After my retirement from NTUC Income, I decided to invest most of my savings in shares on the Singapore Exchange. The shares are kept in CDP.
I had considered the option of investing the additional savings in the Combined Fund in NTUC Income, but I find the upfront spread of 3.5% to be too high.
I have now decided to transfer some of my shares to my wife and children. I asked them to open a stockbroking and CDP account. My stockbroker said that I could approach CDP to make the transfer to family members at quite modest cost.
It is better to make the transfer now, so that my family members are able to learn about investing in shares. They can collect the annual dividend directly. Later, they can also learn about investing in low cost unit trusts. They should not have to pay high charges for investment-linked funds marketed by life insurance companies.
This is also a good way of distributing some of my assets now (instead of waiting until I leave this world! )
Mr Tan, let's be fair, when you were CEO, the offer bid spread is 3.5%.
ReplyDeleteNow it is 3.0%.
You have to be fair in your posting.
You mean you are not aware of such charges when you were giving talks then?
During my time, there were offers for customers of bonus units up to 2% (depending on the amount invested) that brings the spread down to 1.5%.
ReplyDeleteI find a spread of 3% to be too high, when the alternative is 0.3% (by buying shares). Even unit trust have promotions that bring their spread down to 1.5%.
to Anonymous 3.03 pm
ReplyDeleteAs a customer, Mr Tan is not obliged to invest in NTUC funds, if the funds do not give him a good deal.
There are many unit trusts and other funds that offer less than 3%spread. If NTUC continues to be high cost, it deserves to lose its customers.
Mr Tan is an existing customer, who wants to invest directly. Why do you still have to charge 3% spread? Are you paying any commission to somebody in the food chain - someone who does nothing and just collect commission?
I agree with 4.56pm. Why should we pay ntuc agents a high spread for receiving no advice. What do the agents know about investment? Ntuc should consider a discount to people who want to invest directly without going through hopeless agents.
ReplyDeleteTo 3.03pm , what are you implying?
You mean no change for the spread?If ntuc can change bonus why not the spread to 1.5% or 1%?
If ntuc is serious about about giving good return to policyholders, they should consider lowering the spread for people who want to buy directly. Why go through a useless agent who is no more than a salesman or woman?
The problem with ntuc agents they don't know die when during Mr. Tan's time the so called 'sales' were handed on a platter to them. They are skillfool in what? Nothing, zero.
Mr Tan,
ReplyDeleteI do buy the STI ETF too. It has the lowest sales charge.
When you were CEO, you mentioned you gave bonus units. The sales charge can be as low as 1.5%. In my opinion, this is still too high.
Why did you not bring it low enough to STI ETF level? Can you tell us how much goes to commissions for agents with the sales charge?
The question can also be asked of why you should be paying bankers or bank relationship mgrs or personal bankers 5% or 3% of commission when you buy the unit trusts that can be obtained cheaply online.. even though they have not exactly given advice that will help you plan for your future.
ReplyDeleteIf you are angry at the agents.. you should be angry at the bankers as well.
Anyway, instead of being angry, why don't you try to discern the good from the bad .. the ethical from the unethical... educate yourself and form your own judgement.
You , ultimately, is responsible for your own future.
Insurance is meant for protection only. If you really want to make money or grow wealth - trade fx, futures or play stocks...investing is a never-stop learning process.
ReplyDeleteBlackbox,
ReplyDeleteFunds and ETFs are different tools.
ETFs are meant to track the index, but funds are managed by professionals who can track, underperform/overperformance the index.
I think 1.5% is fair deal and it is not "too high".
Commissions are given to agents to go out to sell the funds to people who do not invest or does not know how to invest. ETF do not have this cost and it is meant for more investment-savvy individuals like yourself.
Hi Mr 2:35 AM,
ReplyDeleteI agree funds and ETFs are different tools.
However, it is a fact most professional funds underperform the index.
Mr Jack Bogle from Vanguard has done studies to find that 80% to 90% of professional funds underperform the index. Mr Warren Buffet has also on many occasions said that the best way for the man on the street to invest is through a passively tracked fund. Mr Benjamin Graham has also talked about passive investment in this book "The Intelligent Investor".
Looking at the post, I have to agree with you 1.5% is actually not that high. Afterall, it is a one-off cost and is minimal impact for the long term investor.
However, I am quite against actively managed funds as most of them are inferior to their respective benchmark.
Actually a cooperative like NTUC Income should follow the example of Vanguard. Introduce index funds for everyone to invest in, and have zero sales charge.
But I think this will be quite hard to come by; looking forward to Mr Tan's new company.
You are right , less than 10% of actively managed funds outperformed the benchmarks. Why should we invest in funds that show flute shot performance? The problem is customers
ReplyDeleteare sold on yesterdays' performance and this is the modus operandi of salesmen. This is rear mirror investing.