Question regarding blue-chip investments

[dreamyxq]

Hi, I've recently started researching and planning to do some investment for some spare cash that I have. I came across POSB's Blue Chip Invest-Saver and OCBC Blue Chip Investment Plan, however, as I'm totally new to investments I have quite some question that I need to clarify with experienced experts over here

1. How does, say POSB's Invest-Saver work? It says that I just need to contribute at least $100 monthly to invest. So does it mean that I just setup my account and contribute $100 every month? Or do I need to choose which blue-chip I want to specifically invest in?

2. How does blue-chip investment return? I know briefly that they pay dividends. But, when? Annually? And does the dividend automatically gets credited into my POSB account, if I sign up for POSB's Invest-Saver?

3. How does the risks work out? Say if I'm on POSB's Invest-Saver for $100 monthly, after 2 years, if say some thing bad happen to some company or the economy, do I lose 100% of the money from the investment? Or how does it work, can anyone show me an example scenario?

4. Is this kind of investment plan really worth it? Or am I better off going to fixed deposits that are offering 1% pa?

 

[makav31i]

Hi, I've recently started researching and planning to do some investment for some spare cash that I have. I came across POSB's Blue Chip Invest-Saver and OCBC Blue Chip Investment Plan, however, as I'm totally new to investments I have quite some question that I need to clarify with experienced experts over here

1. How does, say POSB's Invest-Saver work? It says that I just need to contribute at least $100 monthly to invest. So does it mean that I just setup my account and contribute $100 every month? Or do I need to choose which blue-chip I want to specifically invest in?

2. How does blue-chip investment return? I know briefly that they pay dividends. But, when? Annually? And does the dividend automatically gets credited into my POSB account, if I sign up for POSB's Invest-Saver?

3. How does the risks work out? Say if I'm on POSB's Invest-Saver for $100 monthly, after 2 years, if say some thing bad happen to some company or the economy, do I lose 100% of the money from the investment? Or how does it work, can anyone show me an example scenario?

4. Is this kind of investment plan really worth it? Or am I better off going to fixed deposits that are offering 1% pa?

Read here,
http://forums.hardwarezone.com.sg/stocks-shares-indices-92/posb-invest-saver-4309151.html

http://forums.hardwarezone.com.sg/s...e-chip-investment-plan-bcip-ocbc-4271264.html

http://forums.hardwarezone.com.sg/s...en-nikko-am-sti-etf-spdr-sti-etf-4355084.html

Summary:
POSB Invest Saver can only invest in Nikko Am STI ETF...OCBC BCIP can invest in Nikko Am STI ETF and 19 other stocks like telcos and etc...Currently, Nikko Am STI ETF would issue dividend in July and January...If you invest in index fund, you are investing in a basket of companies in the exchange...the only situation when the price is zero is if all the company in the basket of companies in the exchange were to collapse simultaneously...By then, you would have other problems in hand...Worth it or not, it really depends on your risk appetite and your time frame...

 

[AhPek_Lion]

1. How does, say POSB's Invest-Saver work? It says that I just need to contribute at least $100 monthly to invest. So does it mean that I just setup my account and contribute $100 every month? Or do I need to choose which blue-chip I want to specifically invest in?

2. How does blue-chip investment return? I know briefly that they pay dividends. But, when? Annually? And does the dividend automatically gets credited into my POSB account, if I sign up for POSB's Invest-Saver?

3. How does the risks work out? Say if I'm on POSB's Invest-Saver for $100 monthly, after 2 years, if say some thing bad happen to some company or the economy, do I lose 100% of the money from the investment? Or how does it work, can anyone show me an example scenario?

4. Is this kind of investment plan really worth it? Or am I better off going to fixed deposits that are offering 1% pa?

1) When setting up, you can chose the amount you want to be auto-deducted every month. Minimum sum is $100 and for POSB invest saver, automatic it will invest in SGX G3B (NIKKO AM STI ETF) which tracks a total of 30 different blue chips under this counter.

Assuming you chose to invest $100 with POSB invest saver every mth, there will be a deduction of $100 from ur posb account on every 10/11th and the money will be used to purchase SGX 3GB (NIKKO AM STI ETF) on the next trading day

Assuming each share cost $3.40, your $100 can buy maximum 29 shares.

So $3.40 * 29shares = $98.60
A 1% service fee will be charged based on this amount: $0.99

Therefore, they will refund u $0.41

2) Dividends get paid semi-annually (2x per yr) in July and Jan. It will get credited directly to ur POSB saving accounts

3) As i mentioned earlier, this ETF is comprised of a total of 30 different company shares, therefore the risk is diversified. Assuming 10 of the 30 companies are doing badly while the other 20 are doing ok, you will not be that badly affected.

Unlikely that you will lose 100%

Refer here for the 30 companies: https://sg.finance.yahoo.com/q/cp?s=^STI

4) This plans has its risk; however if you just want to park some money and let it grow long term, it will be better than FD (estimated 1.5 - 2% dividend per yr).

Let me give u an example:

You put $6,000 in an FD at 1% p.a; u get about $60/yr but this $6k is stuck in it for 1yr. Benefits is that your capital is guaranteed but there is No flexibility

Assuming you put $500 per mth ($6000/yr) in POSB invest savers and each month u are able to buy 145 shares.

At the end of 6mths, u will get a dividend pay out of average $0.035 per share or 870shares*0.035 = $30.45

and at 12mths, by then u have 1740shares*0.035 = $60.90

Total Interest for the year is $91.35 but you have the flexibility to terminate or sell away the shares whenever you need the cash. Besides, you could potentially earn even more if you sell your shares when the price is higher than what u got it at.


What i suggest is that if you cannot lose alot (like me), start small and learn how this thing works. If you think it is good, you can increase your limit any time at the ATM machine

 

[dreamyxq]

thanks @AhPek_Lion bro.. very useful information over there!

another question I have is regarding the dividend returns. How will I know how much I will receive as dividend from the blue-chip share? And also, any site that I can go to for detailed information about SGX G3B like how each companies are doing, how much dividends are each companies giving out, things like that..

 

[makav31i]

thanks @AhPek_Lion bro.. very useful information over there!

another question I have is regarding the dividend returns. How will I know how much I will receive as dividend from the blue-chip share? And also, any site that I can go to for detailed information about SGX G3B like how each companies are doing, how much dividends are each companies giving out, things like that..

If you have done even a bit of research or even minimally read the links that I provided, you wouldn't even ask the question...SGX website would have the Corporate Announcement and whatever dividend the company wants to issue would be there...Google "SGX" if you don't know how to find the website...

In case you don't know how to Google...

Clich here...

Here is on Nikko Am STI ETF....

http://www.nikkoam.com.sg/etf/sti

 

[Dividends Warrior]

A general advice for beginner investors.

Google and SGX.com are your best friends.

 

[dreamyxq]

When you guys buy blue-chip shares like that, are you looking for the price to go up and sell them for profit or rather just waiting for regular dividends?

Because if it is the first case, POSB's invest-saver doesnt allow me to sell the shares partially, can only sell all at the same time.. How would I then execute a "buy-low sell-high"? Or we can suspend purchase until the price is low so when can profit by buying low and selling high?

 

[zeroX26]

Blue chips investment programs offer by the banks are based on dollar cost averaging. In other words, some months you get a good low price, some months you pay a not so good higher price, but in the long run with averaging, its still a positive uptrend. There's no way for you to use the "buy low sell high" since you can't dictate the buy/sell date & amount.

If you want to buy low sell high, save up until you have enough to buy a whole lot. Otherwise you can wait for SGX to implement the transaction volume in units of 100.

 

[dreamyxq]

So for these investment programs, what is my main objective? Wait for say, 10 years when the price "peaks" and sell all units for profit? Or just let it remain and earn dividends?

 

[wahkao3]

i dont like blue chips.
Blue chips are low risk low return
I want low risk, high return!

 

[zeroX26]

Such programs are to allow retail investors to buy blue chip shares without committing a lump sum of money at 1 go. A purchasing a blue chip is usually for a combination of capital growth + some dividend (usually 3-4%).

It depends what growth are you comfortable with? If after 2-3 yrs it has appreciated by 20-30% & you are fine with it, sell it then. Please don't tell me you want to grow the $ by as much as possible. Nobody will know the peak & bottom.

 

[dreamyxq]

"low risk high return" sounds too good to be true..
which investment product can provide low risk high return? share leh

 

[zeroX26]

i dont like blue chips.
Blue chips are low risk low return
I want low risk, high return!

Pls bring your rubbish somewhere else. Its obvious TS is a beginner; don't come & confuse things further.

 

[dreamyxq]

Such programs are to allow retail investors to buy blue chip shares without committing a lump sum of money at 1 go. A purchasing a blue chip is usually for a combination of capital growth + some dividend (usually 3-4%).

It depends what growth are you comfortable with? If after 2-3 yrs it has appreciated by 20-30% & you are fine with it, sell it then. Please don't tell me you want to grow the $ by as much as possible. Nobody will know the peak & bottom.

I kind of get the idea now..

Actually, if the dividend is 3-4% regularly, it's already quite high compared to most fixed deposits offer, 1%. So I would say if it really is 3-4%, I can safely ignore the capital growth and just let the dividends roll in regularly. Am I correct to say that?

 

[Shiny Things]

I kind of get the idea now..

Actually, if the dividend is 3-4% regularly, it's already quite high compared to most fixed deposits offer, 1%. So I would say if it really is 3-4%, I can safely ignore the capital growth and just let the dividends roll in regularly. Am I correct to say that?

No. Couple of reasons:

1) Capital growth is important! Unless the company pays out a LOT of dividends (like REITs do), you'll be making a lot (maybe even a majority) of your money from capital growth.

2) Capital doesn't always "grow". Dividend stocks can go down too - no stock investment is completely risk-free. And god forbid the company cuts the dividend.

 

[zeroX26]

I kind of get the idea now..

Actually, if the dividend is 3-4% regularly, it's already quite high compared to most fixed deposits offer, 1%. So I would say if it really is 3-4%, I can safely ignore the capital growth and just let the dividends roll in regularly. Am I correct to say that?

1) The POSB interest saver is not a Blue Chips program, only the OCBC one is, so please read properly.

2) Not all blue chips offer a 3-4% dividend payout. The bigger names do, off my head I can think of are Keppel Corp, DBS etc.

3) Blue chips are not indestructible. At a macro downturn, they can still sink. When that happen, can you stomach the drop & still sleep well? If you cant, stick to FD.

 

[wahkao3]

3) Blue chips are not indestructible. At a macro downturn, they can still sink. When that happen, can you stomach the drop & still sleep well? If you cant, stick to FD.

i cant .

 

[dreamyxq]

1) The POSB interest saver is not a Blue Chips program, only the OCBC one is, so please read properly.

2) Not all blue chips offer a 3-4% dividend payout. The bigger names do, off my head I can think of are Keppel Corp, DBS etc.

3) Blue chips are not indestructible. At a macro downturn, they can still sink. When that happen, can you stomach the drop & still sleep well? If you cant, stick to FD.

POSB Invest-saver is not? Then what is it? The micro-site did say that it is a blue-chip regular saving plan..

If I'm not wrong, POSB's program is for Nikko STI ETF, which includes DBS etc etc..

 

[zeroX26]

Nikko STI ETF is a compilation performance index of blue chips, NOT individual blue chips. I don't know does Nikko STI ETF give out dividends or not. Im writing from the perspective of buying individual blue chips i.e. you put $300 a month and that goes to buying only DBS. That's what OCBC blue chip investment program is offering.

There's 2 other threads which give clear and easy to understand information about OCBC & POSB's programs, so don't ask me to explain the diff. Go & read them.

 

[makav31i]

Nikko STI ETF is a compilation performance index of blue chips, NOT individual blue chips. I don't know does Nikko STI ETF give out dividends or not. Im writing from the perspective of buying individual blue chips i.e. you put $300 a month and that goes to buying only DBS. That's what OCBC blue chip investment program is offering.

There's 2 other threads which give clear and easy to understand information about OCBC & POSB's programs, so don't ask me to explain the diff. Go & read them.

Nikko Am STI ETF gives out dividend in July and January...SPDR STI ETF also gives out dividend twice a year...Do note past performance is not an indicator of future performance...