Phillips Share Builders Plan

[Starry]

Hi,

Is anyone here on this plan now? The fees they charge, is it worth the effort?

[bochap]

I rather stick to unit share market. at least those shares belong to me. In SBP, you can't sell them on the open market directly, right?

[Starry]

I rather stick to unit share market. at least those shares belong to me. In SBP, you can't sell them on the open market directly, right?

The issue with unit share is that there is a $10 comm each way. No big deal if you gonna buy a lot, but if let's say for someone who wants to buy $300 of STI ETF every month ($10 comm/month), or $100 each on 2 counters ($20/month), the commision does add up. Also, liquidity could be an issue.

For PSBP, the fees is $6.42 each month for 2 counters or less for investment less than $1000. For more than 2 counters, it will be $10.70. So for the guy above, he will pay $6.42 every month if he buys $300 of STI ETF/month or $12.84 each month for the 2 counters/month. For selling, normal brokerages fee applies. For more than 2 counters, I think there is no difference from buying unit share yourself because the comm is still 10.70/counter. (Phillips mention $6.42 for 2 counters or less. I assume it is $6.42 PER COUNTER/Month for 2 counters or less)

So for a small investor, the savings in buy-commision for a small investment amount/month can be quite a lot. Over years, he could have save up a lot on commission. Also, because it is like a RSP plan, it force a small investor to save and invest.

What you guys think? Is there some catch that I do not know of? I am thinking from the small investor point of view on a per monthly basis. If one has a lot of $$$, then all this doesn't apply because he could either buy it from mainboard or unit share with insignificant commission.

BTW, in PSBP, the shares also belongs to you. You can sell them anytime you want, but normal brokerages fee applies.

The reason why I am bringing this up is that rememebr from my article, I said it is time that we should also look at value big caps? A lot of people tell me that big cap cost a lot of $$$ and they don't have the money to do so. Some of them could only afford $200-$300 a month and using that to buy unit share is still expensive. So I thought the PSBP would make sense for this group of people.

[ghchua]

Hi Starry,

PSBP certainly looks interesting for investors who just started out or who which to set aside some monies every month to invest in blue chip counters.

The disadvantages of PSBP are:

1. Limited choices of stocks to invest in. At this moment, there are only about 13 counters in the list. Lack of diversification if you ask me.

2. Blue chips are not necessary the best stocks to invest in. They don't necessary pay the highest dividend and they are also not cheap since they are closely tracked by institutions.

3. There are charges for corporate actions like dividend charges, rights handling fees etc. Also, the Philips Securities is the custody in this case. Which means, you cannot attend AGMs and you will not receive any annual reports.

4. One cannot just sell those shares using POEMS or other online brokerage account, since PSBP shares are held under Phillips Securities custody. You have to call your Phillips broker to sell, and of course they will charge you normal brokerage charges of minimum $40.

5. You can transfer those shares held under PSBP to your CDP account, but normal share transfer handling charges will apply, both at Phillips side and at CDP side as well.

6. One cannot use CPF funds to invest under PSBP.

[Starry]

Hi Starry,

PSBP certainly looks interesting for investors who just started out or who which to set aside some monies every month to invest in blue chip counters.

The disadvantages of PSBP are:

1. Limited choices of stocks to invest in. At this moment, there are only about 13 counters in the list. Lack of diversification if you ask me.

2. Blue chips are not necessary the best stocks to invest in. They don't necessary pay the highest dividend and they are also not cheap since they are closely tracked by institutions.

3. There are charges for corporate actions like dividend charges, rights handling fees etc. Also, the Philips Securities is the custody in this case. Which means, you cannot attend AGMs and you will not receive any annual reports.

4. One cannot just sell those shares using POEMS or other online brokerage account, since PSBP shares are held under Phillips Securities custody. You have to call your Phillips broker to sell, and of course they will charge you normal brokerage charges of minimum $40.

5. You can transfer those shares held under PSBP to your CDP account, but normal share transfer handling charges will apply, both at Phillips side and at CDP side as well.

That's some good points there!

[myob]

can I ask if the Philips share builder scheme will not apply to CPFOA from next April 08 onwards? thanks.

[ghchua]

can I ask if the Philips share builder scheme will not apply to CPFOA from next April 08 onwards? thanks.

Philips share builder scheme has never been approved for CPF Investments.

[jamie82]

There's an alternative option as compared to the philips version - the CIMB one is doing pretty well (called ARA) and has a focus on the QDII stock holdings.

[ghchua]

Dear all,

For those who are interested, they are having a promotion now. Zero handling charges for 6 months. Which means, effectively, there is no brokerage charges for buying those shares under SBP for 6 months. Also, they have increased the list recently to 19 counters.
http://www.poems.com.sg/promotion/SBP/SBP.htm

[revenant]

Dear all,

For those who are interested, they are having a promotion now. Zero handling charges for 6 months. Which means, effectively, there is no brokerage charges for buying those shares under SBP for 6 months. Also, they have increased the list recently to 19 counters.
http://www.poems.com.sg/promotion/SBP/SBP.htm

wow, can I invest from now till 4 July 08 and then don't invest anymore?

[cristy]

...
PSBP certainly looks interesting for investors who just started out or who which to set aside some monies every month to invest in blue chip counters.

The disadvantages of PSBP are:

...

4. One cannot just sell those shares using POEMS or other online brokerage account, since PSBP shares are held under Phillips Securities custody. You have to call your Phillips broker to sell, and of course they will charge you normal brokerage charges of minimum $40.

5. You can transfer those shares held under PSBP to your CDP account, but normal share transfer handling charges will apply, both at Phillips side and at CDP side as well.

HI gh chua
can i clarify. you mentioned that One cannot just sell those shares using POEMS/ other online brokerage account, so does dat mean dat even if i have accumulated up to one lot of shares, it'll still be under Phillips Securities custody???

[ghchua]

Hi cristy,

Yes. It will be under Phillips Securities custody (regardless of how much you hold), so you definitely cannot sell using other brokerage account. As for POEMS, you might wish to check out with your broker how to do it. You cannot simply key in and sell like normal shares in your CDP account, without informing your broker about it.

[StarFire]

I am a long term investor and in order for me to discipline myself to invest regularly and not to time the market, i choose to go with PSBP. I choose to invest in blue chips counters like SPH, UOB, DBS etc b'cos they pays good dividends. Yes i may not have the chance of attending their AGM and they don't send their annual reports but hey you know what i can get those reports anytime either at SGX website or at POEMS site. And you may also sell your odd lot shares anytime. No problem at all. Lets face it, not many people can have the kind of cash to own UOB, Keppel Corp, OCBC or Ventures shares by merely investing a portion of their salary every month. SBP works, at least for me

[stam]

PSBP PROMOTIONS just ended on 4th july!!!

[serendib]

I am a long term investor and in order for me to discipline myself to invest regularly and not to time the market, i choose to go with PSBP. I choose to invest in blue chips counters like SPH, UOB, DBS etc b'cos they pays good dividends. Yes i may not have the chance of attending their AGM and they don't send their annual reports but hey you know what i can get those reports anytime either at SGX website or at POEMS site. And you may also sell your odd lot shares anytime. No problem at all. Lets face it, not many people can have the kind of cash to own UOB, Keppel Corp, OCBC or Ventures shares by merely investing a portion of their salary every month. SBP works, at least for me

Precisely the line of thinking that lead me to sign up for SBP as well.
Just wish they could extend/modify the SBP to include CPF/SRS too.

Stam -
And even though their promo has officially ended - no harm in enquiring. I actually signed up for SBP the week before the promo started, I then called to 'complain' that I was being penalised - and they extended the promo to me too.

[ghchua]

Hi serendib,

I am not from Phillips but I think it is difficult to implement SBP for CPF/SRS. This is because for SBP, we know that those shares are bought and held under Phillips Securities nominees account. For CPF/SRS investments, they must be held under the respective CPF/SRS agent bank nominees account. As you can see, there are complications here as both are using different nominee account.

[stam]

what you guys think : investing $500 monthly thru SBP into STI ETF.

$6 / $500 = ard 1.2%

[serendib]

Hi serendib,

I am not from Phillips but I think it is difficult to implement SBP for CPF/SRS. This is because for SBP, we know that those shares are bought and held under Phillips Securities nominees account. For CPF/SRS investments, they must be held under the respective CPF/SRS agent bank nominees account. As you can see, there are complications here as both are using different nominee account.

Hi ghchua,

fully agree, which is why I said the SBP has to be modified to cope with SRS/CPF.
I think an innovative financial services provider ought to see if they can negotiate with CPF/MAS to implement such a scheme.

stam - dont forget 7% GST = $6.42

[stam]

any SBP supporters??

serendib - ya thanks for reminding..

[ghchua]

Hi serendib,

Frankly speaking, I don't think SBP will spend time to modify the structure to cater for CPF/SRS. Because SBP itself is not a high profit margin product. Imagine that: low brokerage, miserable fees and even have to use promotion to "tempt" investors to go into SBP.

And to apply to CPF/SRS needs lots of paper work to get it through. Plus, need to comply with CPF/SRS investment scheme regulations. Like that how to make money?

[Private Investor]

any SBP supporters??

I once consider SBP. But unless you invest $500 a month, anything less than that will incur high brokerage. As such, I would rather save the $ each month and buy into the counter, say STI every 6 months. I will incur lesser brokage fee

[serendib]

Hi serendib,

Frankly speaking, I don't think SBP will spend time to modify the structure to cater for CPF/SRS. Because SBP itself is not a high profit margin product. Imagine that: low brokerage, miserable fees and even have to use promotion to "tempt" investors to go into SBP.

And to apply to CPF/SRS needs lots of paper work to get it through. Plus, need to comply with CPF/SRS investment scheme regulations. Like that how to make money?

Hi ghchua, very valid points - although i believe the promo is to address the fact that people are increasingly staying out of active trading due to the bear market.
Actually I'm rather disappointed that MAS/CPF arent doing more to introduce simple, low-cost investment products for the public. Of course the conspiracy theorists will have their own take on this =)

[ghchua]

Hi serendib,

CPF Board is quite slow in approving products to be included for CPF Investment Scheme. They took quite a bit of time to get Streettracks Gold ETF into the scheme and by the time they did it, gold prices already gone up so much.

I am still waiting for them to get the Lyxor series of ETFs into the scheme. Also, I have written to them to ask them about the possible inclusion of Business Trusts (like shipping trusts, CitySpring, HWT etc) into the scheme.

CPF monies is our retirement fund. We need more options to invest them in order to secure our retirement needs. I will be more pro-active and engage CPF Board more in this aspect.

[choozm]

Hi ghchua, what channel do you use to engage CPF board? Email? Do they reply with standard business reply?

It would be good to have Lyxor ETFs to in CPF scheme. CPF should actively seek means to lower the investment cost of CPF scheme.

[ghchua]

Hi ghchua, what channel do you use to engage CPF board? Email? Do they reply with standard business reply?

So far, I have only email to them and they normally took a few days to reply. Sometimes, the reply is standard.

I guess in order to take it to another level, I will have to call those officers personally. I have still yet to do that, will explore it further if they could not give me a satisfactory answer via emails.