Instead of vying for Singapore stocks, why not consider stocks from the wider market?
What is the most important thing in stock trading and investing? Why would people want to trade at all?
We all know the real reason why people want to trade and invest: to earn more money.
Who wouldn’t like more money in their pockets and bank account? Wouldn’t you like to have that new car fully paid for thanks to your smart choices in investing in certain stocks?
You’ve heard of Wall Street, home of the investment bankers and of course, the Wall Street Journal and the New York Stock Exchange (NYSE), where the money flows in and out averages in the trillions daily. That is a lot of money that flows through the markets every day. This could very well literally mean that millionaires and even billionaires are made daily in the stock markets.
Why You Should Move Away from The Singapore Market
Contrast this to the SGX, or the Singapore stock market, where daily money flow averages around $600-900 million daily. While the Singapore stock market has a pretty good amount of money flowing through it for a country of this size, there is a much greater market out there at play, where potentially much more money can be transferred into your pockets for the exact same skills that you learnt to use for the Singapore markets.
Unfortunately, Singapore is a relatively young country, with even younger financial institutions and markets; contrast that with countries with much longer histories, maturity time and sheer size (like the NYSE, or the LSE or even the AMS [Amsterdam Stock Exchange], which has over 400 years to mature).
In cases like this, there can only be so much liquidity flowing through Singapore’s markets as Singapore is more or less limited by the amount of land space to host companies, as well as having the corporations host their variants of the stocks to fit into the Singapore stock exchange.
If you’re able to, try to learn how to trade and invest in the large companies in the world market (i.e. in London or US). Of course, if you’re worried about being a tiny, tiny fish in the massive world of US markets, your worries are well founded: people get played in the market every day, losing a significant amount of money over the course of a week (sometimes, even a day).
This all boils back again to being confident in your research as well as practice being technically proficient. You can most definitely hone these research and observation skills with practice sessions on demo accounts – all brokerage firms SHOULD have this feature. If they don’t, perhaps it would be better to consider a different firm.
There is no competition: It would be better for you to learn at your own pace and master it in your own time instead of rushing out. The money will always be there waiting for you to take it. But in order to take it, you have to master the analysis skills first.
There are differences between the Singapore Stock market and the US stock market that must be highlighted which can then be used to your advantage. First, for Singapore stocks, they can only be bought in lots of 100, while the US markets allow for single stocks to be purchased. This means that for new investors with less money in their accounts, some better Singapore stocks might be placed out of reach simply because of the minimum lot size that can be bought.
So, instead of investing in say the SGX STI (an index) which averages about $3000, why not go for the larger corporations in the US, such as Microsoft or Intel, which has a much lower stock price but offers high degree of stability thanks to its status as a slow moving, blue-chip stock?
Moreover, there are many companies in the US that offer dividends for their stocks. Dividends are sums of money that is paid out by companies to its shareholders (i.e. investors who bought their shares) out of the companies’ profits. The pay-out is usually either annually, or quarterly. As of this writing, Intel (a large blue-chip stock) is worth $29.77 and had a last dividend pay-out of $0.26, paid out quarterly.
International Stock Markets
There is much greater money liquidity in the large stock exchanges in the world, which ultimately leads to many more lucrative opportunities to make good return on your investments.
As highlighted earlier, many of the world stock exchanges have trillions of dollars flowing through their data centres every day, compared to the barely billion dollar valuation of the SGX. The greater the valuation, the greater the opportunities for better option calls and puts, as well as dividend pay-outs.
This, plus the low capital gains tax in Singapore makes using a brokerage firm to trade in the NYSE a very lucrative opportunity. Actually, retail investors’ profits and losses are considered as personal investments and thus NOT a taxable asset. How awesome is that?
At this point in time, wouldn’t you agree that it would be better to trade with US stocks over the Singapore market?
Of course, if you’re planning to play it safer to start with, we recommend going into the Singapore stock market to try your hand in it. The losses would definitely be lower, depending on how much money invested of course, and the markets are a lot less volatile, which will let you sleep a little better and lose less hair.
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).