Cdp account neccessary?

Hello Anon! Straight answer yes. Let me explain the benefits of CDP.

At the current stage, you're interested to invest in STI ETF which you can easily do so via various banks like POSB InvestSavers or OCBC Securities. These banks allow you to purchase them as little as $100 per month. How it works is that the shares (ETF) that you purchased through them will be held 'virtually' on the broker account. This is what is known as custodian account. To put simply, imagine custodian account as your friend's bank account, whatever stocks that you have purchased legally belongs to your friends and your friend is helping you to manage the account.

If in the near future, you intend to purchase shares from popular companies like DBS, Capitaland Mall etc., you won't be allow to attend their AGM as you're technically not their shareholder. Most importantly, custodian account often have a higher fee for helping you to hold your stocks. Example of custodian accounts are like SAXO, Standard Chatered Online Trading or even your robo-advisors.

On the other hand, imagine CDP as a bank account for your stocks. Whatever share you have purchase through CDP brokerages will be credited to your CDP account (maintained by SGX). If you have a CDP account, and you have purchased a share from Capitaland Mall or DBS, you are automatically invited to their AGM and your name will appear as part of the shareholder. Dividends earned are also directly credited to your bank account.

TLDR: If you wish to have a sense of belonging in the company that you invest in, be it that you love the company or love their products, go for a CDP. And once again, yes, do open a CDP account, it's free.

Like Hariz mentioned, CDP is where your SG stocks and SGS like SSBs are held. If you buy shares through a local stock brokerage that is linked to your CDP account, the shares will be in your CDP account.

One key need to have a CDP account for is if you want to apply for IPOs on SGX. And also if you want to buy Singapore Government Securities(SGS) like Singapore Savings Bonds (SSB), Treasury bills (T-bill) or SGS bonds.

You will be asked for a CDP account when you want to apply for these. So try to open a CDP account as soon as you can.