Sunday, August 10, 2008

Invest in the Exchange Traded Fund

Dear Mr.Tan,

I am new to investing and will like to start investing after getting my bonus next month. I read some of your blogs and the Exchange Traded Funds seems like a good choice. I am interested in investing in ETFs but not familiar with the process. How much do i need to invest in ETFs? Can i do the investment on my own or through a broker? I do not have any trading accounts, do i need to get a trading account first?

REPLY
If you go through a stockbroker, you need about $3000 to buy 1000 shares of ETF.

If you wish to invest in smaller amounts, you can go through Philips Securities. They have a plan to allow you to invest monthly, but they impose a monthly charge. I do not know the details. You can ask Philipps Securities.
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4 comments:

Wayne said...

The plan is called Share Builder Plan. More info can be found here:
http://www.poems.com.sg/financialservices/sbpFAQ.asp?value=sbp

There is however, only one ETF, the STI ETF which is available for share builder plan. Even on the entire SGX, there are less than 20 ETFs in all. In the US markets, there are more than 1000 ETFs, if I remember correctly. You can refer to this website www.etfexpert.com for the US ETFs.

In general, I find ETFs move up (and down) faster in prices than unit trusts, as they fully invested as opposed to unit trusts, where fund managers have the discretionary power to hold cash. However, this also means that time and management are needed to run an ETF portfolio.
I have tracked an ETF versus unit trust portfolio on my blog:
http://www.waynekoh.com/search/label/BFS

Can contact yours truly for share-builder-plan account opening: waynekohwg@gmail.com
h/p: 8288.9005

August 10, 2008 2:15 PM
Vincent said...

Hi Mr Tan,
What do you think of DBS Fast Track Portfolio (offered by AvivaDirect)? It offers both active and passive managed fund, which is invested in major ETF market around the world? Although, I found the expense ratio/management fee is quite high (0.75% for passive and 1.2% for active) to invest just in ETF.

http://invest.avivadirect.sg/SG/index.cfm?current=fasttrack/index

August 10, 2008 2:27 PM
Unknown said...

the share builder plan is not a good plan.
because the monthly charges are incredibly high.

if you invest $100 per month, $6.42 is deducted away as handling fee.
like that how to make money ????

do correct me if i am wrong.

August 10, 2008 10:57 PM
Wayne said...

Hi Sarpork,

You are correct. In order to lower the handling fees, a larger investment amount is needed.
A sum of $600 per month will lower the handling fees as a percentage to 1.07%. Investors can select 2 counters. Therefore, it can be $600 divided into 2 stocks, for example, STI ETF and DBS.

Thanks for spotting the "discrepancy"! :-)

August 12, 2008 4:11 PM

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