Question from a reader:
I have never invested in stocks and would like to start.
What are the good websites to monitor Singapore stock prices? How does one start to buy stocks and sell? I understand when an investment goes wrong, it is possible to lose the principal amount you have invested, e.g. when the company goes bankrupt. Why is it that I hear sometimes you have to “top-up” with more money or you lose everything? Is this the same as the practice of short-selling where you borrow stocks?
What about commodities like gold and silver? How does one start to invest in these?
The SGX website provides an update of the stock prices of SGX listed shares.
To be able to buy or sell securities, you need to have both a CDP account as well as an account with one of the stock broking firms in Singapore. This can be done by going down personally to one of the branches of the stock broking firm that you want to use.
The CDP is a central depository where your shares are held while the stock brokerage will provide the platform for you to transact. You only need one CDP account but you can open a few stock brokerage accounts.
Checking prices via the platforms provided by stock broking firms will be more user-friendly than going to the SGX website as you can create your own customised watchlists.
Yes, it is possible to lose 100% of your capital when the company you invest in go bankrupt.
The “top-up” that you mentioned refers to those who trade using margin or leveraged accounts. For these accounts, you put up some collateral (in the form of cash or shares) with the value of $X but you can buy shares worth much more than $X. If the value of the shares drop beyond a certain value, you are required to “top-up” more cash otherwise they will force sell your positions.
As a margin account using leverage, it is possible to lose more than your starting account. Unless you know what you are doing, using a margin account is not recommended.
Borrowing shares to short also requires a collateral. Similarly, you might be required to “top-up” if the share price rises.
To invest in gold, you can look at STREETTRACKS GOLD SHARES, a gold ETF traded on SGX. Another way is to invest via unit trusts.