How to Buy Your First Stock

It has come to our attention, whilst trying to get people motivated to invest, that the question most individuals have is “How do I start investing?” or (my favourite) “I don’t know what I don’t know so I don’t know where to start!”

So today, we have decided to put together this guide to help you to start investing! First, you have to have enough capital to start. Now most people think you need a lot of money to start investing and that in itself is a barrier to entry for most young individuals. To me, it only makes sense to invest if you have a thousand dollars. If let’s say you decide to invest $300, and you make back 10% over a year, it means you’ve spent the whole year waiting just for your investment to return the commission charge you paid. So what if you don’t have enough capital?

You need to start saving! Start putting away a portion of your income and make sure you don’t spend it until you can invest it. If you are currently serving your national service liability, do save some of your allowance and start investing when you ORD. You could probably save $1000 which is just about enough to get you started.

For myself, I have not spent my angbao money on anything other than shares. I have taken all the money I received over the multiple gift giving celebrations over the years and invested it. You can start doing the same unless you’re married in which case you won’t get any angbaos. (to be fair if you are married you probably have the capital to start investing)

Secondly, you need to open a trading account at a brokerage. It is really simple. Just stroll down to the nearest branch of whichever brokerage you like. Take a queue number and tell the person at the desk that you would like to open a trading account. They will give you a few forms to fill up. One is to open a CDP (Central Depository – They keep your shares for you) account, another is to open a trading account with them and, if you want to trade US shares, there will be another additional form for you to fill up. By the way, you can only open your own account when you turn 18. If you are younger than 18, I suggest using your mum or dad as your broker. Lol

Now you may be wondering which brokerage you would like to open your account with. You can either ask your relatives or friends who invest and use the same brokerage firm or you can decide for yourself. There are 2 important criteria for me. The first is the trading platform and its functionality and the second is the commission that the brokerage charges. The list below has been compiled by moneysmart.sg. Make sure to compare the fees and google the platforms to see which one you like the most.

 

Brokerage Firm Minimum Fees Trading Fees (based on contract amount)
<$50k $50k to $100k >$100k
AmFraser $25 0.275% 0.22% 0.18%
CIMB Securities $25 0.275% 0.22% 0.18%
Citibank $28 0.25% 0.20% 0.18%
DBS Vickers $25 0.28% 0.22% 0.18%
RHB Securities (formerly DMG) $25 0.275% 0.22% 0.18%
Maybank Kim Eng $25 0.275% 0.22% 0.18%
Lim and Tan $25 0.28% 0.22% 0.18%
Phillip Securities (POEMS) $25 0.28% 0.22% 0.18%
OCBC Securities $25 0.275% 0.22% 0.18%
SAXO Capital Markets $15 0.12% 0.12% 0.12%
Standard Chartered $10* 0.20% 0.20% 0.20%
UOB KayHian $25 0.275% 0.22% 0.20%

Lastly, what do you buy? Warren Buffett said “Risk comes from not knowing what you are doing.” So if you want to make a good decision, you have to make sure that you are well informed and have the knowledge to make the right decision. Or not make the wrong one… To do so, you need to learn more. Go for seminars, just attend all the free ones. SGX has a lot of them: https://www.sgxacademy.com/ they are quite useful for the beginner investor and a good place to start for some interactive learning. Otherwise you can always speak to people who know more about investing than you. But, beware of those that just talk about individual stocks being exciting because they say something like oh the stock has been going up a lot I think its going to keep going up. You have to be able to discern if the individual really knows what he is talking about. And most importantly read a lot. Read lots of books and use the internet to its fullest. Investopedia is a great website with lots and lots of resources so I would highly recommend it as well. And of course, make sure to like our Facebook Page and subscribe to our WordPress blog if you want to know more about investing.

 

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2 thoughts on “How to Buy Your First Stock

  1. Great tips on buying your first stock. People need to self educate themselves and realize how this method will lead to financial freedom and earn passive income over time. Great content 😌

    Like

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