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27 Jul 2021

Your Ultimate Guide to Stock Investing in Singapore

Your Ultimate Guide to Stock Investing in Singapore | VI
(c) Sadie Xiao


Congratulations on deciding to start your investing journey! It can be scary, we know, but the fear is normal. After all, it’s our money and future we’re talking about.

To help shake your anxiety off, we’ve come up with a guide on how you can do stock investing in Singapore. Follow each step, and soon, your fears will be replaced by confidence.

1. Secure your finances.

Don’t skip this step as this is crucial in your investment success. Securing your finances means taking the time to check how much you can safely invest. You can’t just come up with a random percentage of what you earn each month to put into stocks. That’s just not rational.

What you can do is list down your monthly or annual expenses, and from there, decide how much you can invest. As we always say, “only invest what you can afford to lose,” – a piece of really valuable advice, because investing, as with all things in life, has risks.

You must also prepare for the rainy days. Have you put aside an emergency fund? Have you settled your own and your family’s health and accident insurance?

Think of this step as building a roof around your house. Once you have it, you know you’re safe from heavy rains or the harsh sun.

See also: Investing for Beginners: 3 Things You Should Remember

2. Decide on an investment strategy.

Stock investing can be easy if you know how to do it properly. Some people opt to do stock trading, where they buy and sell regularly depending on market movements. Some people opt to invest for the long-term, such as investors at the VI Community who practise value investing and follow Warren Buffett’s method as a strategy.

Ask yourself these questions before choosing which strategy is consistent with your lifestyle and financial goals: Do you have time to monitor the stock market every day? Are you emotionally prepared for stock market fluctuations? Would you rather review your portfolio quarterly or bi-annually? Would you rather wait for the right opportunity to buy a good stock?

This step will give you clarity on which path to take. Of course, the key is learning all about the strategy you’ve chosen. It’s not enough to copy the method. You must understand why it works so you can be confident doing it on your own.

See also: 5 Reasons Why Value Investing Works for Everyone

3. Open a brokerage account.

A brokerage is where you can buy and sell stocks. Tied to this step is the opening of a Central Depository Account or CDP, which is a requirement for all first-time investors in Singapore. Once you have it, you can select from Singapore’s huge selection of brokerage platforms.

You can open a brokerage tied to your bank so the process will be easier. Otherwise, you can choose other platforms, such as SAXO and TD Ameritrade, especially if you don’t want to limit yourself to trading in the Singapore Stock Exchange (SGX). SAXO and TD Ameritrade allows you to trade in the US market, which in our opinion, is the best, the cheapest, and the most profitable exchange.

In choosing an investment brokerage, consider these things: coverage, account type, cost, and interface.

First, determine whether you want to buy stocks outside of the Singapore market. If you do, then you need a brokerage that can give you access to stocks in NYSE, NASDAQ, ASX, KLSE, or other exchanges. Then you can narrow down your choices.

The next consideration is whether the brokerage is CDP-linked or a custodian account. A CDP-linked account allows you to own the stocks you buy on the platform under your name and in your personal CDP account. Typically, this will be more expensive. On the other hand, a custodian account is when your stocks are held by the platform on your behalf, and they usually cost lesser.

You must understand that brokerages charge you a certain percentage for each trade you make – there's a fee when you buy and a fee when you sell. Fees in Singapore are about 0.08% to 0.25% of trading value.

This emphasises the previous step of deciding on an investment strategy. Should you decide to trade daily, you’ll spend a lot on commission fees, which can eat up your profits.

You must also consider the brokerage’s interface. It could be cheap but difficult to use for a beginner like you. Finally, check the ease of fund transfers. Does the brokerage allow you to pay for your transactions easily? Will their payment methods work for you?

Learn more: Our preferred brokerages in Singapore

4. Fund your account.

You cannot officially start trading if you haven’t funded your account. Each brokerage has a minimum funding requirement although they are flexible in payment methods. Singapore platforms often accept bank transfers, PayNow, and even remittances.

Then, you just need to wait for confirmation and you’re on your way to your full investing journey.

See also: Learn how to invest in ETFs

We wish you the best of luck! And know that you’re always welcome to join our VI community!

Join our free investing masterclasses.


Disclaimer

No income guarantee or promises of any type are being made in this article. Know that your results will vary due to circumstances that are outside of our control. The author and the company do not warrant, guarantee, or make any representations about the use or results of the use of the products, programmes, services, and resources mentioned in this article. The reader, thus, agrees that the author and the company are not responsible for the success or failure of readers’ investment and business decisions relating to any information provided herewith.