How to begin investing in stocks – the lazy way

My investment journey began at time where you had to open a trading account, a CDP account and stocks were bought in lots of 1000 shares.
Ahh… the not so good old days.
It was really expensive to buy even like 1 lot of blue chip stock like Singtel, which was about $3000.
Nowadays, you can start with just $100 a month, and get a basket of 30 STI component stocks, instantly diversifying your portfolio.
Introducing the POSB-InvestSAVER.

What is POSB Invest-Saver?

It is a Regular Savings Plan (“RSP”) that allows you to invest via a GIRO arrangement on a monthly basis. It is designed for those who:

  • may not have a huge capital
  • want to potentially grow their long-term savings
  • are looking to diversify their portfolio
  • are seeking a relatively simple way to invest

From just S$100 a month, you can now invest affordably in either Singapore bonds or blue chip stocks, via two Exchange Traded Funds (“ETFs”) listed on the Singapore Exchange.

Here is a quick guide on how to begin investing in POSB Invest-Saver.
What you need:
A POSB bank account.
Minimum investment amount :
$100 a month
Fees :
1% or $1 if your investment amount is $100.
How to apply :
1) You can do so at the ATM.
2) Online ibanking (preferred)
Steps to follow
You can find out more info on the POSB Invest SAVER at their website.
Pros :
  • Easy to set up and forget about it, every month you will be investing on autopilot.
  • Good if you have a small amount to start investing with
  • Dollar Cost Averaging – Using the fix amount, you will buy more units when the price is low, buy less when the price is higher, lowering your average costs.
  • Convenient – easily redeem the units back to your own bank account
  • You can reinvest your dividends to grow your investment faster
Cons :
The fees can be high if you are investing a large amount ( > $500 )
There are only 2 funds to choose from in the RSP.
Which Fund to invest ?
 
I personally recommend the STI ETF over Bond as the returns are just much better.
STI ETF has annualised returns more than 10% over 10 years and about 3% for the Bond.
You can opt for both if you want to spread your eggs but for me I think STI ETF is safe enough to put all my cash there, since it traces the index of top 30 companies in Singapore.
Only invest spare cash which you are not going to use for the next 5 or 10 years. If you need the money in the near future, just keep it your bank savings account.
What will your returns look like :
Dividends have been increasing over the years.
1 unit of Nikko AM will earn you about $0.098
$100 will get you about 33.3 units or $3.16.
Try getting that interest from a bank !
Other comparisons :

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