Stock Investment in Singapore
If you are thinking about stock investing in Singapore, then this 6 step guide will help you to get started:
1. Clear your Objective and access the risks, Responsibilities, and Benefits:
It is very essential to understand the risk factor in stock investment in Singapore, before making an investment. Investment in stocks is especially suited for those who are willing to take risks and are capable of looking beyond the low returns that they receive from mutual funds.
To get most benefits from your stocks, you need to be an active investor which means an input of your time and attention towards stock market. You must be very attentive towards monitoring your holdings and towards the stock market behavior.
2. Open a CDP (Central Depository) Account
Having a CDP securities account is mandatory for investment on stocks in Singapore. A CDP account stores all your SGX stocks in a centralized location.
CDP account can be opened as an individual, Joint or corporate account. This article focuses on opening an Individual CDP account.
• Age: Above 18 years
• Should not be an undischarged bankrupt
• Identification card
• Copy of tax assessment notice, or Bank statement from a MAS licensed bank, or Central Provident Fund (CPF) statement
CDP account can be opened in the following three ways:
• By mailing the application form along with all the supporting documents.
• By personally visiting CDP
• Over the counter process at any SGX-ST Member broker
3. Opening a Trading Account
For trading stocks on the SGX shares, you need to have a trading account (or Brokerage account). You may buy or sell stocks on SGX using this account. There are a number of brokers and Banks that allows you to open a Trading Account. Few of the famous ones are listed below:
• IG Singapore
• Lim & Tan securities
• Maybank Kim Eng
• DBS Vickers
• RHB Securities Singapore
• KGI Fraser Securities
• OCBC Securities
• CIMB Securities
• UOB Kay Hian
Choosing the Right Trading Firm
It is very important to first verify your firm because you will be investing a lot of money in your trading account and hence you need to be sure about the security of your money. Some of the key points that may help you in choosing the best trading firm for you are as follows:
• Commision Charges
As you are a new investor then you may compare the commission charged by various trading firms. Usually, the commission charges of each Trading firm vary from 0.12% to 0.275% of trading value and a minimum cost of $10 to $25 per transaction.
• Fund Transfer
You need to think of the way in which you will pay to the trading account for buying your stocks. You may use transaction modes like ATMs or GIRO or alternatively, you may link your savings account with your trading account. In doing so, the money will be automatically deducted from your savings account while buying the stocks and be paid to automatically into your designated savings account while selling the stocks.
• Overseas Investments:
As you become a more experienced player in the stock market, you may think about expanding your investments to overseas markets also. Holding overseas stocks comes up with some additional fees and exchange rates but if it is your future possibility, then you must choose a trading firm that allows investment in overseas stock markets so that you need not open another trading account with another firm in future.
As a beginner, you should look for a user-friendly trading platform as all the brokerage platforms are not built the same. You may try out free demo account option or consult your experienced friends to find the most suitable trading firm.
4. Design your Investment Gameplan:
Having a clear plan for Stock Investment in Singapore helps you in choosing appropriate stocks for you.
• The first thing that you need to decide is to determine the capital that you will be investing in stocks. It is highly advised that you must not put all your capital into the stocks. To be a safe player, you must invest that portion of your capital in the stocks which you can afford to lose if the worst possible circumstances occur.
• Then you must assess your risk-taking ability. It is often said that risks and returns go hand in hand and this is quite applicable to stock investment too. For low-risk takers, the safest play is to invest in Blue-chip stocks having high dividend yield if you are looking for long-term investment in Singapore.
• Risk can also be reduced by proper diversification of your stock holdings.
• Another important factor that may affect your investment in making a decision is the current financial scenario. You must keep yourself well updated about all the information that affects the stock prices.
5. Picking up, Buying and monitoring the stocks:
Selection of stocks may be done using technical analysis, Fundamental analysis or a combination of both. Technical analysis requires study of supply and demand to predict the future price. Fundamental analysis involves a study of the financial status of the company to determine its stock value.
After proper analysis, you can pick the best-suited stocks for you, buy them and monitor them online using customizable comprehensive trading tools provided by some online platforms like KE Trade mobile for Maybank Kim Eng etc.
6. Reviewing your Strategy and keeping Calm:
As you start gaining experience in stock trading, you will be comfortable in trying out different investment strategies but you must always keep in mind that your strategy should always be in line with your investment objective.
The Way Ahead
In the end, you know that it is the nature of the stock market to rise or fall so you should be able to handle your feelings and save yourself from falling into the trap of trends and hearsays which are not backed up by your personal study. Just be disciplined and don’t leave your original investment plan if you want to achieve your long-term investment goal.