Investing with your CPF - Part 2

This is a continuation of from an earlier post:
Investing with your CPF - Part 1


How do you start to invest with your CPF-OA?
You need to open a CPF investment scheme (CPF-IS) account with one of the agent banks.
DBS: http://www.dbs.com.sg/personal/others/cpfinvestment/default.page?
OCBC: http://www.ocbc.com.sg/personal-banking/Investments/cpf-investment-account.html
UOB: http://www.uob.com.sg/personal/investments/financial/uob_cpf_investment_account.html

Note that you need to
1) Be at least 18 years old
2) Not an undischrged bankrupt
3) Must not have an existing cpf-is acount with any bank
4) have at least 20k in your CPF OA before you can invest.


What are the charges like?
As you may have suspected by now, since the investments go though an agent bank in additon to your regular broker, there are additional charges tied to it.

The full list can be viewed on CPF website:
http://ask-us.cpf.gov.sg/efa/cs/idcplg?IdcService=GET_FILE&RevisionSelectionMethod=LatestReleased&dDocName=EFA_000087&Rendition=Primary&allowInterrupt=1&noSaveAs=1

I shall highlight the more important ones here:
Shares:
1) normal brokerage charges applies
2) transaction fee between $2 and $2.50 per 1000 units/shares (up to max of $20-$25)
3) service charge of $2 per counter per quarter.

Unit trust
1) regular sales charges applies
2) between $2 and $2.50 per 1000 units (up to max of $20-$25)

Based on these charges, I will suggest
1) DO NOT buy penny stocks using your CPF-OA. The one time transaction fee will eat into your overall costs
2) try not to over diversify on your CPF-OA stocks. Each counter will eat up $2 per quarter.
3) calculate your overall return carefully, taking all these charges into consideration. You need to beat the 2.5% to make it worthwhile to invest your CPF-OA