 a month, and OCBC is cheaper after that. Standard Chartered seems great as well, in fact, it's the cheapest, but people seem to say it's more DIY rather than automatic. What are the cons of Standard Chartered?

SCB account is custody account, means the shares are held in street name.
if SCB went bankrupt, you lose everything, though this is very a small probability event.
Other cons might be relevant:
1. platform is not very userfriendly or powerful in charting etc.
2. you need to place the fund in settlement account first before you can make purchase, acting more as a 'debit card' instead of 'credit card' where other brokers may offer you leverage -> but don't think this is applicable for the two methods you've mentioned

ps. i'm using SCB since it's the cheapest in town

 

[w1rbelw1nd]

SCB account is custody account, means the shares are held in street name.
if SCB went bankrupt, you lose everything, though this is very a small probability event.
Other cons might be relevant:
1. platform is not very userfriendly or powerful in charting etc.
2. you need to place the fund in settlement account first before you can make purchase, acting more as a 'debit card' instead of 'credit card' where other brokers may offer you leverage -> but don't think this is applicable for the two methods you've mentioned

ps. i'm using SCB since it's the cheapest in town

Bro, as mentioned ad nauseum in the forum, SCB being bankrupt does not mean that our shareholdings are in jeopardy. Those assets does not appear as assets in SCB balance sheet, so SCB debtors have no access to them.

Unless SCB use our shareholdings without our approval, then there is no risk of our shareholdings being directly affected by e solvency of scb...

In contrast, for our cash holdings of more than 50k.... Lol. I am pretty sure I rather let SCB hold my stocks than e excess of 50k.

 

[xRenol]

SCB account is custody account, means the shares are held in street name.
if SCB went bankrupt, you lose everything, though this is very a small probability event.
Other cons might be relevant:
1. platform is not very userfriendly or powerful in charting etc.
2. you need to place the fund in settlement account first before you can make purchase, acting more as a 'debit card' instead of 'credit card' where other brokers may offer you leverage -> but don't think this is applicable for the two methods you've mentioned

ps. i'm using SCB since it's the cheapest in town

From what I understand, the money will only be deducted a few days after the purchase. It is not necessary to place the money in the Settlement Account first before your purchase.

 

[galapogos]

Hi,

Can someone explain the settlement account?

I currently already have a savings account in SCB, so I'm thinking it would be easier for me compared to POSB/OCBC. I intend to invest at least $300 a month, though I haven't decided on my initial investment.

Can I only purchase the Nikko AM per lot? And is it automatic, i.e. every month it will deduct money from my savings account to invest for me?

 

[Terran19000]

From what I understand, the money will only be deducted a few days after the purchase. It is not necessary to place the money in the Settlement Account first before your purchase.

Nope, for SCB you have to have the money inside settlement account before purchasing.
Agree that money will only be deducted on settlement date, but if you dont have enough money on trade date, you wont be able to make trades because of insufficient purchasing power.

 

[sgbanking]

Hi,

Can someone explain the settlement account?

I currently already have a savings account in SCB, so I'm thinking it would be easier for me compared to POSB/OCBC. I intend to invest at least $300 a month, though I haven't decided on my initial investment.

Can I only purchase the Nikko AM per lot? And is it automatic, i.e. every month it will deduct money from my savings account to invest for me?

settlement account is a separate (mandatory) account under SCB, no other SCB or bank account is allowed other than it.

it is not automatic so you need to manually place the trade and execute your own customized RSP.

 

[Jajoba123]

suggest u also look at Vanguard as well if u keen to buy etfs.
i mean there r others like i-shares, etc. but Warren Buffest gave instruction to his wife's trustee to park 90% in a low cost etf S&P500 and he suggested Vanguard. So VOO it is.

 

[Vincent_G]

One more option is POEMS Sharebuilder Plan

 

[Vincent_G]

From what I understand, the money will only be deducted a few days after the purchase. It is not necessary to place the money in the Settlement Account first before your purchase.

No, SCB will not allow you to buy if you don't have enough money in your trading account..

 

[naro]

Hi,

I'm trying to get started on passive investing, in particular investing on the STI. I did a bit of reading up, and so far it seems there are 2 ways to invest in the STI.

1. SPDR STI ETF
2. Nikko AM Singapore STI ETF

To my knowledge, SPDR is more established (founded in 2002) while Nikko AM was only founded in 2009. SPDR also seems to track the index closer, but Nikko AM has a slightly lower expense ratio. I don't think these matter very much in the long run. Nikko AM also has a smaller lot size of 100 vs SPDR's 1000, which is great for a first time investor like myself. Another point I uncovered is that I need some qualification or certification to buy SPDR. All this seems to point me in the direction of Nikko AM.

Then, there are 3 platforms to invest in the Nikko AM.

1. POSB Invest Saver
2. OCBC BCIP
3. Standard Chartered

To my knowledge, POSB has a 1% buy fee, no selling fee. OCBC has a 0.3% or $5 min buy/sell fee, and Standard Chartered has a 0.2% buy/sell fee, but is more DIY.

So, POSB seems to be the best choice if buying up to $500 a month, and OCBC is cheaper after that. Standard Chartered seems great as well, in fact, it's the cheapest, but people seem to say it's more DIY rather than automatic. What are the cons of Standard Chartered?

There's also the POEMS Share Builder Plan. OCBC's BCIP minimum of $5 is waived till 30 Sep 2014.

There are a few blog posts comparing the different options:
- How to start investing? | finance4uandme
- STI ETF Monthly Investment Plans Comparison

My personal opinion and what I'm doing:
- Regular index investing into Nikko AM STI ETF via Stanchart's online trading platform
- Regular purchase of blue chip stocks via sharebuilder plan (OCBC Blue Chip Investor Plan and POEMS' Sharebuilder Plan) as I feel these plans allow for lower entry cost of those blue-chip counters and avoid timing risk.

But this is my personal opinion and action plan, ultimately, its up to you how you plan to execute it.

 

[kaixmax]

Hi,

Can someone explain the settlement account?

I currently already have a savings account in SCB, so I'm thinking it would be easier for me compared to POSB/OCBC. I intend to invest at least $300 a month, though I haven't decided on my initial investment.

Can I only purchase the Nikko AM per lot? And is it automatic, i.e. every month it will deduct money from my savings account to invest for me?

I think sgbanking has touched on this and it is not automatic. A settlement account is just a bank account that is used by SCB to deduct or credit money when you buy and sell stocks, credit dividends etc. It works on an upfront basis for SCB, meaning the money has to be inside the account before you buy shares. If you don't have any account with SCB , you can consider setting up a E-Saver account (no atm cards, no cheque, pure internet banking) to transfer money from other banks to your standard chartered accounts. This has no minimum holding sum required. This can be used as your regular savings account with stan chart and you can use it to transfer money from your E-saver account to your settlement account (you need a SGD denominated settlement account to buy singapore shares with SCB).

For what it is worth, the most cost-effective method is to get a stan chart trading account and do Dollar cost averaging by buying the SPDR STI ETF. It's much more liquid meaning the bid-ask spread is tighter although the expense ratio might be a bit higher (not sure about now). You can buy every quarter instead of once a month to accumulate enough for the minimum lot size of 1000 shares. If you don't have a trading account yet, looking up the threads by Shiny which will explain to you how to do so.

What you need to do is transfer money to SCB account --> buy shares --> repeat at regular intervals

 

[crystalnox]

I think sgbanking has touched on this and it is not automatic. A settlement account is just a bank account that is used by SCB to deduct or credit money when you buy and sell stocks, credit dividends etc. It works on an upfront basis for SCB, meaning the money has to be inside the account before you buy shares. If you don't have any account with SCB , you can consider setting up a E-Saver account (no atm cards, no cheque, pure internet banking) to transfer money from other banks to your standard chartered accounts. This has no minimum holding sum required. This can be used as your regular savings account with stan chart and you can use it to transfer money from your E-saver account to your settlement account (you need a SGD denominated settlement account to buy singapore shares with SCB).

For what it is worth, the most cost-effective method is to get a stan chart trading account and do Dollar cost averaging by buying the SPDR STI ETF. It's much more liquid meaning the bid-ask spread is tighter although the expense ratio might be a bit higher (not sure about now). You can buy every quarter instead of once a month to accumulate enough for the minimum lot size of 1000 shares. If you don't have a trading account yet, looking up the threads by Shiny which will explain to you how to do so.

What you need to do is transfer money to SCB account --> buy shares --> repeat at regular intervals

Nikko AM STI ETF also pretty decent if you only can buy in lots of 100 at a time.

 

[wahkao3]

Bro, as mentioned ad nauseum in the forum, SCB being bankrupt does not mean that our shareholdings are in jeopardy. Those assets does not appear as assets in SCB balance sheet, so SCB debtors have no access to them.

Unless SCB use our shareholdings without our approval, then there is no risk of our shareholdings being directly affected by e solvency of scb...

In contrast, for our cash holdings of more than 50k.... Lol. I am pretty sure I rather let SCB hold my stocks than e excess of 50k.

are you sure about that...............

 

[Shiny Things]

are you sure about that...............

Yes. Yes, we are sure about that.

Let's be absolutely clear: holding your shares at the bank is exactly like holding cash at the bank.

 

[wahkao3]

Yes. Yes, we are sure about that.

Let's be absolutely clear: holding your shares at the bank is exactly like holding cash at the bank.

okay..... I keep most of my equity assets in SCB. With this information, I feel more comfortable with counter party risk.

 

[galapogos]

Thanks everyone! Seems like POEMS has a higher fee. I probably won't be investing over $1000/month so I think either POSB or Standard Chartered is the best for me. I'm inclined towards SCB as I already have an e-saver account with them, while I have no POSB account. Also, the fees seem to be lower, and I don't really mind doing things manually once a month. I do that every month with my credit card bills and other personal finance matters anyway.

One more question - is it possible to sell my stocks partially with SCB? Seems like POSB only allows full redemption.

 

[tofuguy]

Thanks everyone! Seems like POEMS has a higher fee. I probably won't be investing over $1000/month so I think either POSB or Standard Chartered is the best for me. I'm inclined towards SCB as I already have an e-saver account with them, while I have no POSB account. Also, the fees seem to be lower, and I don't really mind doing things manually once a month. I do that every month with my credit card bills and other personal finance matters anyway.

One more question - is it possible to sell my stocks partially with SCB? Seems like POSB only allows full redemption.

If partially you mean: Got 10,000 in total, sell 2,000. then yes

 

[galapogos]

Hmm, just tried to create an online trading account with Standard Chartered, but I'm stuck at the Customer Account Review, which requires that I have 1 of the following:

A diploma or have a higher qualification in accountancy, actuarial science, business/business administration/business management/business studies, capital markets, commerce, economics, finance, financial engineering, financial planning, computational finance and insurance; OR

A professional qualification such as Chartered Financial Analyst Examination conducted by the CFA Institute, USA and the Association of Chartered Certified Accountants (ACCA) qualifications; OR

I have a minimum of 3 consecutive years of working experience in the past 10 years in the development of, structuring of, management of, sale of, trading of, research on and analysis of investment products, the provision of training in investment products or the provision of legal advice or possession of legal expertise on the foregoing; OR

I have a minimum of 3 consecutive years of working experience in the past 10 years in accountancy, actuarial science, treasury or financial risk management

Of which I have none. How does one pass this if he's not in the finance industry?

 

[crystalnox]

Hmm, just tried to create an online trading account with Standard Chartered, but I'm stuck at the Customer Account Review, which requires that I have 1 of the following:



Of which I have none. How does one pass this if he's not in the finance industry?

Then just tick the last one, say you have traded for >2years. You don't need to tick all the boxes to be approved.