Step-By-Step Guide On Getting Started On Investing In Singapore
DollarsAndSense has written widely on the topic of investments and how new investors can get started in Singapore. Despite our best efforts, we still get many questions from our readers saying they haven’t gotten started even though they want to, and that they find some of our articles too advanced.
We often find ourselves responding to our readers saying there are basic and simple information on our website, and other websites, and that they just need to make a conscientious effort to start by continuously talking to people and asking them questions and reading relevant articles to build a solid foundation of knowledge on the topic. No one can become an expert overnight by just reading a couple of articles.
Often, the problem is life sometimes. This group of people set out to learn but tend to neglect following through as there is only a finite amount of time each day, and people will complete the responsibilities and tasks most important to them.
To simplify matters for our readers, we thought of compiling articles that answers the question of many of our readers and point beginner investors in the right direction, and to the right articles to start building up your knowledge and eventually make your first investment.
Here are some of the most common questions people new to investing have asked us and an extensive reading list that should answer many aspects of the questions.
# 1 Many Articles Talk About Concepts And Ideas, But How Do I Really Get Started?
The very first thing you need to start investing is a brokerage account and a Central Depository (CDP) account. You can open up a brokerage account with brokerage firms in Singapore including with the local banks DBS, UOB, OCBC; other banks such as Standard Chartered, Maybank or CIMB; and brokerage firms like Phillips and online portals such as iFast’s FMSOne portal.
All you have to do is a simple google search and to then send an email to the preferred brokerage firm you wish to open an account with. We’ve copied some of the articles we have written on this topic below for more information on this process – you can find out more about opening brokerage accounts, the fees involved when you make transactions, the documents you need to get started, as well as what kind of information you will be receiving from these brokerage accounts and how you can use them to begin your investment journey.
After setting up your accounts, you need to know how to buy stocks. Your trading representative will run through the process with you, but generally, this is quite similar across all brokerages.
As for how to pay for your investments, you just need to tell your trading representative how you wish to pay for your investments. This can be done in several methods via online banking, ATMs, cheques, Giro or direct payment at outlets. For us, doing it online is the most convenient method.
There’s no short-cut, you have to read to understand. And the more you read, the more you will understand.
Read our articles on setting up your brokerage and CDP accounts here:
# 2 What Do I Need To Know Before Embarking On My Investment Journey?
After sorting out which brokerage firm you prefer using and gaining information on how to buy and sell, you need to ask yourself what you need to do, financially, before making investments.
This often include understanding your financial commitments and having adequate emergency savings, sufficient insurance, setting aside budget for your monthly expenditure, putting a retirement plan in place as well as developing good savings habit so that you are continuously saving for your future. We have some articles for you to read on a bit more on this topic.
Based on your responses to these questions, more fundamental steps such as building your savings, paying off high interest debt such as credit card and personal loans or creating an appropriate monthly budget might be more important at this stage of your life. If you’re already leading a financially sound lifestyle, you should also consider putting your money in important financial products such as health and life insurance or bonds.
Read our articles to understand what you should be considering before you start investing here:
# 3 I Am Ready To Invest, What Stocks Should I Buy To Start Making Money?
If we, or other people knew this, there would be many more billionaires among us rather than people guiding or teaching you to invest.
When you’re ready to actually make stock investments, you need to know some key concepts – your investment profile; your investment horizon; risk vs return; simple financial ratios; diversification and passive vs active investing. All these will determine how you should be investing and what kind of stocks you should invest in.
You also need to know what safer investments are – like country indexes, bonds, and highly rated blue chip companies – and what riskier investments are – small-cap and growth companies.
We’ve listed some articles you should be reading to find out both these things.
Read our articles to find out more about key investment concepts here:
The other side to this question is understanding the kinds of stocks that exist on the market. Broadly, there are blue-chip stocks, which tend to be safer and stronger companies with long operational history, and growth or small-cap stocks, which are riskier but have greater potential to deliver tidy returns.
On the stock market, you can invest in stocks, exchange traded funds (ETFs) and retail bonds.
There are many types of stocks you can invest in, from the biggest and strongest companies in Singapore and other regions, such as Singtel, DBS, Keppel Corp or Yangzijiang, to smaller companies many people have not even heard of. Bigger companies tend to provide investors safer options and stable returns while smaller companies tend to offer bigger growth upside (or losses) as they are often more risky investments.
You can also invest in companies from US, Europe and other parts of Asia on the Singapore stock exchange. Another thing to consider is investing in different industries such as property, construction, oil & gas, technology or others. You can also invest in real estate investment trusts, or REITs, which owns properties and deliver stable dividends.
ETFs typically track indexes such as the Straits Times Index, Singapore’s country index made up of the 30 strongest stocks listed in the country or segments of the stock market, such as growth stocks, regional stocks, REITs, commodities or bonds.
As you can see, there are many types of stock investments to make in Singapore alone. Once you’ve gotten a good grasp of the local market, you can even explore other markets in US, China or Europe.
Read our articles here to find out more about the different investment types here:
# 4 What Should I Be Watching Out For When I Start Investing?
This is another favourite question for beginner investors. If you’ve read most of the article suggestions above, you will have a good idea on what you need to be watching out for at every stage of the process already.
You should continue honing your skills by critically thinking through how you want to build your investment portfolio, especially if it is for your retirement.
There are also many tools out there that you can use. And there are many “tips” from people that can land you in hot water. If you’re new to the game, stick to what you know and what is generally safer, in many of our articles, we tell beginner investors to get their feet wet in the STI ETF first. As mentioned, this is the Straits Times Index (STI), an index tracking the 30 strongest Singapore-listed stock.
There is no end to learning, and every article you read and every new person you speak to will give you a new perspective or a new idea, so you should continue talking to people and reading articles whenever you have free time.
You should not forget to regularly review your investments every year, to check if they are performing to expectations and to decide if you should be rebalancing your portfolio.
Read our articles to find out more about what you need to take note of after starting your investment journey here:
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