If you’re reading this, it means you’re interested in learning about how to buy stocks for the first time. We’ll teach you what you should know about buying stocks in Singapore, from the basics of stock trading to more advanced concepts like margin trading.
Article Breakdown
What stocks are and how they work
A stock is simply a share in the ownership of a company. When you buy shares in a company, you become a shareholder and are entitled to a portion of the company’s profits, which are paid out to shareholders in the form of dividends. You have rights as a shareholder and the right to vote on important company decisions at shareholder meetings.
The price of a stock (also known as the ‘share price’) constantly fluctuates during trading hours and depends on supply and demand. If more people want to purchase stock than sell it, the price will go up. Conversely, the price will decrease if more people want to sell stock rather than buy it.
Most stocks can be bought and sold through stockbrokers. In Singapore, there are two main types of stockbrokers:
Full-service brokers- These brokers provide a wide range of services, including investment advice, research, and access to other financial products such as insurance. They typically charge higher fees than online brokers.
Online brokers- These brokers offer a more limited range of services but are much cheaper. They are a good choice for investors comfortable making their own investment decisions.
Why you might want to invest in stocks
Some investors are looking to make a fast profit by buying and selling shares rapidly, while others take a more long-term approach and hold onto their shares for years or even decades.
Investing in stocks can also be a way to generate income through the dividends that companies pay out to shareholders. And finally, many people view investing in stocks as a way to build wealth over time.
How to buy stocks in Singapore
There are two main ways to buy stocks in Singapore: a broker or an online trading platform.
You need to open an account with them if you’re using a broker. You can do this by visiting their office in person or, in some cases, online. Once you have opened an account, you need to deposit money into it using a bank transfer, cheque, or cash.
You’ll then be able to place orders to buy stocks and sell stocks through your broker. When placing an order, you will need to specify the stock ticker symbol (e.g. SPY for the SPDR S&P 500 ETF), the number of shares you want to buy or sell, and the price you are willing to buy or sell the shares.
It’s important to note that brokers typically charge a commission on each trade, so you must factor this into your costs when buying stocks.
If you’re using an online trading platform, you will first need to open an account with a broker that offers this service. Once you’ve opened an account and deposited capital, you can access the online trading platform and place orders to buy and sell stocks.
When placing an order on an online trading platform, you need to specify the stock ticker symbol, the number of shares you want to buy or sell, and the cost at which you want to buy/sell the shares.
It’s important to note that most online brokers charge a commission on each trade, so you’ll need to factor this into your costs when buying stocks.
The risks and benefits of stock investment
Like any investment, risks and rewards are associated with investing in stocks.
The most significant risk is that the price of the stock you own may go down, which could result in a loss of your investment. However, the price of a stock can also go up, which could result in a profit. There is also the risk that dividends are not guaranteed and may be cut or eliminated if a company’s financial situation deteriorates.
Finally, it’s worth noting that stocks are generally more volatile than other investments such as bonds and CFDs, which means they can fluctuate widely in value over short periods.
In general
Buying stocks can be exciting and lucrative. For first-time traders, it makes the most sense to do your homework and really understands how the market and the trading process works before investing your hard-earned money. This could come in the form of reading books, forums, and guides, as well as taking an online class on trading strategies. It is important to remember that while stock trading can promise great returns, they can also cause great losses, therefore you should always be realistic in your trading goals.