Dividend Chaser on POSB new invest-saver

(From Article)

This POSB invest saver lets you invest in an index ETF from as low as $100/month. The index ETF used is the NIkko AM Singapore STI Exchange Traded Fund. This ETF tracks the Singapore Straits Times index similiar to SPDR STI ETF.

Benefits of POSB Invest-Saver

1) Invest from as low as $100
This is beneficial for those who do not have a huge capital to start with

2) Low transaction cost
Sales charge is fixed at 1% per transaction. If you invest $100, sales charge is $1.

3) Dollar cost averaging
By buying every month, you can ride out the gyrations of the market. No market timing is needed. As an index fund goes up in the long run, the longer you invest in it, the smoother the returns

In channel news asia, it was written that we can expect a return of 2-3% annually. I've checked on the fund factsheet of Nikko STI ETF. The 3 year annualised return for this fund was 5-6%. This fund also gives dividends of about 1-2% annually. The dividends payout by the fund will be credited to your POSB invest saver account.

If the returns is just 2-3% annually, it would not be that attractive to me as it barely covers the inflation rate in Singapore. I would think that the returns should be more than 3% judging from the funds performance

This product is beneficial to those who want to invest but do not have the capital or knowledge to do so. A return of 2-3% is better than putting it in the bank and the best thing is you can withdraw your money anytime. It is stated that no fees will be incurred when you sell your unit. This is subjected to change as indicated on POSB website. However in any investment, there are still risks involved. The returns are not guaranteed and you may still lose money in the short run. In the long run, investments generally return profits.