Endowment Plan VS SSB VS Regular Share Saving Plan

[ongkinhong12345]

Hi,

I only have S$300 per month for investment.

What type is suitable for starters?
Blue chip investment plan, invest saver, share Builders plan.

Manulife, Aviva ot Great Eastern?

Besides, if I choose DBS invest saver.
Option A.
ABF - sgd100/month
STI - sgd200/month

Or

Option B.
STI -sgd300/month
Which one is better?

I’m kind confused!!!

 

[BBCWatcher]

S$300 per month equates to S$3,600 per year. One way to split this would be:

$1,000/year into bonds
$100/month into Singapore listed stocks ($1,200/year)
$1,400/year into globally listed stocks

And that'd be a decent split. You could execute those contributions this way:

1. $500 every 6 months into MBH via OCBC's BCIP. To do that you'd need to issue carefully timed, manual instructions to resume and suspend your $500 purchases, but it can be done. Just make sure you understand how the deadlines work and set calendar reminders to yourself on your smartphone, for example.

2. $100/month into G3B via POSB Invest-Saver. This part is hands off/automatic.

3. $1,400/year into IWDA or VWRA via Standard Chartered. This is a manual, once a year purchase.

With this approach you would have only 5 manual tasks to perform per year: 4 for MBH (resume/suspend/resume/suspend), 1 for IWDA or VWRA. And that's not bad!

 

[Mecisteus]

Just go with option B.

If you have extra cash then can consider overseas ETF.

RSP - STI ETF
+ lower cost
+ higher potential returns
+ liquid and can sell in 3, 5 or 10 years
- value is volatile depending on market conditions
- no insurance coverage

Endowment
+ with low insurance coverage
+ no volatility
- must hold many years to break even
- high commissions to agent

 

[Mecisteus]

3. $1,400/year into IWDA or VWRA via Standard Chartered. This is a manual, once a year purchase.

With this approach you would have only 5 manual tasks to perform per year: 4 for MBH (resume/suspend/resume/suspend), 1 for IWDA or VWRA. And that's not bad!

Once a year purchase is quite a big gap to capture and average prices meaningfully.

For $300 monthly, I suggest it is better to just initiate STI ETF with POSB IS once and then forget it.

 

[BBCWatcher]

Once a year purchase is quite a big gap to capture and average prices meaningfully.

Sure, but the holding period is many decades (to near retirement), and it's still a random part of a deliberate program -- every November 8th or whatever. It's not a problem. In fact, it works really well in the Singapore context with "13th month" bonuses if that's what you get. Align your IWDA/VWRA buy with that 13th month payment.

As the savings flow increases -- career progression, etc. -- the same basic foundation applies, just with adjustments to buying amounts and frequencies. Buying IWDA or VWRA once per year isn't going to be a permanent feature.

For $300 monthly, I suggest it is better to just initiate STI ETF with POSB IS once and then forget it.

That's only slightly simpler (reduces 5 manual actions per year to zero), but it's much riskier, incredibly non-diversified.

If you want to ignore the bond leg then it could be $100/month into G3B via POSB Invest Saver and $1,200 every half year into IWDA or VWRA via Standard Chartered. That's only 2 manual actions per year.

 

[ongkinhong12345]

Hi BBC!

I’m enjoying your BBC CLUB information.

I have a few questions
1. Should I terminate the A35.SI ?
I bought 3 months ago thru posb IS.
2. If I can allocate sgd2400 yearly for IWDA / VWRA? should I buy like
sgd1200 on June and sgd1200 on Dec?
3. For long term investment(newbie), which is more suitable?(IWDA/VWRA)
4. Read a lot from shiny things post,
SCB is much more suitable from IB.
(from small capital investors) am I right?


Summary:
1. sgd100 monthly - G3B
2. sgd100 monthly - MBH
3. sgd2400 yearly - IWDA/VWRA

Would be good?

Sorry for my broken English

 

[Value.Matrix]

Ultimately, we have to understand a few things before we even tell you what to do about it.

(1) What kind of returns are you looking at?
(2) When do you need the funds?
(3) What are the percentage loss / absolute loss you can take
(4) How active or passive are you?
(5) Do you want advice from any advisor?

Seedly has done a blog on RSP. it sums up a lot for RSP.

Honestly speaking, for $3,600 options, ($300 fund)

I would suggest to go into Robo-advisors or some low cost funds to remove your mind from rebalancing.

The brokerage fee itself would be at least 0.15% for a $6000 DBS cashupfront account.

If you are rebalancing, the fees can go up to 0.5% per buy AND sell. We just hope the Dollarcost Averaging is helping you to just need to buy only.

If you are using other interactive brokers, it depends on how much per trade is. I have not used them much, so i would let those who are experienced and familiar with them to suggest.

Endowments are really only for beating inflation, and if you die die must require that amount and cannot sleep if you suffer a loss.

 

[BBCWatcher]

Summary:
1. sgd100 monthly - G3B
2. sgd100 monthly - MBH
3. sgd2400 yearly - IWDA/VWRA
Would be good?

1. That works via POSB Invest-Saver.

2. For cost/expense reasons, try $500 every 6 months via OCBC's BCIP. That'd require 4 carefully timed, manual instructions per year: resume/suspend/resume/suspend.

3. Try $1,300 every 6 months via Standard Chartered. That'll require 2 manual actions. Take your pick of either IWDA or VWRA. They're both fine, as you prefer.

Total = 6 manual actions per year, really 3 every 6 months. That's low effort, I'd say.

 

[ongkinhong12345]

Thanks for your advice!!!

1. That works via POSB Invest-Saver.

2. For cost/expense reasons, try $500 every 6 months via OCBC's BCIP. That'd require 4 carefully timed, manual instructions per year: resume/suspend/resume/suspend.

3. Try $1,300 every 6 months via Standard Chartered. That'll require 2 manual actions. Take your pick of either IWDA or VWRA. They're both fine, as you prefer.

Total = 6 manual actions per year, really 3 every 6 months. That's low effort, I'd say.

 

[dgenex]

I'm in a similar situation. Looking to invest about $300/month split between ES3 and MBH using DCA.

In this case would using Philips Capital Share Builder and depositing $900 every 3 months make sense? Would cost $6 (2 counters) for $900 investment.

Or are there any better options? Would appreciate any help!

Sent from Xiaomi REDMI NOTE 7 using GAGT

 

[BBCWatcher]

I'm in a similar situation. Looking to invest about $300/month split between ES3 and MBH using DCA.

Where's the global diversification?

....Let's assume you (wisely) include global diversification in your long-term investment strategy. S$300/month equates to S$3,600 per year, which you could arrange this way (example):

1. S$100/month into G3B via POSB Invest-Saver;

2. S$500/year into a Singapore Savings Bond or into MBH via OCBC's BCIP. (BCIP is a monthly investment program and will require issuing resume/suspend instructions to OCBC per their instruction deadlines in order to annualize investments.)

3. S$950 every 6 months into IWDA or VWRA via Standard Chartered. (If IBKR Lite or some other, low cost option becomes available in Singapore in the future, switch to that.)

That'd give you these input allocations:

Bonds: ~13.9%
SGX Listed Stocks: ~33.3%
Globally Listed Stocks: ~52.8%

That's pretty decent for a long-term investor planning to retire in Singapore who is not a U.S. person. Don't even worry about rebalancing for the first few years. As your savings flow can be increased, go ahead and do that and adjust.

 

[dgenex]

Where's the global diversification?

....Let's assume you (wisely) include global diversification in your long-term investment strategy. S$300/month equates to S$3,600 per year, which you could arrange this way (example):

1. S$100/month into G3B via POSB Invest-Saver;

2. S$500/year into a Singapore Savings Bond or into MBH via OCBC's BCIP. (BCIP is a monthly investment program and will require issuing resume/suspend instructions to OCBC per their instruction deadlines in order to annualize investments.)

3. S$950 every 6 months into IWDA or VWRA via Standard Chartered. (If IBKR Lite or some other, low cost option becomes available in Singapore in the future, switch to that.)

That'd give you these input allocations:

Bonds: ~13.9%
SGX Listed Stocks: ~33.3%
Globally Listed Stocks: ~52.8%

That's pretty decent for a long-term investor planning to retire in Singapore who is not a U.S. person. Don't even worry about rebalancing for the first few years. As your savings flow can be increased, go ahead and do that and adjust.

Sorry, forgot to mention the $300/month I've set aside for SG investments. And its not inclusive of the $200 I was planning to invest in IWDA/VWRA as u mentioned above! I'm still exploring what percentage to invest in SG vs Overseas as well.

Was just thinking of investing in ES3 instead of G3B, so thought about using Philips Capital for both instead.

Also, I read in the Philips Capital product sheet that there's a 1% dividend charge? Does this mean they take 1% of your dividends? i.e Dividend of $5, you get $4.95.

And is this charge similar across all RSP?

Thanks alot! Sorry beginner here!

Sent from Xiaomi REDMI NOTE 7 using GAGT

 

[BBCWatcher]

Sorry, forgot to mention the $300/month I've set aside for SG investments. And its not inclusive of the $200 I was planning to invest in IWDA/VWRA as u mentioned above! I'm still exploring what percentage to invest in SG vs Overseas as well.

OK, I think I understand.

Was just thinking of investing in ES3 instead of G3B, so thought about using Philips Capital for both instead.

No, that doesn't matter. ES3 and G3B are now extremely competitive with one another.

I think at this level of savings/investment flow, POSB Invest-Saver into G3B is going to be the low cost winner. For example, you could have S$200/month flowing into G3B via POSB then "batch up" the other S$100/month into MBH buys via OCBC's BCIP, probably at S$600 every 6 months. Then you've got S$200/month flowing into IWDA or VWRA, also "batched up" into buys every 6 months, probably (and via Standard Chartered in this case).

If you want to make that S$100/month into Singapore dollar denominated bonds, S$100/month into G3B, and S$300/month into IWDA or VWRA, I'd like that better. That'd be 20% bonds, 20% SGX listed stocks, and 60% globally listed stocks, the sort of split I prefer for long-term investors planning to retire in Singapore who are at least 10+ years away from retirement.

Also, I read in the Philips Capital product sheet that there's a 1% dividend charge? Does this mean they take 1% of your dividends? i.e Dividend of $5, you get $4.95.

Maybe, but they can also automatically reinvest dividends. POSB Invest-Saver doesn't do that, unfortunately. Even so, I think POSB narrowly wins this particular contest at these flow levels.

 

[dgenex]

OK, I think I understand.


No, that doesn't matter. ES3 and G3B are now extremely competitive with one another.

I think at this level of savings/investment flow, POSB Invest-Saver into G3B is going to be the low cost winner. For example, you could have S$200/month flowing into G3B via POSB then "batch up" the other S$100/month into MBH buys via OCBC's BCIP, probably at S$600 every 6 months. Then you've got S$200/month flowing into IWDA or VWRA, also "batched up" into buys every 6 months, probably (and via Standard Chartered in this case).

If you want to make that S$100/month into Singapore dollar denominated bonds, S$100/month into G3B, and S$300/month into IWDA or VWRA, I'd like that better. That'd be 20% bonds, 20% SGX listed stocks, and 60% globally listed stocks, the sort of split I prefer for long-term investors planning to retire in Singapore who are at least 10+ years away from retirement.


Maybe, but they can also automatically reinvest dividends. POSB Invest-Saver doesn't do that, unfortunately. Even so, I think POSB narrowly wins this particular contest at these flow levels.

Ah I see, alright thanks a lot for the advice!

Sent from Xiaomi REDMI NOTE 7 using GAGT

 

[ongkinhong12345]

Hi BBC,

What if invest into robot-advise like stashaway or digiportfolio POSB?
Compare to the method earlier?

Using the same amount .

OK, I think I understand.


No, that doesn't matter. ES3 and G3B are now extremely competitive with one another.

I think at this level of savings/investment flow, POSB Invest-Saver into G3B is going to be the low cost winner. For example, you could have S$200/month flowing into G3B via POSB then "batch up" the other S$100/month into MBH buys via OCBC's BCIP, probably at S$600 every 6 months. Then you've got S$200/month flowing into IWDA or VWRA, also "batched up" into buys every 6 months, probably (and via Standard Chartered in this case).

If you want to make that S$100/month into Singapore dollar denominated bonds, S$100/month into G3B, and S$300/month into IWDA or VWRA, I'd like that better. That'd be 20% bonds, 20% SGX listed stocks, and 60% globally listed stocks, the sort of split I prefer for long-term investors planning to retire in Singapore who are at least 10+ years away from retirement.


Maybe, but they can also automatically reinvest dividends. POSB Invest-Saver doesn't do that, unfortunately. Even so, I think POSB narrowly wins this particular contest at these flow levels.