REIT-TIREMENT - REIT Investing & Personal Finance

A blog about REIT investment & personal finance

Friday, January 25, 2019

How to Start Investing in REITs

For people with no investment experience, it is very common to ask: "How to start investing?" This is a very general question, which has no direct answer to it. How about let's make the question more relevant to this blog, "How to start investing in REITs ?" Well, now the question scope has been narrow down quite a lot, hasn't it? If you have not read my previous post on "What to Consider before Start Investing" and "How to Come Out a Simple Dividend Investment Plan", I would recommend you to read it first.

1) Open Brokerage Account
There are 2 types of accounts you can use to buy REITs: through regular saving plan or through trading account, both have its pros and cons.

i) Regular Saving Plan
Regular saving plan allows one to invest a fixed amount every month into shares from S$100 per month. It is a dollar-cost averaging way to invest, in which every month it invest fixed amount of fund to buy more when price is low and buy less when price is high. Below are the comparison and list of REIT counters available to purchase.

Blue Chip Investment Plan
Share Builder Plan
Monthly Investment Plan
REIT Counters Available
REIT
CapitaLand Mall Trust
REIT
1. Ascendas REIT
2. Ascendas Hospitality Trust
3. Ascott REIT
4. CapitaLand Commercial Trust
5. CapitaLand Mall Trust
6. Frasers Centrepoint Trust
7. Frasers Logistics & Industrial Trust
8. Keppel REIT
9. Mapletree Commercial Trust
10. Mapletree Industrial Trust
11. Suntec REIT

REIT ETF
1. Lion-Philip S-REIT ETF
REIT
1. Ascendas REIT
2. Ascott REIT
3. CapitaLand Commercial Trust
4. CapitaLand Mall Trust
5. Capitaland Retail China Trust
6. Far East Hospitality Trust
7. Frasers Centrepoint Trust
8. Keppel REIT
9. Lippo Malls Indonesia Retail Trust
10. Mapletree Commercial Trust
11. Mapletree Industrial Trust
12. Mapletree Logistics Trust
13. Mapletree North Asia Commercial Trust
14. Suntec REIT

REIT ETF
1. Lion-Philip S-REIT ETF
2. NikkoAM-Straits Trading Asia ex Japan REIT ETF
3. Philip SGX APAC Dividend Leaders REIT ETF 
Fees
0.30% (min. S$5) per counter
≤ S$1000
1 to 2 counters – S$6
3 counters – S$10

> S$1000
0.20% (min. S$10)

Dividend Charges
1% (min S$1 capped at S$50)
< S$1000
1% (min S$1) per counter

≥ S$1000
0.18% (min. S$10) per counter
Dividend Handling
Credit to designated OCBC deposit account
Reinvested to your preferred counter by default or paid out on request
Credit to Maybank Kim Eng prefunded trading account
POSB is not in above because it does not offer REIT counter and OCBC only offer 1 REIT counter which is not sufficient for diversification purpose. For monthly investment sum more than S$1000, POEMS is a better choice. For sum less than S$1000, it would depends on both investment sum and number of counters.

Besides individual REIT counter, you could also invest in a basket of REIT counters through REIT ETF, which itself provide diversification across different asset class. Below are links if you want to know more about REIT ETF:
Dollar & Sense - Investing in REIT ETFs Listed In Singapore: 5 Things You Need To Know
Cheerful Egg - Which Singapore REIT ETF would I Invest in?
Financial Horse - REIT ETFs: 5 Reasons I am Still Not a Fan after Budget 2018
Regular saving plan provide you a discipline way to invest
ii) Trading Account & CDP Account
Basically, trading account is the one that you use to buy/sell your stocks and stocks that you bought would be deposit into your CDP account. You can have multiple trading accounts with different brokerage firm but you only need one CDP account. If you do not have CDP account, you can submit the application together when you open your first trading account with brokerage firm. Some firm offer custodian account instead, in which the firm hold your stocks under their name.

Few things to consider before your select your brokerage: commission fees, CDP or custodian and lastly cash upfront or payment within 2 business days (T+2). Generally, cash upfront account with custodian type will offer lower commission fee.

There are many brokerage to select from, you could refer to following for comparison:
Financial Horse - Best Stock Brokers for Singapore Investors (2018/2019 Guide)
Dollar & Sense - Singapore Online Stock Brokerage Account Fees Comparison (2018 Version)
Seedly - The Ultimate Cheatsheet: Cheapest Stock Trading/ Brokerage House in Singapore 2018

Unless you are able to afford $8000-S$10000 per transaction consistently, else minimum commission is definitely a very important thing that you should look into. Standard Chartered offer no minimum commission to their priority banking customer, which require to maintain S$200,000 in deposits and investments.

Choose a brokerage that suit your need most
Now, let's compare regular saving plan and trading account.

Regular Saving Plan
Trading Account
REIT Counters
Limited
All
Minimum Commission
<S$1000
S$1-10
CDP
T+2
S$25

Cash Upfront
S$10 (DBS Vickers, only for buy transaction)
≥S$1000
S$10
Custodian
with Cash Upfront
S$10-28
Rights Issue, Preferential Offer
Limited Control
Full Control
To have a better comparison we calculate the cost of regular saving plan in quarter term:
i) S$300 to S$600 per quarter, up to 2 REITs - S$3-S$18
ii) Above S$600 to S$1200 per quarter - S$6-S$30
iii) Above S$1200 to S$2100 per quarter - S$12-$30
iv) Above S$2100 to S$3000 per quarter - S$18-$30

As for trading account, to minimize the cost, you could consider brokerage that offer custodian accounts with $10 min. commission. If you really want your shares to be in CDP, then choose DBS Vickers cash upfront account. In this case, to maintain transaction fee below 1%, you would require $1000 per transaction. 

There are other benefits where regular saving plan can't offer. The main thing would be REIT counters to choose from, at this point of writing, there are 34 REITs, 5 Staples & 2 Business Trusts (business model similar to REIT) and 3 REIT ETF listed in SGX. Regular saving plan shareholders also have limited control on major corporation action like right issue and preferential offer.

If you have min. $1000 quarterly for investment, you could consider to buy REITs through trading account since cost does not differ much. Else, stick with regular saving plan until your capital is being built up. Remember! No amount is too small to start investing, Rome wasn't built in one day.
It's taken approximately 1,009,491 days to build Rome
2) Portfolio Management
Now while waiting for brokerage account opening, you should start to find a way to record and keep track of your portfolio. A lot of people do it on own DIY spreadsheet. But for a lazy person like me, I prefer to source for readily available resource, which I found the following:

i) Stock Portfolio Tracker Spreadsheet by Investment Moat
This is a free google spreadsheet created by owner of Investment Moat. The instruction and features are clearly explained in the page. It may seems complicated at a start, but what you have to do is to remove those yellow column data, then you are good to go, do not delete any formula. If you only want to keep track of your Singapore portfolio without recording cash, just keep "Portfolio Summary", "Stock Summary", "Transactions" sheets and hide the rest, do not delete any sheets.

ii) StocksCafe Portfolio Management
It is a pay to use service, however, you could try it free for 30 transactions. It will automatic track those dividend that you entitled without having to key in manually. StocksCafe is able provide detailed performance report of your portfolio. You could also click into individual stocks for its detail. There are a lot of features like screener, stock score, dividend strength calculator, shared portfolio, etc. Try it out for yourself.
Well, we are definitely not going to use this method for record keeping
3) Read & Learn
Once you have your trading account and portfolio management tool ready, then is time to find out where to learn the basic of REITs investing. There are lots of public libraries across Singapore, in which you could find a lot investment books in section 332.xxx. You could also look for this section under "Singapore Collection" area, books in Singapore Collection are written by local authors. There are total 4 REITs books written by local authors: International REITs, Building Wealth Through REITS, REITS to Riches and Value Investing in REITs. (If anyone happen to know the 5th, please let me know) 
My REIT books collection
Besides book, there are lots of good website that you could find great posts, just refer to those links on the right side of this blog. TheFinance.sg, SG Investment Bloggers and Financial Chickens are websites that consolidate local blogs for easy access and reference. It has become a habit for me that I check it everyday for any new interesting blog post. Everything is a learning opportunity, isn't it right?
You ask me who is Charlie Munger? Hmm, I don't know how to answer it, obviously i don't read enough
If you are willing to spend on courses, there are many REITs courses in Singapore. Some example are:
Dividend Machines by the The Fifth Person (open for sign-up once a year)
Early Retirement Masterclass Workshop by DrWealth
Investing in Singapore REITs  by Kenny Loh from My Stocks Investing Journey
Or you can check from Eventbrite for any upcoming REITs courses.

There are also online courses on Udemy and Investing Note for you to subscribe:
REITs Masterclass: Unlock Your Dividend Income Stream - Investing Note
Dividend Investing Specialised Topic: REITs MasterClass - Udemy (Same as Investing Note)
The Complete REIT Investing Course (Updated 2018) - Udemy

This is NOT a sponsored post and I will not receive any commission, though I wish it.
Do not buy solely based on other's idea, always do your research. Also, have a bottom line on maximum concentration for each REIT and sector, do not overly invest no matter how confidence you are. Ultimately,  no one care about your money more than you do. 

11 comments:

  1. You sure read up alot Vince haha 😉

    ReplyDelete
    Replies
    1. Only related to REITs and personal finance I read. You too research a lot on unit trust.

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  2. Currently using the spreadsheet by investment moat. Really good spreadsheet.

    Stockcafe looks interesting. For that price , im quite willing to use it but not sure how long websites like this will last

    I read the building wealth through reits as well. Simple to read, easy to understand.

    ReplyDelete
    Replies
    1. Previously I used both until stockcafe became paid service. Lol, stingy I am. I really quite like stockcafe fearures though.

      The other 3 books are nice too, can borrow from library and read.

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  3. Replies
    1. You can do that, good for diversification. But none of the 3 have clear information on how they handle share placement and whether can shareholder participate.

      Delete
  4. Super thanks. one stop helpful resources.

    ReplyDelete
    Replies
    1. Thanks for the compliment, if you find it useful, please share with your friends.

      Delete
  5. Thanks! I'm gonna read those few books about REITs.

    ReplyDelete
    Replies
    1. 👌👌👌Yeah,can borrow free from library. If you find it useful,buy to support those author.

      Delete
  6. Very interesting blog. Alot of blogs I see these days don't really provide anything that I'm interested in, but I'm most definately interested in this one. Just thought that I would post and let you know. 70trades

    ReplyDelete