Martin Lee @ Sg
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Newbie Investing in Stocks and Shares

Question from a reader:

Hi Martin,

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?

Vincent

My reply:

Hi Vincent,

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.

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4 comments
TravelKid101 says 8 years ago

Hi

Can someone who already has a CDP account buy an IPO from the ATM without having an account with a stock broking firm ?

Reply
    lioninvestor says 8 years ago

    Don’t think that is a problem but you will still need a stock broking account in order to sell it later on.

    Reply
Paul says 10 years ago

Nice short introduction!

There are a lot of investment vehicles. For beginners, opening your accounts (CDP and brokerage) is the first step. From there, you can try navigating the online platforms to get a feel.

Now it’s a pretty good time to get into the stock market. For the risk-adverse, slowly i guess.

Otherwise, investment in funds via Fundsupermart is a pretty safe option too.

thanks martin for the intro. 🙂 I wrote some small posts on investment on my blog as well.

Reply
EeMin says 10 years ago

hi Vincent,

to complement Martin’s reply, you might also wish to consider investing in ETF (exchange traded funds) besides stocks only.

Our local stable of ETFs listed on SGX tend to be rather limited. You could look at those listed on AMEX or NYSE (e.g. http://us.ishares.com) for a much greater range (incl those which long/short on a variety of asset classes and industries). Need to watch forex risk as most ETFs are priced in USD.

Being a licensed Independent FA rep myself, we help clients open trading accounts w/ OCBC Securities. For hassle free application, feel free to drop me a mail.

Btw, on commodities, you could take a look at Powershares DB Commodity Index Tracking Fund (.DBC), which offers exposure to 6 of the most heavily traded and important soft/hard commodities, namely crude oil, heating oil, gold, aluminum, corn and wheat.

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