You want to start a regular savings plan, but are unhappy with the counters offered by the BCIP or Invest Saver.
The POEMS Share Builders Plan does offer a larger variety of stocks and ETFs. However, the fees you pay are much higher.
Is this regular savings plan really worth the fees?
Here’s a review of what the POEMS Share Builders Plan can offer you:
What is the Share Builders Plan?
The Share Builders Plan is a regular savings plan offered by Phillip Securities. You are able to purchase the counters via Phillip’s POEMS 2.0 platform.
How does Share Builders Plan work?
The Share Builders Plan (SBP) allows you to purchase your desired counter via a dollar cost averaging strategy. You will be investing a fixed sum each month into the counter.
When the price of the counter is higher, you will buy less units of the stock.
When the price of the counter is lower, you will buy more units of the stock.
As such, the average price that you purchase the counter will be somewhere between the highest and lowest prices that you paid.
This is great as you are able to passively invest into the stock or ETF of your choice each month. Moreover, it reduces the tendency for you to check your stocks everyday.
The minimum amount that you can invest in each counter is $100 a month. You are able to invest in subsequent multiples of $100.
Here are other characteristics about this SBP:
The only requirement is that you’ll need to be 18 years old.
Funds are deducted by GIRO
When you apply for the Share Builders Plan, you will need to apply for a GIRO deduction. This will allow POEMS to deduct your investment amount from your bank account.
This is great as you are able to have an automatic deduction from your account each month.
However, don’t forget to have sufficient funds in your account 6 days before the transaction date!
Transactions occur on the 18th of each month
POEMS will purchase the counters for you on the 18th of each month.
If the 18th of the month is a non-business day, the purchase will be done on the next business day.
No fractional shares
POEMS does not allow you to purchase fractional shares. As such, you will only receive the nearest rounded-down whole number of the counter that you purchase.
For example, you want to invest in a counter that cost $23 and you only invested $100.
With the deduction of the fees, the maximum number of shares you can purchase is only 4.
So what happens to the extra funds? They will remain in your account for now. The funds will then be reinvested in the next month.
This process will repeat so long as you have excess funds in your account.
Amend your funds
If you wish to amend your investment amount or the counters, there are 2 ways that you can do so:
- Make an amendment request online via POEMS
- Fill up a SBP Amendment Instruction Form
Do remember to make your amendments 6 days before the transaction date! If not, your changes will only be effective on the next investment month.
Unable to use SRS funds
POEMS only allows you to invest in the SBP using cash via GIRO. You are unable to use your SRS funds to invest in this regular savings plan.
What types of accounts can I create with the Share Builders Plan?
Here are the 3 types of accounts that you can create with SBP.
The normal account will be the default account that you create.
You are able to create a joint SBP with another person. Both of you are able to make changes to the SBP that you have applied for.
Junior Share Builders Plan
POEMS also offers a Junior SBP for your child. If your child is below 18 years old, you are able to open a joint account with your child.
However, your shares can only be sold using the adult’s trading account.
When your child reaches 18 years old, there are 3 options that you can consider:
- Continue the plan as a joint account
- Transfer the holdings to your child’s Younger Investor Group (YIG) account
- Terminate the SBP
If you decide to terminate the SBP, your child’s holdings will be sold through your trading account.
What counters can I invest with the Share Builders Plan?
There are 2 main types of counters that you can purchase with SBP:
POEMS offers 5 different ETFs that you can purchase:
|ETF Name||SGX Ticker|
|Phillip SING Income ETF||OVQ|
|SPDR Straits Times Index ETF||ES3|
|Lion-Phillip S-REIT ETF||CLR|
|ABF Singapore Bond Index||A35|
|Nikko AM Inv Grade Corporate Bond||MBH|
Since both A35 and MBH invest in bonds, how are they different? You can read my comparison of these 2 bond ETFs to see which one is better for you.
These ETFs are rather similar to the ones offered by OCBC BCIP and Invest Saver.
|SGX Ticker||POEMS||OCBC||Invest Saver|
POEMS does offer you the Phillip SING Income ETF, which the other RSPs do not. However, the expense ratio is rather steep at 0.7%!
Apart from the fees that you incur with the POEMS SBP, you will need to pay the expense ratio of the ETF as well. As such, the fees may really add up in the end!
#2 Individual stocks
OCBC BCIP allows you to purchase 17 different stocks. In contrast, POEMS SBP allows you to purchase 39 different stocks!
These stocks come from a wide range of different sectors:
- REITs (Hospitality, Retail, Office, Industrial)
All of these stocks are listed on the SGX.
How do I start investing in the Share Builders Plan?
You are able to apply for the Share Builders Plan via the POEMS 2.0 platform. You can use either the desktop or mobile platforms.
#1 Select ‘Regular Savings Plan’
#2 Fill up the GIRO form and mail it Phillips Securities
If you have not applied for a SBP before, you will need to fill up the GIRO form and mail it to Phillips Securities.
#3 Select the counter that you wish to invest in
#4 Select your investment amount for each counter
Will I receive my dividends?
POEMS will help to reinvest your dividends for you. Your dividends will be accumulated with your other uninvested amounts.
When you have a large amount of uninvested funds, POEMS will use these funds to buy extra units of the counter of your choice.
If you wish to track the dividends you receive, you can consider using StocksCafe’s dividend tracker.
You can redeem uninvested funds
You may also request to redeem your uninvested funds instead. You will need to inform your Trading Representative at least 3 business days before the transaction date.
If not, your funds will be reinvested to buy more units of that counter!
How do I sell my counters?
If you decide that you want to sell your counters, you can do in 2 ways:
- POEMS online
- Trading Representative via your share trading account that is linked to your SBP
The sales proceeds will be credited to your trading account. You will still need to withdraw the funds from your trading account!
What are the fees involved with investing in the Share Builders Plan?
POEMS Share Builders Plan has a different fee structure compared to OCBC or DBS. Moreover, all fees are subjected to GST as well.
Here’s are the 6 different types of fees you may incur:
#1 Monthly Handling Fees
POEMS does not charge you a transaction fee when you make a buy or sell order. Instead, it charges you a monthly handling fee.
The monthly handling fee is something similar to the management fees being charged by robo-advisors.
The fees that you pay depend on:
- Your total investment amount
- The number of counters that you’ve purchased
The total investment amount is the monthly amount that you’re investing into POEMS SBP. It is not the total investment amount in your account!
The fees look really steep. Moreover, POEMS charges GST as well.
As such, the minimum fees that you’ll pay is $6.42!
#2 Dividend Fees
POEMS charges you a dividend handling fee as well.
When you receive a dividend, you will be charged 1% of this dividend. This fee ranges from a minimum of $1 to a maximum of $50.
If you receive less than $1 worth of dividends, you will not be receiving any dividends at all.
#3 Scrip Dividend and corporate actions fees
POEMS will charge you $10 (excluding GST) for any scrip dividends or corporate actions (except right issue).
#4 Share Transfer Charges
You may want to transfer the counters in your Share Builders Plan to your Central Depository (CDP) account.
However, you will incur a huge cost of $20 (excluding GST). This fee is incurred per counter and per transfer.
It is an extremely hefty fee, so you may want to think twice about transferring it to your CDP!
#5 Hard Copy Statement Fee
If you opt out of receiving an E-Statement, you will be issued a hard copy statement instead.
You will be charged $2 (excluding GST) for each hard copy statement that you receive.
#6 Failed GIRO charge
If you do not have enough funds in your bank account for the GIRO deduction, you will be charged a failed GIRO deduction fee.
The failed GIRO collection charge is $5.35 (including GST). This is pretty hefty as well!
As such, do remember to ensure that you have enough funds when the GIRO deduction is made!
Here’s a summary of the additional fees that you’ll incur:
Is the POEMS Share Builders Plan worth investing in? Here are some key pointers for this regular savings plan.
#1 Huge variety of stocks to choose from
POEMS provides a huge choice of stocks that you can invest in. Compared to OCBC’s 17 stocks, you are able to invest in 22 extra stocks!
If you invest in ≥ 3 counters, do remember that you’ll have to pay $10.70 in monthly handling fees!
#2 Exorbitant fees
The fees to invest in the POEMS Share Builders Plan is extremely exorbitant. The monthly handling fees are really, really hefty. You will need to invest a larger amount to make the fees worth it.
Both the OCBC BCIP and Invest Saver have lower transaction fees than POEMS. As such, they may be the cheaper options when it comes to regular savings plans.
Moreover, you will incur a dividend handling fee as well. This is not present in both the OCBC BCIP and Invest Saver.
If you purchased a dividend stock, this fee will definitely eat into your returns!
#3 Lesser flexibility of your funds
Compared to both the OCBC BCIP and Invest Saver, this regular savings plan is provided by a broker. This results in a lower flexibility of your funds.
With both the OCBC BCIP and Invest Saver, you will receive your funds and dividends directly in your bank account.
However for POEMS, any uninvested amount will remain in your account. You will have to make an extra request to withdraw your funds.
Personally, I do not think that the POEMS Share Builders Plan is worth investing in. There are so many costs and inconveniences that it may not be worth the trouble.
Unless you’re really bullish on a certain stock, I would not recommend the POEMS Share Builders Plan.
Moreover, there are some online brokerages like Tiger Brokers that have a minimum sum of $1.88 for each trade!
The fees that you incur are a major factor that you’ll need to consider. As such, I do not think that the POEMS Share Builders Plan is the most cost effective investing option.