People can say what they want (seems like everyone has a different view as to what it will achieve) but to me, the essence of SGX board lot reduction to 100 boils down to one word – affordability. Well, at least to small-time investors like myself.
I thought, why not a simple illustration.
Let’s assume we are now in 2015 and I have $800 to spare in my bank account. While window shopping after work and during weekends, it seemed like every single freaking shopping mall, regardless of sub-urban or prime location, is always packed with people.
*light-bulb in my head brightens*
Why not invest in shopping malls?! After some homework i.e. tikam tikam, I’m convinced that Vivocity, the largest shopping mall in Singapore, has the potential for future AEIs and earnings growth. Also, I like how CapitaMall have been doing a decent job of getting consumers like myself spend our hard-earned money there.
I don’t care what the price is. BUY lah!
- CapitaMall Trust (C38U) S$2.00
- Mapletree Commercial Trust (N21U) S$1.44
Eh? Yah hor. Now that it is 2015, the board lot size is only 100. This means that I can get 1 lot of each and spend only S$344.00 in total (excluding fees etc).
Aiya, since my bank account has money, let’s also buy 1 lot each of STI ETF and ABF SG Bond Index Fund since I’m a shopaholic.
- Nikko AM STI ETF (G3B) S$3.42
- ABF SG Bond Index Fund (A35) S$1.16
Additional spendings : S$458.00
So now, I’m a part-owner of 17 shopping malls in Singapore and feeling shiok about it. One day, I looked in my trading account and sees that few dollars have been credited. Wah seh – got dividends!
Again, I embark on more research on SGX website and to my amazement, I realize I will be getting dividends almost every month! Below are previous figures pulled from SGX website assuming I have 100 units of each stock/ETF :
- Jan – $4.65 (NIKKO AM SINGAPORE STI ETF)
- Feb – $2.72 (CAPITAMALL TRUST)
- Mar – $1.865 (MAPLETREE COMMERCIAL TRUST)
- Apr – Nothing =(
- May – $2.57 (CAPITAMALL TRUST)
- Jun – $1.953 (MAPLETREE COMMERCIAL TRUST)
- Jul – $4.65 (NIKKO AM SINGAPORE STI ETF)
- Aug – $2.69 (CAPITAMALL TRUST)
- Sep – $1.95 (MAPLETREE COMMERCIAL TRUST)
- Oct – $2.30 (ABF SPORE BOND INDEX FUND ETF)
- Nov – $2.56 (CAPITAMALL TRUST)
- Dec – $1.801 (MAPLETREE COMMERCIAL TRUST)
* Nikko AM STI ETF has not paid a dividend in January before due to revised distribution dates so I reused the July amount
Adding everything up gives me a grand total of … $29.709! Chey – only enough for a pair of movie and maybe popcorn.
Anyway, light-hearted scenario aside, I believe it does improve the affordability of investing and how I can easily create a VERY TINY stream of passive income despite holding on to very little capital.
In no way am I recommending you invest in the randomly selected Tikam-Tikam counters listed above – do so at your own risk!
Last Piece of the Jigsaw Puzzle
The last stumbling block would be how trading platforms and brokerage react in response to the reduction of board lot size. Currently at 0.2% (no minimum) for SGX-listed shares, Standard Chartered online equities trading is a compelling choice for many small-time investors.
The question is, will fees remain at 0.2%? Will others respond with equally competitive fees?
下定决心, 不怕牺牲, 排除万难, 我们要发达!!
Yes, I’m an old-school uncle at heart with a weak-spot for cheesy dance tracks. *sigh*
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