Monday, July 1, 2013

OCBC Blue Chip Investment Plan (BCIP)


When I first heard about the OCBC Blue Chip Investment Plan, the first thing I did was to scroll down to the Fees & Charges section! Before you go down the same path as me, first you can check out what it is. It has a decent webpage and plenty of information.

Now, for the important part of OCBC Blue Chip Investment Plan :
Buying/Selling of shares - 0.30% or S$5 per counter, whichever is higher.

Touted as an "affordable and hassle-free way to invest in blue chip shares", I guessed they forgot to tell you the humongous percentage of your hard earned money that would go towards paying of fees.

If you are going to invest only $100 monthly, your fees would be 5.0%.
If you are going to invest only $200 monthly, your fees would be 2.5%.
Even if you invest $500 monthly, your fees would still be pretty hard to swallow at 1.0%.

To be fair, they have stated that the launch promotion that is luring you in is only temporary.
For a limited time only, you only have to pay a fee of 0.30% when you buy or sell through BCIP.

Assume that the limited time promotion is over, and the Nikko AM STI ETF is priced at $3 now. You invest $100 monthly through BCIP. In 3 months, you spend $300, and pay $15 in fees. ($5 monthly)

Now, assume that someone buys Nikko AM STI ETF differently through Standard Chartered. Save up $100 monthly for 3 months, and buy 1 lot of 100 units for $300. Fees? 60 cents at 0.2%. (of course, you'll still need to pay the SG Clearing Fee)

I guess I'll be sticking to Standard Chartered Bank for now. Let's just pray that the 0.2% fee remains unchanged, shall we?

Useful Tidbit for Today : 
A lot of people have asked whether STI ETF pays dividend, and the answer is YES!

18 comments:

  1. There is also a dividend charge of 1% for the OCBC BCIP (didnt read in detail), so it's v expensive!

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    1. Woah, didn't know that! Thanks for highlighting it!

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    2. Just called OCBC regarding this, officer indicated that there is no charge for dividend. Can you share any link stating otherwise? Thanks. Very informative blog.

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    3. Thanks for sharing. Maybe stabbys can share the source of the information?

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  2. I read your blog with interest and thanks for educating. Does the SCB platform allow you to use SRS to pay for your ETF contributions or its just cash. I dont seem to be able to find the info from SCB.

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  3. Thanks for your comments, as far as I know only the 3 government appointed operators (DBS, UOB and OCBC) are allowed to deal with SRS investment.

    http://www.moneysense.gov.sg/understanding-financial-products/insurance/guides-and-articles/making-sense-of-the-supplementary-retirement-scheme.aspx

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  4. Just for proper comparison, how much would be the total charge if you buy 1 lot of Nikko AM STI ETF via SCB? Thanks.

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    1. As an example, G3B closed at $3.30 today.
      If I buy 1 lot of 100 shares from SCB,

      Trade Consideration : SGD 330.00
      Client Commission : SGD 0.66 (0.2%)
      SG Clearing fee : SGD 0.13 (0.04%)

      Total = $330.79

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  5. Thanks for the information.

    How about POSB Blue chip investment? Seems like Standardchartered is cheaper compare to Philip SBP. if you compare with POSB, can you advice which is cheaper. let's say $200/mth.

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    1. Hmm. You mentioned POSB, Standchart, and Philip all in your post! I did a quick read online - say we invest $200/month on one counter, STI ETF, and we exclude GST blah blah.

      POSB = 1% of $200 => $2
      OCBC = 0.30% or S$5 whichever is higher => $5
      Philip = $6

      Standard Chartered isn't a Regular Savings Plan and can't really be compared in the same light as the above, but you can always buy 1 lot of Nikko AM STI ETF every two months (be disciplined!) and pay only 0.2% in fees.

      For myself, check out my purchase log on the left. On average, I do a purchase of 1 lot (100 shares) monthly.

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  6. Thanks for the info.

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  7. Just for comparison purpose. What is your opinion on POSB offer on bluechip?

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  8. A quick reply :

    Based on the fees, both POSB Invest-Saver and OCBC Blue Chip Investment Plan offer the same access to Nikko AM STI ETF at different fees structure.

    POSB = 1%
    OCBC = 0.3% or $5, whichever is higher

    Generally speaking :
    For $100 to $400, POSB has lower fees.
    At $500, both POSB and OCBC will cost you $5.
    For amount greater than $500, OCBC will have lower fees.

    I haven't taken a more detailed look at POSB Invest-Saver yet (probably a blog post at a later time), but one thing jumps out at me -

    "Only full redemption of your total holdings in the POSB Invest-Saver is allowed. No partial redemption will be accepted."

    This is a definite no-no for me since it won't permit re-balancing or asset classes.

    Is it good enough for the common folk with only $100 to invest monthly? Probably yes. Some gain is better than no gain.

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  9. thanks for the advice. looking forward for your blog on POSB Invest-saver.

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  10. Here's some more information on how to consider OCBC's BCIP fees. Do note that OCBC charges $0.54 per counter per trade (a SGX fee), so a $100 purchase actually costs $5.54 (5.54%). That includes GST, thankfully. If you want to maximize the value of that $5+ minimum fee you'd have to buy at least $1667 per month per counter. You can't actually do that -- it has to be investment increments of $100 -- so $1700 is the lowest available amount that maximizes the value of that $5 minimum.

    There are no custodial fees and no dividend fees apparently, so that's good. When you want to sell shares it's the same story: 0.3%, $5 minimum, plus $0.54. These are the current rates. Maybe OCBC will change them, and that's a risk.

    So these fees are a little high perhaps, especially if you're not going to hold shares very long. That said, OCBC's BCIP could be quite interesting to SRS account holders. That's because it's minimum hassle. Given how nobody seems to know how to deal with SRS -- even sometimes the 3 SRS operators -- that's a welcome development. Also, you don't really trade SRS funds too often: you buy and hold to retirement, or at least a very long time. So BCIP might be well designed for SRS account holders.

    One thing that I don't like is that OCBC charges an "insufficient funds" fee of $5.35. Meaning that unless you cancel your monthly contribution when you have invested all your funds (such as a full SRS balance) apparently OCBC is going to charge you $5.35 every month until you shut the damn thing off. Not cool. Set yourself a reminder to shut off the BCIP contributions just after your account is drawn down. (The purchases are made on the 22nd of the month.)

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    1. Great advice! I love it when the community shares their experience and tips with others - this is what it's all about, moving forward and learning together as one.

      Cheers!

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  11. Hi, newbie on this and got 3 counters without knowing much info.
    1. If i have 3 counters and decided to stop temporarily the two counters. Do i need to pay the 5.35 sgd fee? Is it 5.35x2 because two counters?

    2. If i dont have money to fund my investments monthly, can i just stop the monthly investment for long period of time without getting fee or i will get 5.35sgd x3.

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    1. Hi!

      To be honest, I have no idea - perhaps you can contact OCBC directly at 1800 363 3333 to get detailed replies.

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