Poems SBP for ETF
Saturday, October 18, 2014 Jes Finance 0 Comments

I like the idea that I can invest as low as S$100 a month every month.

Anyway, ETF stands for exchange traded fund and it is a basket of blue chips (check out investopedie if you do not know the meanings). When you invest in it, every month they will just keep buying the shares with the same amount of money. When it is higher price, you buy less shares, when lower price, more shares.

This is also called the Dollar Cost Averaging method.

Some of the ways you can start is here:

POEMS Sharebuilder Plan (I am using this as I prefer SPDR STI ETF but take note that a minimum of S$600 a month is more worthwhile to reduce the charges to 1%)

OCBC BCIP (0.3% charges for their recent promotion in Nikko AM)

POSB Invest Saver(1% charges but investing into Nikko AM)

There have already been some comparisons by these well knows bloggers so please check them out:

Bigfatpurse's comparison

Investopenly's comparison

Let me share why I decided to go with POEMS after some deliberation:

1) SPDR STI ETF give higher returns over Nikko AM although slightly higher expense rate too

2) They will reinvest my dividends automatically

3) I can sell odd lots (Less than 1000 shares).

Monitoring the stock market! (Source: Wikipedia)

I know I am like leaching on other people's work but it's good to consolidate these links together right =P.. This is for the difference on STI and Nikko. Basically, their basket of stocks is slightly different.

When to start trading on ETF

Everyone who is earning and has a bit of savings and do not know what to do with it.
This is not for drawing out until more than 10 years later! Anyway, I am sure everyone can afford S$100 a month! IMHO, this is better than a savings plans.

Why you should buy into ETF
This is like a passive, secure investing where the risk is low and of course, returns is not as high but reasonable (5 - 8%). I do not want my money corroded away by inflation by keeping it in a bank. I do not want to invest in those investment linked policies. I do not have to time the market, it will invest every month without fail. I put it away and forget about it and hopefully it will grow into a handsome reward when I am old and mouldy.