Friday, 11 November 2016

1% commission charges and updates

Biggest news of this week is that Trump will be the next president of US. I didn't take any positions before or after the polling day. The markets are especially volatile and my portfolio & investing strategy are designed to try and navigate times like these more calmly. Sometimes by staying out and doing nothing.

I have just been fine-tuning the auto-purchases of the ETFs in the Monthly Investment Plans (MIPs). As it turns out, the auto-purchase of 1 share of the SPDR Gold Shares (O87) under the Maybank KE MIP did not happen again for the month of Nov 2016.

Decided to stop this component of the Maybank KE MIP but only continue with the one for the auto-purchase of the SPDR Straits Times Index ETF (ES3). Made other changes such that these are the current auto-purchase constituents of the MIPs:
  • S$300 - ES3
  • S$600 - Nikko AM Singapore STI ETF (G3B)
  • S$100 - ABF Singapore Bond Index Fund (A35) 

Which means that S$1,000 is auto-invested every month via the MIPs into local ETFs. Some in the first half of the month and the rest in the second half of the month. Purchase commission charges are at 1% of the invested amount i.e. I pay S$10 as fees every month for the MIPs.
I have to admit that this is high but acceptable to me when it comes to my dollar cost averaging strategy. Reason is simple - I expect to pay more when someone is doing the work for me. For the value cost averaging and dividend investing components of my strategy, I invest larger amounts and the commission charges drop to less than 0.50%.

I know I have to lower my transaction costs but I'm already doing that for the most part. The S$10 is not significant to me. I have already reduced our general spending slightly every month to make up for this S$10 so the net effect is zero.

What's important to me is the fact that I'm automatically diverting S$1,000 of my cash savings into Singapore ETF investments every month. In fact, when Smartly launches, I plan to divert another S$1,000 of my cash savings for the robo-advisor to allocate into an aggressive risk profile portfolio of overseas ETF investments every month.

Again at 1% annual fees initially before decreasing to 0.7% when the asset balance exceeds S$10,000. It could go down further to 0.5% if I decide to keep at it for several years. You see how the robo-advisor fee structure mirrors the transaction costs in my own portfolio?

It only starts to drop the more funds I can commit and the more experienced I become over time. This works for me as my preference is to spread out my investment cash through market cycles. It's a slow and steady investing approach but the portfolio & strategy should weather market volatility and crashes more effectively.

Quick updates for the month of Nov 2016 so far:
  • My wife received her annual performance bonus letter and the amount is okay considering how tough the market conditions were for the past year. Not forgetting how bad the impact on the profits of her bank is due to that.
  • We will allocate the bonus when received into savings, spending and investments accordingly but I will not be reflecting the full amount on this blog.
  • Averaged down on REIT ETF, Starhub and Vicom this week.
  • Auto-purchases of G3B and A35 coming up in the next 2 weeks.

5 comments:

  1. hi FS,

    i noticed that you bought ES3 and G3B?
    any reason for this? since they are both essentially the same, tracking the same index..

    ReplyDelete
    Replies
    1. Hi FC,

      Yes, I hold the ES3 while my wife holds the G3B. It has to do with the way our Monthly Investment Plans are set up. Besides, I like the fact that their semi-annual distributions are in different months. Helps to even out our passive income cash inflow throughout the year!

      Cheers,
      TFS

      Delete
  2. Hi Finance Smith,

    Thanks for investing with Monthly Investment Plan (MIP).

    For MIP, we consolidate all orders for that counter (eg. SPDR Gold Shares (087)) and go to the board lot market first. If the orders cannot be fully executed, we will turn to the odd-lot market. Unfortunately, given the low liquidity of the odd-lot market, the orders are sometimes not fulfilled. An e-mail notification will be sent in such situations (lack of odd lots sellers / share price higher than your subscription amount / trading halt etc.)

    We hope this is helpful! If you have further queries, please feel free to contact your respective Trading Representative or our Customer Service at 6432 1888 or helpdesk@maybank-ke.com.sg

    Thanks again for your support.

    ReplyDelete
  3. Hi Finance Smith,

    really glad that I came across urs blog after reading intensively for the past few months about personal finance. I decided to embark into investing last month. May I know how do u track urs STI Nikko with POSB invest saver? Thank you

    ReplyDelete
  4. Hi Finance Smith,

    I just embarked on the investing journey. May I know how do u track STI ETF? thank you

    ReplyDelete