Smaller Trading Lot Size

Singapore Exchange (SGX) had started trading in lot size of 100 instead of 1,000 since 19th January and there were expectations that it will attract more new investors, creating a surge in the trading volume. Or has it?

On the 19th of January 2015, Singapore Exchange (SGX) cut the minimum trading lot size to 100, down from its original 1,000. The original intent of the move was to attract more investors since investing in pricey blue chips like DBS Group Holdings (SGX: D05), United Overseas Bank Limited (SGX: U11) and Singapore Airlines Limited (SGX: C6U) has became more affordable.

Using Singapore-based bank DBS as an example, based on its closing price last Friday at S$19.38. To buy a lot prior to the change, would require S$19,380. The cost of buying one lot of the same shares will require only S$1,938, a price which is more affordable to most investors.

Three weeks have past since the minimum lot size was changed and it is clearly visible that the trading volume had not increased much as compared to past volume a year ago.

Investor Monkey - DBS trading volume

Although by reducing the lot size had made investing for younger or new investors more affordable, the minimum commission for online transaction at S$25 ranged from 0.24% to 0.35% per transaction charged by brokers still remains. This makes it even harder for smaller lot size investments to start profiting.

To achieve its intentions of attracting more investors into the market, the commissions collected from the investors will have to be reduced or adjusted proportionally.

Bottom Line

Without the reduction of the commission, profiting from the investment would not be as attractive. However, the doors to investment had been opened to new investors or those who do not have much capital. To profit from investing, it would be better to start early and the reduction of minimum lot size had made investment early much easier.

Rather than sitting on the sideline and hoping that one day SGX will adjust the commission collected for small trade size, which nobody would be able to tell when, why not start your investments whenever there is an opportunity today?

Book Review: Start Over, Finish Rich

Seeing that in the year 2010 will present a great opportunity in building wealth, David, in his book “Start Over, Finish Rich”, wrote about how to get back on track financially by staying positive and continuing saving and investing.

Just finished reading the book Start Over, Finish Rich by David Bach. Although written in 2009, when the Global Financial Crisis was ending, most of what is mentioned is still very much applicable in today’s context.

Seeing that in the year 2010 will present a great opportunity in building wealth, David, in his book, wrote about how to get back on track financially by staying positive and continuing saving and investing.

During a financial crisis, a lot of people give in to fear and despair. They stopped their savings and investment plans altogether and when the economy starts to recover, many of them missed the opportunity to build their wealth.

In the book, Start Over, Finish Rich, David talks about how to:

  • Find Your Money
  • Deal with Your Credit Card Debt
  • Fix and Protect Your Credit Score
  • Rebuild Your Emergency Savings
  • Re-energize Your Retirement Plan
  • Make it Automatic
  • Rebuild with Real Estate
  • Rebuild Your College Fund (and Restructure Your Student Loan)
  • 25 Ways to Save $5,000

One of the most important lessons to be learnt from reading the book Start Over, Finish Rich is not to give up when crisis strikes, wiping out your retirement funds. All you need to do is to get up, dust yourself and continue the journey which you will finish rich eventually.

Although 2010 had already past, the lessons to be learnt from reading this book can still be applicable in future on the next downturn of the economy. It would be good to read through the book, understand the topics covered in it and adapt the ideas on the next economy downturn.

Portfolio Update (January 2015)

One month had past silently since the start of the new year. With the start of this new year, I had set my new targets and plans for my investment strategies. Have already started to use investment to increase my capital since mid-2014 since to create a passive income via investment requires much more dollars invested.

Continue reading “Portfolio Update (January 2015)”