ocbc blue chip investment plan

OCBC Blue Chip Investment Plan Review: Best for Beginners

OCBC Blue Chip Investment Plan is a regular savings plan that allows users to invest by contributing a fixed amount each month. Its minimum investment is S$ 100 a month. The investment plan invests your money in a portfolio of up to 30 ETFs and stocks. You get to enjoy dividends directly from your OCBC account.

What is OCBC Blue Chip Investment Plan?

With the OCBC Blue Chip investment plan, you invest every month at a fixed amount that you are comfortable with. The best part is that you do not have to fork out a lot of money as your initial investment. The platform uses the dollar-cost averaging method to invest your money which is one of the best methods besides dividend investing. Find out the best blue chip stocks in Singapore.

 

What Counters Can I Invest in Using the OCBC BCIP?

You invest in three significant counters using the OCBC Blue Chip Investment Plan. They include:

  • Real Estate Investment Trust (REITs)
  • Stocks
  • Exchange-Traded Funds (ETFs)

Real Estate Investment Trusts (REITs)

REITs are used to invest in income-generating real estate assets. You earn an income from the dividend yields of the REITs. The dividend amount is based on the rental income that the REIT receives from all the assets.

You can only buy one REIT, the CapitaLand Integrated Commercial Trust (CICT) through OCBC Blue Chip. During a recent review, the FTSE Russel removed Singapore Press Holdings (SPH) from the STI and was replaced by Maple Tree Industrial Trust.

The STI currently has 6 REITs on its index. OCBC has mentioned they are looking to add or remove counters from BCIP based on the constituents of the STI. This means that you might be able to invest in more REITs in the future.

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Stocks

There are 14 individual stocks that you can choose from while using OCBC BCIP. All these stocks are found in the STI and are considered the blue-chip stocks of Singapore, meaning they have a good reputation and strong financial health.

Below is a list of the blue-chip stocks of Singapore. Investing in these stocks usually has a lower risk than other growth stocks. It is important to note that low risk does not mean any risk.

Stock Name SGX Code
CapitaLand Limited C31
ComfortDelGro Corporation Limited C52
DBS Group Holdings Limited D05
Keppel Corporation Limited BN4
Oversea-Chinese Banking Corporation Limited O39
SembCorp Industries Limited U96
Singapore Airlines Limited C6L
Singapore Exchange Limited S68
Singapore Press Holdings Limited T39
Singapore Technologies Engineering Limited S63
Singapore Telecommunications Ltd Z74
StarHub Ltd CC3
United Overseas Bank Limited U11
Wilmar International Limited F34

Exchange-Traded Fund (ETFs)

ETFs are funds traded in the stock market and by different investments. They usually follow an index. When you buy a share in a fund, you diversify your investment across different investments on that fund. 

Here are 4 ETFs That you buy couple with the index that it tracks.

ETF Ticker Asset Class Index Tracked
Nikko AM Singapore

STI ETF

G3B Stocks FTSE Straits Times Index
Nikko AM SGD Investment

Grade Corporate Bond ETF

A35 Bonds iBoxx SGD Non-Sovereigns

Large Cap Investment Grade Index

Lion-Phillip

S-REIT ETF

CLR REITs Morningstar® Singapore

REIT Yield Focus IndexSM

Lion-OCBC Securities

Hang Seng Tech ETF

HST Stocks Hang Seng Tech Index

 

It is important to note that the ETFs buy into all the investments in the index. This means that you can purchase a collection of bonds, stocks, or REITs. Diversification lowers the risk involved with investing depending on the performance of the different investments instead of relying on one.

 

You will be required to pay for the expense ratio of the fund. This is in addition to the transaction fee that you will need to pay when using OCBC BCIP.

Here is a look at the expense ratio of these 4 ETFs:

 

ETF Expense Ratio
Nikko AM Singapore STI ETF 0.3%
Nikko AM SGD Investment

Grade Corporate Bond ETF

0.27%
Lion-Phillip S-REIT ETF 0.58%
Lion-OCBC Hang Seng Tech ETF 0.68%

 

Can I Receive Dividends When I Invest with The OCBC BCIP?

If the ETF or REIT you buy via OCBC BCIP issues a dividend, you will receive it through your OCBC-linked bank account. The dividend you get varies from counter to counter. In most cases, companies announce that they are issuing dividends to their shareholders. There are three types of dividends that you can receive and they include:

  • Shares

Some companies offer dividends in the form of more shares. It will be credited to your BCIP account when you receive a share dividend.

  • Cash Dividend

The cash dividend is the most common form of a dividend. In most cases, the company will announce cash dividends they will give out for every share you own. The dividend is then credited to your deposit account.

  • Choice

In some cases, a company may offer a choice dividend. This means if you are a shareholder, you will receive a letter to choose whether you want your dividend in the form of cash or shares.

Woman checking graphs on stock market on computer

What are the Returns for the BCIP?

The returns of OCBC BCIP solely depend on their stock performance or ETF. You are likely not to go wrong with the ETFs and stocks you buy through OCBC since they are all well-established, but this does not mean that you shouldn’t invest in any counters. But first, make sure that you do your research on the stock or ETF before investing. When you know how the company works, you will know whether it is worth investing in.

What Do OCBC BCIP Fees Look Like?

For new customers and those under 30 years, you get a preferential fee of 0.88% with an initial investment of S$500 of your buy amount or sell amount. If you are over 30 years old, you get the rate of 0.3% of the buy or sell amount, a minimum fee of S$5 for every transaction, whichever is higher.

Here is a better look at the fee structure when you invest in the different amounts.

AMOUNT YOU BUY OR SELL FEES YOU PAY FEES IN PERCENTAGE
$100 $5.00 5.0%
$200 $5.00 2.5%
$300 $5.00 1.6%
$400 $5.00 1.25%
$500 $5.00 1.00%
$600 $5.00 0.83%
$800 $5.00 0.63%
$1000 $5.00 0.50%
$1200 $5.00 0.42%
$1400 $5.00 0.35%
$1600 $5.00 0.31%
$1700 $5.10 0.3%
$1800 $5.40 0.3%
$2000 $6.00 0.3%

 

From the table, you can see the cost of investing less than S$500 every month is relatively high. If you use your SRS account to invest, there is an additional processing fee of S$0.37 per counter. So remember to include this fee when calculating your yield or return.

There is a fee of S$10 +GST for transferring shares to your CDP account or any other financial institution or even to your family members. If you transfer the shares to other people, the fee will be higher (around S$150+GST). This transfer procedure is quite tiring since you will need supporting documents from OCBC bank. It is best if you could avoid it.

OCBC BCIP vs. DBS Invest Saver

DBS Invest Saver and OCBC BCIP are very similar. Here is how they compare;

CATEGORY OCBC BCIP DBS INVEST SAVER
Fees for investors under 30 years old 0.88% 0.5% for bond ETFs, 0.82% for stock ETFs
Fees for investors over 30 years old $5 or 0.3%, whichever higher 0.5% for bond ETFs, 0.82% for stock ETFs
Counters 15 individual stocks, 6 ETFs 4 ETFs only, various unit trusts
ETFs counters
  • Nikko AM Singapore STI ETF
  • Nikko AM SGD Investment Grade Corporate Bond ETF
  • Lion-Phillip S-REIT ETF
  • Lion-OCBC Securities Hang Seng Tech ETF
  • Nikko AM-ICBCSG CN BD
  • ETF SGD
  • Lion-OCBC Securities
  • China Leaders ETF
  • Nikko AM Singapore STI ETF
  • Nikko AM SGD Investment Grade Corporate Bond ETF
  • ABF Singapore Bond Index Fund
  • Nikko AM-StraitsTrading Asia ex Japan REIT ETF
Unit Trust 0 Yes, many

 

The verdict

where to invest question

From the comparison, DBS Invest Saver has better fees for investors under 30 years old. If you are over 30 and want to invest S$600 or less every month, DBS Instant Saver is your best bet. If you want to invest S$600 every month, you can go with OCBC BCIP.

Regarding counters, if you want to invest in individual stocks, opt for BCIP. Regarding the ETFs counter, both have the Nikko AM Bond ETF and Nikko AM STI ETF. DBS Invest Saver has the Nikko AM-Straits Trading Asia ex Japan REIT ETF while OCBC BCIP has the Lion-Phillip S-REIT ETF. The Lion-Phillip S-REIT ETF is slightly diversified.

The DBS Invest Saver has the Singapore Bond Index Fund, a defence fund, while the OCBC BCIP has the Lion-OCBC Securities Hang Seng Tech ETF, an aggressive fund that focuses on the HK-China’s Tech industry.

In the Unit Trust category, the OCBC BCIP does not offer the category because the firm has a different program that offers monthly investment for unit trusts. On the other hand, DBS Invest Saver offers monthly investment for unit trusts under the same program called the Invest Saver Program.

Is It Worth Investing?

OCBC BCIP allows you to invest in ETFs and stocks through the dollar-cost averaging approach. It offers an excellent way to cultivate an investing habit even with a bit of capital. Here are the pros and cons of investing with OCBC BCIP:

The Pros

  • Cheaper than traditional brokerage firms
  • Easy and cheap way to invest via dollar-cost averaging approach
  • Ideal for investors with little capital
  • Buys individual blue-chip stocks using the Dollar Cost Averaging Method
  • Easy to apply if you have an OCBC account
  • You can reinvest your dividend manually
  •  Attractive fees for investors below 30 years
  • Able to invest SRS funds
  • GIRO applications are made on your behalf

The Cons

  • Fees increase once you are over 30 years old
  • Sell orders are always executed during the next business day
  • You incur both management and transaction fees when you invest in ETFs
  • REIT investment options are limited
  • Unable to reinvest dividends
  • Shares you buy are not under your full custody
  • The share transfer process is quite tedious

How to Apply

BCIP is a custodian account. Here you will not need to apply for a CDP account. If you have OCBC Online Banking or the OCBC deposit account, you can apply for the Blue Chip Investment plan account via your mobile banking app or online banking account.

If you do not have an OCBC deposit account, you will need to mail the form in, and they will settle the deposit account opening and the blue chip investment plan account for you. Below is the procedure to follow when opening your OCBC BCIP account. But first, you will need the following thing:

  • OCBC online banking via iBanking
  • OCBC deposit account
  • OCBC SRS account

Step 1: Apply for an OCBC Blue Chip Investment Plan Account

Once you create your OCBC bank account, you can apply for a BCIP account through the OCBC iBanking platform, as we mentioned earlier. You can choose whether to create a normal or a joint account.

It is important to note that joint accounts can only be created by adult parents who has a child under 18 years. Typically, your application will take at least a week to be processed, and you will be notified via SMS once it is done.

Step 2: Select How Much and What Counter You Wish to Invest In

OCBC BCIP has 20 counters that you can choose from. You can choose with an ETF or stock that you would want to purchase. Then you will need to choose your monthly investment amount.

You can start your investment strategy with S$100 every month. If you wish to invest further, you can add multiples of S$100. You will need to submit your application, then select the account you are debiting from, and it must be from an OCBC account. After which, a GIRO application will be made to deduce the amount from your account.

Step 3: Amend Your Plan If There is a Need

If you need to amend your plan, you can always do so from your iBanking platform. Some of the types of amendments you can make include:

  • Cancelling the application
  • Changing your investment amount
  • Add new counters
  • Change your settlement account

What Is Dollar-Cost Average?

Dollar-cost averaging is a passive investment method that requires periodic investment on a particular share irrespective of the price movements. Sometimes the market is very volatile, and you can be caught up investing a lot of money in the market at the wrong times. This means that you could quickly lose many of your savings due to one wrong investment decision.

So how can you avoid this risk? Rather than making a lump sum investment at once. Dollar-cost averaging believes in spreading your capital in smaller tranches. This will help minimize your money odds while building your portfolios.

Why Should You Choose Dollar-Cost Averaging?

Research shows that almost 90% of actively managed funds failed to beat the market conditions. Here are the top reasons you should consider going with dollar-cost averaging are your preferred investment method.

1. Volatility

Using the dollar cost averaging approach will help cushion your money when the market dips. If you make a lump sum investment just before a market crash, you will lose all your savings. If you decide to split your money in tranches using Dollar-cost averaging, you can easily avoid the loss.

2. Influence of Emotions

Some investors may argue that mastering the psychology behind trading is the key to success. However, most people still admit that their emotions are the primary driver of poor trading decisions.

The main reason behind this is that most humans are susceptible to making decisions driven by greed and fear, which is a perfect combination for a disaster. Here are some of the common mistakes most people make due to emotions:

3. Buying High and Selling Low

Buying high and selling low is one of the major mistakes people make. Fear of missing out and market euphoria, and herd mentality are some of the causes for this behavior.

4. Falling In Love with a Company

This is another mistake most investors make. When you are too attached to a company, you will make mistakes because you might ignore the warning signs. Keep in mind that industries are constantly changing, and some companies will be left behind. Your attachment might have you averaging down for a firm that might never recover.

The secret to avoiding the mentioned driver of poor investment decisions is automation. This is where DAC comes in. The best part about it is that this investment approach allows you to build a sizable portfolio with less risk. This way, you sleep soundly and let your money work for you.

What Is the OCBC Timeline?

OCBC usually deducts money from your bank account every 17th of the month of the 17th fall under non-business days. You have to ensure that your account has sufficient funds in your account two business days before the GIRO deduction date. To be on the safe side, make sure that you have enough funds in your account for the first three months.

OCBC BCIP buys shares on your behalf on the 22nd of every month. They then send a statement of the number of shares they have purchased on your behalf and what prices. After a few days, you can log in to your account to see the number of shares that you hold at the time.

Dividend Crediting

You will receive dividends when the ETF or the company announces issuing them out. You will receive the exact amount of money that the company issues on your OCBC bank account. OCBC will not deduct any fee from your dividend.

If the dividend is in the form of cash, it will be deposited into your OCBC deposit account linked to your Blue Chip Investment Plan account. If it’s a choice, you will choose whether to receive dividends as shares or cash. If you use SRS to invest your dividend, cash or share will be credited to your SRS account.

If you want to reinvent your dividend, you will have to reinvest it manually. OCBC does not automatically reinvest your dividends for you. All you need to do is leave the dividend in your OCBC account linked to your BCIP, and the money will be reinvested.

Related Questions

Do I Own My Stocks in the OCBC Blue Chip Investment Plan?

When you invest with the BCIP, you will not need to open a Central depository account or a custodian account. All your shares will be under the custody of OCBC. Your shares are under the following places; meaning that you do not have full custody do the shares:

Funds Used Shares Are Under
Cash OCBC Securities

Pte. Ltd 

SRS OCBC Nominees

Singapore Private Limited

 

It is also important to note that you do not have voting rights as a shareholder, and you will also not receive annual reports from any of the companies you decide to buy shares from. Therefore, you will not have the same privileges as classes of shareholders.

How Can I Transfer Shares to My Name?

If you want to have full ownership of your shares, you will want to transfer them out of your CDP account or transfer them to another financial institution. You must go to an OCBC branch to collect and fill out the transfer forms. It is also important to note that you can only transfer shares you have paid for in cash. If you used SRS to buy, you could not transfer them.

Is OCBC Robo Invest and OCBC BCIP The Same?

Although the same bank provides them, they provide different digital investment services. OCBC robot invest is a Robo advisor, while OCBC Blue Chip Investment Plan is a regular savings plan.

How Can I Sell BCIP Holdings?

Go to ‘Blue Chip Investment Plan-Sell My Holding.’ The sale will take place the next business day if you make the sell order by 2.30 pm.

Closing

OCBC BCIP is great to start your investment journey if you do not have a lot of capital to start your regular savings plan. The platform gives you access to a range of stocks and exchange traded funds that offer high yields and at a lower risk. However, you will need to open an OCBC bank account to apply for a BCIP investment.

Key Takeaways

  • The fee is much lower if you are under 30 years.
  • You will not attend any AGM or have any voting rights when buying shares via OCBC BCIP.
  • OCBC BCIP uses the Dollar Cost Averaging approach while investing.
  • The platform does not invest in unit trusts.

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