How To Start Investing in Equities

Sometimes, FOMO (or, Fear Of Missing Out) can hit when you’re least expecting it. For example, that time you overhear your friends talking about equity investing and FOMO hits like a pile of bricks.
At the end of the day, we all want our money to generate good returns for us – so that we can plan for our future. Equity investing can be an excellent choice when you are looking for higher returns and do not need your money to hand for a while.

Investing in Equities – Get Started!

Entering the world of equity investing, or even investing, in general, can seem daunting at first but understanding what you’re going to have to go through, you will be equity trading with ease and clear understanding.

Step 1 – Get A Broker

For equity trading in Singapore, the first thing you need to do is find a “broker”.  This is the person who you will tell to buy and sell equities for you.  It is very easy to find a list of local brokerage firms online. Before deciding on a broker make sure they are registered and have a good reputation – this information is simple to find on the MAS website – www.mas.gov.sg.

Brokers charge a fee for their services – this is typically charged as a percentage add-on amount to your equity investment.  For online trading, you also need to open a trading account with a broker and sometimes this can be as a cheaper alternative for trading equities instead of phoning your broker with instructions each time you want to buy or sell.

Step 2 – Open 2 Accounts

The next step is to open two accounts with your broker. You need to open:

1. A CDP account
2. A Trading Account

These two accounts must be linked to trading, and your broker will help you to complete this process quickly and easily.

Opening A CDP Account

This is straightforward, simple and free.  You can find all the information you need at www.cdp.com.sg.  You can open a CDP account either with your broker or directly with the CDP. This account, often called a securities account, is to manage your equity holdings – for all the incomings and outgoings. It records all your equity transactions electronically in one easily accessible, secure and convenient place.  You need to be 18 years old to open this account and not be an undischarged bankrupt. You can only have 1 CDP account.

Opening A Equities Trading Account

This account is also simple to open and your broker will help you with this.  How your money moves with each transaction is reflected in this account – your initial deposit, the money coming in and out from buying and selling equities as well as the broker fees.

That’s It! – Complete Step 1 and Step 2 above – And you are ready to start trading equities! It’s that simple to get set up!

Now all you have to worry about is which equities to buy and managing your portfolio of investments…

Purchasing Your Equities – Where And How To Buy?

You buy and sell equities through your stock broker, who acts as a middle man between you and the stock exchange.  When choosing a broker you have the option to select a full-service broker or a discount/online broker.  A full-service broker will give you suggestions of which equities to buy – based on their research. These brokers are more expensive but provide more guidance and advice. On the other hand, an online broker will simply place your orders to buy and sell equities specifically as you tell them to and are a cheap alternative if you prefer to do your research.  Most brokers in Singapore offer both options of service.

What You Should Look Out For?

Check the reputation of your broker before depositing money with them and before trading equities with them.  Even with the best broker in Singapore, mistakes can be made on your account – so it is also important to monitor your account statements and check the transactions are correct.

If you notice an error immediately get in touch with your broker to have it corrected.  Log the complaint with your broker and if they do not resolve the matter contact the SGX (Singapore Stock Exchange) and SIAS (Securities Investors Association Singapore) to log the complaint with them. They will assist in resolving your issue and will also take steps to warn other investors of substandard broker behaviour.

Keeping Track Of Your Equity Portfolio

After each transaction, you receive a trade confirmation, and you will also receive monthly statements for all your trading activity – review these documents carefully to check they are correct.  If you have any questions, do not hesitate to contact your broker for clarification. Remember that with equity investing there are risks involved. In the worst case, if the company goes bankrupt, the maximum you risk losing is the total amount you invested. It is not a good idea to invest all of your money in just one equity. Making the best return on your portfolio can be achieved by diversifying your investments.

Find out the Difference Between Stock And Stock Fund or more about equity investments.