Augmenting your wealth is very easy with the advent of internet-based trading platforms. Many Singapore financial institutions such as DBS, UOB and OCBC offer online portals to facilitate transactions saving both time and effort. It is convenient and cost-effective as most brokers charge a nominal transaction fee for each trade they execute on their clients.
Trading in stocks is not as daunting as it sounds and can be broken down into three stages:
1) Securities account
2) Market research
3) Order execution
If that sounded like gibberish to you, then no worries, as we will now break this down step by step:
STEP 1: Open Account with Broker
The easiest way for most retail investors is by opening an account with a brokerage firm. These brokers act as financial intermediaries who facilitate trades between buyers and sellers of securities. They do this by buying or selling shares for their clients when they receive orders (from these clients). This transaction usually incurs a fee charged on either side to both buyers and sellers.
STEP 2: Conduct Market Research
The minimum you need to buy stocks successfully is information, otherwise known as ‘market intelligence’. It can be summarized into two broad categories: fundamental analysis and technical analysis. Fundamental analysis focuses on analyzing macroeconomic factors such as economic growth, inflation, etc., whereas Technical Analysis studies past market prices to predict price movement in the future.
STEP 3: Order Execution
Once you have completed your market research, place an order to buy or sell at the current market rate. You will be charged a fee if your broker executes this trade on your behalf (like most other services). Be mindful of any costs incurred before placing an order, as they can severely erode trading profits.
STEP 4: Maintain Discipline / Seek help when needed
More than likely, there will be bad days filled with significant losses; many new investors lose heart during these periods and give up entirely. Remember, however, that you are invested long-term and should not let temporary hiccups dissuade you from continuing with your investment plan. If losses in your portfolio are eating away at your capital, consider selling some of the securities in your portfolio to recoup losses.
If you are unsure about what you are doing, it is always prudent to seek more experts than yourself. This way, you will improve your investment skills, leading to greater returns down the line.
However, Singapore stocks are not for everyone as there is no set route towards success and one needs to take failure with equanimity. For most people who want a simple diversified portfolio for long term savings, exchange-traded funds (known locally as ETF’s) may be a better choice. When buying or selling securities, the amount invested in each trade or transaction can be a few hundred dollars or less, hence ‘micro-investing’.
Micro-Investment Schemes in Singapore offer a variety of investment strategies and asset classes allowing investors to achieve their long term financial goals. These range from Exchange Traded Funds that track indices such as Hang Seng or FTSE Bursa Malaysia KLCI to Real Estate Investment Trusts (REIT’s), which invest in income yielding property assets. In addition to this, there are also other schemes such as Global Currencies, which invests in foreign currencies and helps mitigate risks associated with volatility when investing in these markets.
The amount invested each time can be small; thus, it is ideal for those who want to accumulate capital over an extended period.
Investing takes practice, but it can pay off if you’re patient enough to wait for your investment to mature! It’ll take time to build up your portfolio, understand how the companies work and make decisions based on current reports about other assets, so don’t worry too much about the money until after a few years of doing this constantly!
After all, investing isn’t necessarily about making money; it’s about learning how to manage your finances while maintaining other financial assets like investments. Doing this will help you get better returns on future investments and might even help you make more money in the future when you’re all grown up!
Are you interested in stocks in Singapore? Saxo Bank can help you with all your trading needs!