Monday, June 17, 2013

Investing basics - How do I start investing?

Every person i meet who has no prior exposure to the investing world will ask me this question:

How do I start investing?


This is a very general question but its also a question that makes me ponder a lot on it. I ask myself back:

How did i even start this investing journey?
You can read my About Me page by clicking on the tab above to read how i started my journey.

In this blog post, i hope to answer this question in a simple and clear way so that readers can understand.

1) To start investing, you must have savings. If you do not have the habit of saving, start by putting aside a monthly amount to save. Savings will be more important than investing at the start. I wrote an article on it here: Why extreme savings is more powerful than investing?

2) Sign up for a brokerage account.  I realised many people do not know where or how to sign up for a trading account. A trading account allows you to buy shares of companies in the stock market.

A few brokerage that you can open an account with:

http://www.citibank.com.sg/gcb/investments/citi_brokerage.htm?eOfferCode=SGIVBRPWAL
http://www.limtan.com.sg/
http://www.phillip.com.sg/
http://www.dbsvonline.com/English/index.asp


I personally use citibank brokerage and limtan securities. You can click on the link to check out the commission charges of each one. Opening an account is free. You can sign up for it anytime.

3) Attend seminars or read books on investment.
There are free investment seminars out there which you can attend. One good provider is Singapore Exchange(SGX). Yes, in Singapore, the stock exchange actually organises free beginner investing lessons for the public.
You can visit their website here: http://www.sgxacademy.com/index.php?option=com_sgx&task=listing&Itemid=4 (Note: Some courses are free while some requires a fee)

You can also read up websites that the singapore government links with to improve the financial literacy of Singapore.
Some websites recommended are:
http://www.moneysense.gov.sg/
http://www.cpf.gov.sg/imsavvy/default.asp

Many people also ask what is the stock market? The stock market is actually a financial intermediary. In laymen terms, it is the middle man. This middle man connects the buyer( who want to buy a share of the company) and links it with the seller (which is the company itself). When you buy the stock of a company through the stock market, you are effectively one of the owners of the company. They are called shareholders although most of us are small ones.

These are the basic steps to get you started. Some of the websites recommended above not only teach you about investment but also on personal finance, ie things to take note when taking up a housing loan.

*Update: I've written a series of blog post to help you in your investing journey.  Topics like "how to pick stocks?", "Understanding financial statements", "bonds investment","index fund investing" and the special series on "buying the company on the streets" are free for you to read at your own leisure time. Check it out here

If you're ready to learn even deeper, check out this REITs masterclass on Udemy which I've collaborated with Chlorophyll Inc to bring to you a comprehensive online course on Reits investing. You can also preview some parts of the course for free here.

Thanks and wishing you all the best in your journey towards financial freedom.

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Related Post:
1. Investing Basics - Low Cost Index Fund investing (Passive Investing)
2. How to pick stocks (Part 1) - Economic Moats
3. Understanding financial statements (Part 1) - The income statement

17 comments:

  1. Very simple and to the point. Great information, and, thank you!

    ReplyDelete
  2. Hi,

    Is any of the above broker can also help to open a CDP account if we never open it beforehand? And is there any other venue to buy shares if I want to buy low price shares? Coz most broker fee will charged a minimum $25 for any transaction then if we were to buy 1 lot of shares valued $250 means the fee is 10% of my purchase.

    Got any insight on this?

    ReplyDelete
    Replies
    1. Hi,

      All the brokerage houses can help you to process the application for a new CDP account.

      Standard chartered has a brokerage account which has no minimum commission. However, the stocks you bought will not be stored in the cdp account but in standard chartered itself. That's the only way I can think of. There's a lower commission way where other banks offer $18 min commission which is lower than the $25 you said.

      Delete
  3. Hi, is Fundsupermarket reliable for a start to invest? Especially for a beginner?

    ReplyDelete
    Replies
    1. Hi,

      Fundsupermart is widely used by many people in Singapore. There are many funds that they have so its not easy to pick a good fund. If you're buying funds, always consider the sales charge and other fees that is involved. It'll eat up into your investment returns. A low cost way to invest is to buy index etfs which I think Fundsupermart does not have.

      Delete
  4. Hi, i'm interested in this area of investing. May I know if I am too "young"? I am 17 this year and thinking about opening a citigroup brokerage account. I have been reading about it and really getting into to it as I read more.

    ReplyDelete
    Replies
    1. Hi Justin,

      Its never too early to start investing. However, make sure you manage your risk well and know what you're doing. It would be good to start small and grow your investments later. Never be greedy in your investments.

      Delete
  5. Hi. Is there any low cost investment for beginners?
    And is Iq option a good investment?

    ReplyDelete
    Replies
    1. Hi,

      Low cost investments you can take a look at index fund investing such as the POSB Invest saver. Options is definitely not for begineers. You can lose more than what you have if you're not careful.

      Delete
  6. Hi dear,

    Just wondering if there is any investment books that you wood actually recommand?

    ReplyDelete
    Replies
    1. Hi Star Keys,

      You can check out the book titled "What your school never taught you about money" by dennis ng. Its a good start for investment.

      Delete
  7. Hi,
    I have a question about the stock market. As I understand, stocks and shares are emotionally driven markets that are unpredictable and the risks are high. How does one reduce the risks ? Do enrolling courses help to reduce the risks?

    ReplyDelete
    Replies
    1. Hi MajesticEagle,

      If we stay invested in the market for the long term, the risks will be reduced. This must be done knowing the business fundamentals to ensure it is sound. Learning how to analyse and value business and also diversify our investments in a few businesses will reduce the risks.

      Delete
  8. HI SGYI,
    I'm a female that have no understanding regarding investing.
    Based on your post, i would say that i have 2 pointers done (Saving & open an account). i'm a bit hesitant on the SGX courses as there are so many courses. For a beginner, which courses should i start from ? For an investment dummy like me, i'm afraid that the courses will make me confuse. Is there any book or steps by steps guidelines on how beginner should take? I'm a systemic person (taking &understanding step by step). For all the investing website, i know that first is always saving then Investing. In investing would it be right (based on my understanding in my research so far) that we need to know what are available investment plans/ schemes available (pros & cons) then decide which one to invest on ? Just wondering if that is the right way ? and for a beginner, is there any recommended plans that it good for beginner to start as it is low risk and help us to understand about investing? Am sorry if investment dont work like how i think it to be.

    ReplyDelete
    Replies
    1. Hi,

      There are many beginners SGX courses which are really basic and not confusing at all. SGX academy actually has categorised their courses into basic, intermediate and advance so you can go for the basic ones. For investment, I would think just investing in index funds or stocks will be sufficient. Can ignore the other investment plans out there such as investment linked policies or plans which charges high sales fees.

      Delete
  9. how much should you have before considering investing in shares? Is $1000 enough?

    ReplyDelete
    Replies
    1. Hi,

      $1000 is not really sufficient to build a stocks portfolio. If you got a stable monthly income, can considering investing small amounts first.

      Delete