Blue Chip Investment Plan Vs Invest Saver

Banks are trying to make it affordable to buy and own equities. Personally, I think that having a little investment is good, as it is one of the better ways to grow your wealth. A lot of researches have shown that over a long run, equities often outperform the rest as an investment product. The only problem is that equities often trade in standard lots. At SGX, it is traded in lots of 1000 shares. There are talks that the exchange will lower it to 100 soon, but it is still some time away from actual implementation. In the meantime, what option do consumers have when they want to own shares, but yet have only a small pool of money to invest?

Regular Savings Plan

OCBC and POSB each came out with some Regular Savings Plan (RSP) that targets this group of consumers. Each month, consumer will use a fix amount to buy the equities or exchange traded fund of their choice. This means that when the price are high, it will buy fewer lots, but when the prices are low, it will buy more lots. In investment terms, this is called dollar cost averaging. In the long run, it tries to make your overall purchase price of the equities lower than the current traded price.

The Plans

For OCBC, the plan is called Blue Chip Investment Plan (BCIP). Below are the highlight from this plan.

• Invest with monthly minimum amount of $100
• Can choose to buy stocks in 19 counters that are part of the STI, or 1 ETF that tracks the STI.
• Buying fee of 0.3% of transacted price or $5, whichever is higher
• Selling fee of 0.3% of transacted price or $5, whichever is higher

For POSB, the plan is called Invest Saver. Below are some of the features from this plan

• Invest with monthly minimum amount of $100
• Can only buy an ETF that tracks the STI
• Buying fee of 1% of transacted price
• Selling fee of 1% of transacted price

The above does not take into account on-going promotions that the individual banks are having on this product.

Comparison

You may ask, which one will be a more suitable product for me?
I will say it all depends on your need.

Q: Would you want to buy blue chip counter or only ETF?

If you want to buy blue chip, then you need to sign up BCIP. But if you are looking to buy ETF, then you will have the option to sign up either one.

Q: If I am buying ETF, which one will I pay less transaction fee?

It all depends on how much you want to invest. If  you are investing less than $500 per month, POSB Invest Saver will be a better choice, as there is a minimum transaction fee of $5 for OCBC. But if you are investing more than $500 per month, then OCBC will provide you with a more cost effective solution.

Summary

Even if you are already investing through your broker, there is no harm in signing up for this plan. The transaction cost for small investment amount is very much lower than what a typical broker charges for buying shares. Which plan you choose will ultimately depends on your investment goals. But one time is for sure, investing regularly and early is the best way to beat the up and down of the market.