By: Colin Ng
It’s no secret that saving up for a dream house or a dream car takes a long time, given how the prices of these commodities tend to rise as time goes by. However, with the help of the right regular savings plan, one may be able to achieve this goal faster than expected.
It’s worth remembering that regular savings plans and savings accounts aren’t the same.
With a savings account, money goes directly to a bank account. On the other hand, money is channeled through different assets in a regular saving plan.
In this article, we’re going to talk about two of the most in-demand regular savings plans in Singapore that can definitely help you achieve your long-term goals faster. These are the POSB Invest Saver VS OCBC Blue Chip.
The Post Office Savings Bank (POSB) and Oversea-Chinese Banking Corporation (OCBC) stand as two of the most trusted and dependable banks on the island, providing account holders with all sorts of banking services. For people who are starting to realise what their future goals are, we believe that their savings plans are worth checking out.
If you’re in the dark as to how regular savings plans work, don’t worry because we’re here to help! Before we proceed with the comparison, we’re going to answer some pressing queries about regular savings plans in Singapore.
Let’s get started!
Frequently Asked Questions about Regular Savings Plans
Owning a regular savings plan is one of the keys to a financially secure and stable life. It’ll serve as your guide towards achieving your long-term financial and life goals.
It’s also worth noting that an excellent regular savings plan would be rendered useless if you’re not willing to commit yourself to save and cut down on expenses. It doesn’t have to be difficult, but you need discipline and self-control.
Regular savings plans aren’t as common as savings accounts in Singapore, so the majority of people may not be that familiar with it. Anyway, we’re here to shed light on some of the most pressing questions about it.
1. How does a regular savings plan work?
Regular savings plans share the same function of keeping your money safe for future use as savings accounts. Account-holders are obliged to transfer a minimum amount to them every month.
Instead of keeping the money stagnant in your account, it’s channeled through a wide range of assets such as stocks, ETFs, and unit trusts for it to grow.
If a savings account can only increase your money through its interest rates, a regular savings plan takes the riskier route and throws it into the stock market.
As with most cases in investing, you may either gain and lose money when opening a regular savings plan. Although, if you hit the jackpot, you can fast track your journey towards achieving your goals.
2. Do you need to be an expert in investing?
Opening a regular saving plan doesn’t require you to be an expert in the stock market, but knowing how it works definitely helps.
In fact, most regular savings plans in Singapore are marketed as a way to grow your savings with minimal effort. They require minimal effort as most of them use the dollar-cost-averaging strategy which allows account holders to buy more units regardless of whether the market prices are high or not.
If the prices are high, you can purchase fewer units. If the prices are low, you can buy more units.
3. Do you need to make regular investments?
Even if you know everything there is to know about stock market investing, it’s still recommended to make monthly investments even if the prices aren’t looking good. After all, even the most professional investors struggle to catch the bottom of the market.
Doing regular investments will help you develop a disciplined investment routine and make you more flexible and liquid with your investments.
Aside from that, doing regular investments takes away the stress of constantly watching the market prices. You won’t be forced to spend all your time being emotionally and mentally stressed while monitoring the state of the market.
If you don’t want to stress yourself out over the ups and downs of the market, then regular savings plans will be the right choice for you.
POSB Invest Saver vs OCBC Blue Chip
Anyway, now that we’ve answered some of the most important questions about regular savings plans, it’s time to go over our review and comparison of POSB Invest Saver vs OCBC Blue Chip. We will look into what makes both of them worthy contenders when choosing the best regular savings plan in Singapore.
Let’s start with POSB Invest Saver!
POSB Invest Saver
As one of the top banks on the island, POSB fares well in helping account holders see growth in their savings as well.
POSB Invest Saver is one of the four regular savings plans offered by banks and brokerages in Singapore. It appeals mostly to beginner investors who don’t have an existing brokerage account to start investing in a wide range of assets.
It’s a regular savings plan that aims to remove the hassle and stress of investing by automating the entire process for every account holder.
Let’s dig deeper into what makes it a special regular savings plan.
1. Monthly investment
You can start investing with POSB Invest Saver for as low as only S$100 per month. If you’re capable of investing more money every month, you’re more than welcome to do so.
However, the main advantage of using regular savings plans is to invest a small amount of money without losing a lot in terms of fees charged by most brokers and banks.
The sum will be deducted from your account every 15th of the month or the next business day if it falls on a public holiday. You will be safe from penalties as long as you make sure that your account has sufficient balance during this time of the month.
One of the best features of POSB Invest Saver is how few its fees are, compared to other regular savings plans. Account-holders don’t have to worry about fees other than the common sales charge.
When investing in Nikko AM STI ETF, you will have to pay a sales charge of 0.82% and 0.50% for investing in the Singapore Bond Index Fund.
If one compares the fees of POSB Invest Saver with other regular savings plans, it’d be more obvious how low its fees are. Other banks and brokers tend to charge trading fees of 0.25% or a minimum of about S$25 for investments under S$50,000, on top of other fees such as platform fees, maintenance fees, and even withdrawal fees.
3. Investment Options
POSB Invest Saver allows account holders to invest in exchange traded funds and unit trusts. It comes with limited options compared to other regular savings plans that offer a wide range of investment options.
On top of that, investors are allowed to pick from these 4 ETFs, each one having different underlying assets: Nikko AM Singapore STI ETF, ABF Singapore Bond Index Fund, Nikko AM SGD, and REIT ETFs. Investors can also choose from a list of unit trusts.
However, investors don’t have much of an option other than ETFs and unit trusts. This may seem like a disadvantage, but these two are the most recommended options for entry-level investors or those with limited investing experience.
Apart from being capable of delivering market returns, ETFs and unit trusts are popular choices for a diversified investment portfolio.
4. Pros and Cons
As with most regular savings plans, POSB Invest Saver comes with strengths and weaknesses as well. It’s ultimately your choice of how you’re going to weigh these pros and cons.
When it comes to fees, we have to praise POSB Invest Saver for not draining the returns of its investors by imposing multiple fees. Investors only have to worry about settling the monthly sales charges that range from 0.50% to 0.82% per transaction.
POSB Invest Saver makes it easier for investors to access their accounts as well. It’s accessible 24 hours a day through its iBanking platform, allowing investors to monitor their accounts and redeem their holdings with a simple click.
It’s known for its easy and convenient application process as well. You won’t have to wait for a couple of days or weeks just to know if your application is approved or not.
However, the POSB Invest Saver may not be the perfect option for experienced investors due to the limited investment options. It can only offer ETFs and unit trusts which are great options for newbie investors who don’t know much about the stock market yet.
5. Reviews for POSB Invest Saver
Here’s what a Singapore review site had to say about the POSB Invest Saver:
“For a relatively low cost and easy way to invest monthly in Singapore’s economy, POSB Invest Saver is a good place to start. The added bonus of fulfilling one more category on your Multiplier account should provide some motivation for you to begin the habit of regular investing.”
OCBC Blue Chip
OCBC Blue Chip is perhaps the more preferred option by veteran and experienced investors who don’t want to constantly stress over the state of the stock market. Obviously, it’s a famous option because of its blue chips.
Blue chips are commonly known as stocks of nationally well-regarded companies, with extensive records of profit growth and dividend payouts. Most investors would prefer blue chips because these companies are known to have good management, services, and products.
Here’s why we think that OCBC Blue Chip Investment Plan is a worthy contender against POSB Invest Saver.
1. Monthly investment
Similar to POSB Invest Saver, monthly investments start at S$100 per month. If you’re capable of saving more than that every month, then feel free to invest beyond what’s required.
If you’re willing to invest more, you can invest in further multiples of S$100. Though, unlike the previous option, you need to set up an OCBC account before being eligible to apply for OCBC Blue Chip.
This account is important because this is where the investment sum will be deducted every month. However, opening an account with OCBC may be a hassle for other investors who have accounts with other banks.
If you’re less than 30 years old and applied for the OCBC Blue Chip Investment Plan before 28 June 2019, you are entitled to FRANK’s preferential BCIP fees. This means that you are charged less for transaction and processing fees.
The preferential rate for every transaction is S$0.88, based on an investment amount of S$100. It’s only slightly higher than POSB Invest Saver’s monthly rate, so it isn’t too bad.
On the other hand, if you don’t have access to its preferential rates, you will have to pay 0.30% in investment fees or S$5, whichever is higher.
We still believe that OCBC Invest Saver is an excellent option as the difference in monthly investment isn’t that huge, even if you’re not entitled to preferential rates.
3. Investment Options
When it comes to investment options, OCBC Blue Chip has more to offer compared to POSB Invest Saver. If you’re after flexibility and more options, then you’re going to like what OCBC Blue Chips has up its sleeves.
If the POSB Invest Saver only has ETFs and unit trusts, the OCBC Blue Chip offers stocks, exchange traded funds, real estate traded funds, and 17 other share counters that are mostly components of the Straits Times Index (STI).
Some of these share counters are Lion-Phillip S-REIT ETF, DBS Group Holdings Limited, CapitaLand Limited, Olam International Limited, CapitaMall Trust, and Singapore Exchange Limited, among others.
4. Pros and cons
One of the best features of the OCBC Blue Chip Investment Plan is the wider variety of investment options that investors have access to. If you’re an experienced investor, you would want more options when choosing which stock to invest in, right?
On the other hand, this may not be the best feature for newbie investors because they may not know which of these multiple investment options is the right choice. Having a wide variety of investment options may overwhelm a beginner investor.
More than that, it’s one of the few regular savings plans that offer blue chips. You won’t have to worry about seeing decent returns because most of its listed companies are known for their long record of profit growth.
5. Reviews for OCBC Blue Chip
Here’s a review shared by an investor who’s been using the OCBC Blue Chip Investment Plan:
“I started a regular savings plan via OCBC’s BCIP about a year ago. The market seemed like it was at an all time high last year. I didn’t want to do a lump sum investment only to have a crash happening in the next couple of months. That’s when I decided I want to just do dollar cost averaging using RSP. This way, I can be in the market, and also be able to pick up more cheap shares should the market tank.
I had a blue chip stock in mind that I have been wanting to buy. And this blue chip stock was in the list of counters offered by OCBC. The other platform that offers RSP on individual stocks is POEMs Shares Builder. DBS Invest Saver and FSMOne offer only ETFs or Unit Trust.
In terms of applying for it, it was a breeze for me, as I already had a savings account with OCBC. You can sign up via an Internet banking site. You simply have to specify which counter and what amount.”
|POSB Invest Saver||OCBC Blue Chip|
|● Affordable monthly fees
● Fewer fees
● Easy and convenient application process
● Quick access to accounts
● Perfect for beginners
● Dollar-cost Averaging
● User-friendly online platform
● Removes the stress of monitoring the markets
|● Multiple investment options
● Access to blue chips
● Preferential rates
● Competitive monthly rates
● Quick application process
● Perfect for experienced investors
● No need to monitor markets
And with that, we end our comparison of POSB Invest Saver VS OCBC Blue Chip. Based on what we’ve learned, both are excellent regular savings plans because of their rates and investment options.
However, we believe that POSB Invest Saver is the perfect option for beginners. If you don’t know much about the stock market, it will help you not get overwhelmed in choosing where to invest.
POSB Invest Saver charges slightly lower monthly fees as well, making it a great option for those planning to make only small investments monthly. You won’t have to worry about getting charged S$25 for transactions less than S$500.
On the other hand, if you prefer to be a bit risky and stick with the big players, then we recommend going for OCBC Blue Chip. It gives investors access to an extensive range of investment options like counters, stocks, ETFs, and REITs.
If you’re looking for a more convenient way of investing, you might want to check out our list of the best robo advisors in Singapore. We feature some of the most in-demand robo advisors on the island on that list!