The Step-by-Step Guide to Starting Investing in Singapore
6 November 2017
There are many reasons I loved being a kid. Life seemed much simpler then. There was less to worry about. And saving money was as straightforward as putting it into a piggy bank. Today, as an adult, I’m a lot more stressed, there’s lots of things to consider before making any decision, but I’m happier I know better than to just place coins in porcelain animals.
You see, a dollar saved in the bank is just a dollar, but investing that dollar? That’s how your money grows. That’s not to say that saving isn’t important, especially for short-term goals. But if you’re planning for the long term, you’re going to need to invest your money in order to make sure your savings are not eroded by inflation.
Many people are hesitant to start investing not so much because they don’t want to grow their money, but because it seems like there’s a mountain to overcome before they can even start. Not to mention that without the right information, the risk of losing money seems a lot larger than it actually might be. We’ve broken it down to make things much simpler so here’s a step-by-step guide to start your investment journey:
Step 1: Are you eligible to start investing?
If you’re not 18 years old yet, don’t worry! You can always get your parents to invest on your behalf. But since opening a CDP account is free, you should open yours as soon as you can. You’ll need this to trade stocks on the Singapore exchange, and you can apply for an account easily via the SGX CDP page.
To be eligible to open an Account, you need to be at least 18 years old and NOT an un-discharged bankrupt. You can either do this directly with The Central Depository under SGX (it’s a very straightforward process) or create a sub-account with a “Depository Agent” – a stockbroking firm, trust company or bank nominee. Basically, while you can deal with as many different brokerage firms as you want to trade, you only need to open one CDP securities account to deposit all the stocks you’ve bought.
Step 2: What should you invest in?
Unlike savings, not every investment has guaranteed returns. It’s up to you to decide how much money you’re willing to lose in your quest to grow your nest egg. Each investment product comes with its own risks, and a smart investor combines different types of investments to balance out the risk.
[Read also: The Investment Products Cheat Sheet for Beginners]
Step 3: Keep an open mind!
There’s a lot of things you’ll need to take note of on your investment journey. Never assume that you know all there is to know about investments and always be ready to learn more.
Most of all, remember to decide early on what your investment goals are. Make sure you don’t change your mind too often, because investments tend to be a long-term decision, and the more you flip-flop on the decision, the more you’re likely to lose money.
Need to know more about investing? Here are a few helpful resources to start you off.