Asked by Anonymous
Asked on 02 Aug 2019
How many lots can an investor get from investing $500 for example? Can he get lesser than 100 units when investing with lesser capital?
The number of lots depends on the share price, so you may not necessarily get 100 share with $500 (think DBS/OCBC). However you can buy odd lots if you really need to, but I highly discourage it. Brokerage houses will allow transaction of odd lots (I'm from Phillip and I know for a fact it can be done) but poor liquidty and wide spreads should be enough reason for you not to buy odd lots.
Rather than trying to invest in shares with $500 a month, save your funds and wait for the right price. You'll get a better deal that way, with a better margin of safety. Due to transaction costs involved, I won't recommend transacting in shares if the transaction cost is 0.5% of the contract value. If your budget is low, you would be better off doing UTs on POEMS in this case, as there are no sales charges, platform, or switching fees.
If you are buying through a brokerage house then the minimum shares you have to buy is 100 shares.
Assuming you can only invest $500 every month, buying odd lots is only possible with regular savings plan.
You can check out POSB InvestSaver, OCBC Blue Chip Investment Plan or Philips Share Builder Plan.
I’m assuming that you want to buy a stock that costs more then $5, in that case you can’t buy 1 lot as it costs more then the capital you have. You could do Regular Savings Plan on the stock you want, in which case you can put $500 and buy less then 1 lot. This is considered odd lot. For regular savings plan(RSP) you could try POEMS, they have RSP for blue-chip stocks.
Top Contributor (Oct)
The short answer: It depends on the stock price. *you must buy minimum 1 lot = 100 share of the stock. and stock price is always quoted for 1 share.
If stock price is $1/stock, $500 gets you 500 shares or 5 lots. But in real life, there is other charges which you must take into consideration as well. If your budget is firmly maxed at $500, even if charges is $1, you can only buy 400 shares/4 lots and be left with $99 cash as change.
IF the $500 per month thing, my suggestion is to invest ONCE every 2 to 3 months, that way you have $1500 each round and you can buy more and potentially pay lesser charges. Dollar Cost Averaging can be improvised in this manner. It is still an "averaging" investment method, and you have 3 months to decide which stock/etf to buy and really plan how to expend your bullets (cash)
Unless you are sure, I actually recommend you to look into sti or robo-advisors. If you are investing only $500 on the stocks. The cost is at an average of $50(25in and $25 out), exclusively. The fee is already 11% of your total (50/550*100%). You would need your stocks price to grow 110% to at least break-even.