How to Buy Stocks in Singapore
Singapore is one of the best places in the world to travel to, but do you know what is even more attractive in Singapore? It’s investing! Having one of the most stable economies in the world, and thanks to its proximity to China, Singapore is a paradise for both amateur and experienced investors. If you are a beginner and want to know how to start your investment career, the first thing you need to know is that you do not necessarily have to be a Singaporean to do it! You just need to invest in the right market and take it to step by step.
Among the many investment types in Singapore, there are low-risk options you can go for, especially when you are a beginner. For example, stock investing is a low-risk investment that can help you build up your way to success as an investor whether you are a Singaporean or a foreign investor. Do you need a tip or two on how to buy stocks in Singapore 2018? Well, here we’ll narrow it down for you step by step, but before that let’s look at two of the most common stocks to buy in Singapore:
Blue chip stocks
These are the stocks you can buy in large companies that are financially stable and have long success histories. In the beginning, you will need at least $5000, but the market shows the investment is worth it as most of these companies provide good pay-outs. If you need guidance, investment programs for blue chips investors are recommended.
Small cap stocks
These stocks are the opposite twin to the blue-chip stocks. With small-cap stocks, you choose to invest in small companies that are in the growth stage. Much riskier, the small-cap stocks are usually volatile and can lose you a large sum of money, but they also provide a great pay-out if the company becomes successful and grows spectacularly in a short period of time.
How to buy stocks in Singapore
So, now that you know slightly more about stocks than you used to, are you ready to find out how to really invest in stocks? Here is what your approach should be for buying your first stock:
The first step is to open a brokerage account as this will grant you access to stocks on SGX. With many popular brokerage firms in Singapore, you will not have any problems with opening one. Most of these firms also have a form of connection with a local commercial bank which makes them even safer for a beginner.
When it comes to what type of brokerage firm you should look for, here are a few tips to guide you. You may think the commission charged by the firm is the only thing that counts, but there are other factors to consider. For example, pay attention to fund transfer. You will have to choose a way to pay for the stocks you buy, so you may want to ask the bank you already work with if they also offer this kind of services. You can also pay for stocks using other types of services, such as ATMs or GIRO.
Also, when choosing the firm that will handle your brokerage account, think of overseas investments. The first step for a beginner is to start investing in stocks listed by SGX. But in the future, you will want to invest in overseas markets too. Find a broker that will be open to explaining the procedure and extra costs as that will help you invest further.
If you have gone through all these steps, also check out the platform used by the brokerage firm. You could ask for a demo from the brokerage firm so that you know what you will be paying for.
So, what is a CDP account and why you need it? Well, a CDP account or central depository account is a must-have for any investor in Singapore who is looking to invest in stocks. A CDP account can be looked at as a vault that centralizes all the stocks you bought on SGX. Your brokerage firm will not keep track of all the stocks you buy but the CDP account does and that can be useful for you in your future as an investor. Usually, brokerage firms will automatically use your CDP account to deposit the stocks you buy. However, you should make sure they have such a policy by asking them when you are opening an account.
Your own investment strategy
Having your own investment strategy is very important if you want to be a stock investor in Singapore in 2018. Here are a few points to consider when putting together your investment strategy:
- Always start small and set realistic targets that you can achieve. For example, you can try index investing to give yourself a view of a diversified portfolio or worthy companies you could invest in.
- Think of a strategy that involves a specific investment budget i.e. how much you are looking to invest and how often you will be investing.
- As a beginner, it very important and also smart to have a plan and invest over time instead of a large sum at a time.
- Use DCA as your beginner guide, whether you are a Singaporean or not. DCA means dollar cost averaging and it’s an investment strategy that requires you to invest a certain sum every month. This should let you worry less about the market’s volatility and keep you on the right track.
To sum it up, once you start making your way into the investment world and familiarize yourself with the stock market, you should continue to learn about different investment strategies and be more courageous as an investor. It is very important for a beginner investing in Singapore stocks in 2018 to understand that even if the market is crowded with investors looking for their next big opportunity, you are not competing with them. You are looking to walk your own career path, find the best strategies for you, invest in stocks you believe in and continue to prosper.