How to Buy Stocks or Shares in Singapore? A Complete Guide to Stock Investing

Welcome to the world of investing in Singapore's stock market. Our comprehensive guide simplifies the process, demystifying complex financial jargon and explaining the significance of stocks and shares in the business world. By the end of this article, you will have the knowledge to make informed decisions and secure your financial future. You will also learn how you can start investing in stocks and shares in Singapore and start building your investment portfolio.

What are Stocks and Shares?

In the realm of investing, the terms "stocks" and "shares" are often used interchangeably. They both represent financial instruments that confer ownership in a corporation. These instruments essentially grant you a claim on a portion of the company's assets and earnings. When you acquire a company's stock, you're essentially obtaining a small piece of that company, effectively becoming a shareholder.

Being a shareholder entitles you to a share of the company's assets and earnings, and this share is directly proportional to the amount of stock you own. In practical terms, a company's earnings can translate into dividends, which are then distributed among its shareholders. To break it down:

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Shareholders often hold voting rights within the company. This means they can participate in key decisions, such as determining corporate policies and selecting members of the board of directors. The more shares you own, the more influential your vote becomes. However, it's essential to realize that owning stock doesn't grant you direct control over the day-to-day operations of the business. Instead, as a shareholder, you're investing in the company's potential for growth and profitability.

As such, when you buy stocks and shares, it is not merely a transaction; it's an investment in the company's future. You become a part of its journey, sharing in its successes, and having a voice in its direction. It is a unique opportunity to align your financial goals with a company's growth prospects.

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Important Things to Know Before Investing in Singapore Stocks and Shares

Before diving right into putting your money into stocks and shares, it is crucial to understand the landscape and what awaits you. This knowledge will be your compass as you embark on your investment journey. So, let us explore the key aspects surrounding stocks and shares:

Benefits and Risks

Investing in stocks and shares offers a mix of exciting benefits and potential pitfalls. On the bright side, there's the allure of substantial returns. Unlike the traditional safe havens like savings accounts or bonds, stocks possess the power to yield remarkable gains over time. Investors can bask in the glow of capital appreciation if stock prices climb.

Furthermore, many companies are generous with their shareholders, offering dividends that can create a steady stream of income. These dividends represent a slice of the company's profits, regularly distributed to investors. The beauty lies in flexibility: you can reinvest them to fuel future growth or enjoy them as an additional source of cash flow.

However, there's a flip side to this coin. The stock market is renowned for its roller-coaster-like volatility. Prices can swing wildly and unpredictably, responding to economic conditions, industry trends, corporate announcements, and global events. This roller-coaster ride may lead to losses, particularly if you decide to part ways with your shares during market downturns or turbulent times.

Singapore’s Investment Scene

In Singapore, stocks and shares are traded on the Singapore Exchange (SGX), providing a platform for investors to participate in the nation's vibrant and dynamic economy. his platform opens doors for investors to dive into the nation's vibrant and dynamic economy. Here, you encounter a diverse spectrum of investment opportunities. You will find stalwart blue-chip companies with a track record of stability and growth, and you will also discover Real Estate Investment Trusts (REITs), offering a gateway to invest in real estate assets.

Fees

As you venture into the world of stock investment in Singapore, it is paramount to be aware of the various fees involved. These typically include brokerage fees, which serve as compensation for the brokers facilitating your trades. Additionally, clearing fees come into play, covering the costs incurred in clearing and settling trades on the exchange. There is also the Goods and Services Tax (GST), which applies to brokerage and clearing fees. Savvy investors consider these costs meticulously and understand how they can sway the balance of returns.

Value, Growth, and Dividend Investing

Next, let us consider the strategies that you can employ. In the realm of Singaporean stock investment, you have options to tailor your approach to your objectives and risk appetite. Three prevalent paths are:

• Value Investing:

This strategy involves the hunt for stocks trading below their intrinsic value, as determined by fundamental analysis. Investors here believe the market has undervalued these stocks, anticipating future price hikes.

• Growth Investing:

Growth enthusiasts zero in on companies poised for above-average growth rates, often outshining their market peers. They bet on enterprises with the potential for expansion, driven by factors like innovative products, expanding market share, or entry into new markets.

• Dividend Investing:

Here, the spotlight shines on stocks from companies that consistently dole out dividends to shareholders. This approach seeks to nurture a reliable income stream, especially attractive to those in search of dependable passive earnings.

All in all, here is a table of pros and cons for each approach:

Your Investor Profile - Investment Timeframe, Goals, Risk Level

Next, it is important for individuals to conduct a self-assessment to construct a clear picture of their investor profile. This entails a deep dive into three critical facets:

• Investment Timeframe: Determining your investment timeframe is akin to charting your financial journey on a timeline. Are you inclined towards short-term gains, seeking swift returns? Or do you have ambitions of sustained growth over the course of several years? This decision sets the tempo for your investment strategy.
• Financial Goals: The compass that steers your investment ship is your financial goals. Defining specific objectives such as retirement planning, home ownership aspirations, or funding educational pursuits serves as your guiding star. Tailoring your investment approach to align with these goals becomes your primary navigation strategy.
• Risk Level: Assessing your risk tolerance acts as the rudder in your investment voyage. Some individuals are adventurous, willing to embrace higher risks in pursuit of potentially greater rewards. Conversely, others opt for a more cautious approach, prioritizing the preservation of capital by gravitating towards conservative investments.

Through understanding these elements of your investor profile, you empower yourself to make enlightened decisions and craft an investment portfolio tailor-made for your unique circumstances and aspirations. Furthermore, it is of utmost importance to revisit and adapt this profile in response to evolving circumstances, ensuring that your investments stay firmly on course to meet your financial objectives.

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How To Invest in Stocks?

Navigating the world of stock investing requires careful consideration and a strategic approach. Before you begin your investment journey, it is key to define your path and understand the fundamental principles that will guide your decisions. Here are a few guiding principles for starting your investment journey in the stock market.‍

1. Choose Your Investment Approach

Before diving into stock investing, it is crucial to decide how hands-on you want to be in selecting stocks and managing your portfolio. Consider the following options:

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• DIY Investing: If you prefer taking charge of your investment decisions and enjoy selecting individual stocks or stock funds, you are engaging in DIY investing. Investors opt for this approach because it gives them control over their investment choices and allows them to tailor their portfolio to their specific preferences and objectives.
• Robo-Advisors: For those who prefer a hands-off approach, consider using a robo-advisor. Robo-advisors use algorithms to manage your investments based on your specific financial goals.
• Personal Managers: Another option is to employ the services of a personal manager, often provided by financial institutions or investment firms. A personal manager is a professional who can offer personalized investment advice and manage your portfolio on your behalf, taking into account your financial objectives and risk tolerance. This approach is suitable for individuals seeking expert guidance and a customized investment strategy tailored to their needs.‍

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2. Understand Stocks and Funds

To navigate the world of investments effectively, it is crucial to differentiate between individual stocks and funds:

• Individual Stocks: If you are interested in investing in specific companies, you can acquire individual stocks listed on various stock exchanges. However, keep in mind that investing in individual stocks requires thorough research and entails a higher level of risk compared to other options.
• Investment Funds: Alternatively, you can choose investment funds such as Exchange-Traded Funds (ETFs) and Unit Trusts. These funds enable you to diversify your investments across a basket of stocks or other assets. Diversification helps spread risk, making it a prudent choice for many investors.

It's important to note that ETFs and unit trusts are available for various sectors and regions, providing flexibility to align your investments with your financial goals.

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3. Determining your budget for investing in the stock market

Begin by determining the amount you are comfortable investing in either stocks or investment funds. As you decide on your investment choices, consider the share prices of individual stocks and consider the minimum investment requirements associated with ETFs or unit trusts. When aiming to create a diversified portfolio, you will have to allocate a portion of your budget across multiple investment opportunities.

4. Long-Term Investing

Investing in stocks is a long-term journey guided by enduring principles. Historically, stock markets have demonstrated growth over time, but they are subject to market fluctuations. To succeed, avoid the temptation to constantly monitor your investments, particularly if you are not actively trading. Instead, maintain a steadfast commitment to your long-term investment strategy. This approach can help you weather short-term market ups and downs and position you for potential long-term gains.

4. Manage Your Stock Portfolio

‍As you advance in your investment journey, it will be important to manage your stock portfolio effectively. Regularly review your portfolio to ensure it remains in line with your financial objectives. Be prepared to make adjustments when necessary, taking into account changes in your goals and risk tolerance. Diversifying your investments across various sectors and asset classes is an essential strategy to mitigate risk and promote a well-rounded portfolio. By staying vigilant and adaptable, you can optimize your investment portfolio for long-term success.

How to Buy Shares and Stocks in Singapore

The process to setting up share and stock investments in Singapore involves a series of strategic steps, each vital to ensuring a successful and smooth initiation into your investing journey.

1. Open a Central Depository (CDP) Account

To get started, open a Central Depository (CDP) account, which is managed by the Singapore Exchange (SGX). This is a critical first step as it acts as a custodian for the Singaporean stocks and shares you purchase. Having a CDP account ensures the proper documentation and protection of your ownership of securities.

Requirements to open a CDP account:

• You must be at least 18 years old.
• You cannot be an undischarged bankrupt.

To open a CDP account, you will need:

• A Singapore Bank Account 
• Citibank NA (Citibank)
• DBS Bank Ltd (DBS/POSB)
• Malayan Banking Berhad (Maybank)
• Oversea-Chinese Banking Corporation Limited (OCBC)
• Standard Chartered Bank (SCB)
• The Hongkong and Shanghai Banking Corporation Limited (HSBC)
• United Overseas Bank Limited (UOB)
• Tax Identification Number (Your NRIC)
• A Photographed or Scanned Copy of Your Signature

If you have a tax residency status outside Singapore, you will need to provide the following:

1. Country of Tax Residency
2. Tax Identification Number
3. Completed Form-W9

You can open a CDP account online with SGX, or simply click here to access the form.

2. Open an Online Brokerage Account

After obtaining a CDP account, the next step involves opening an online brokerage account. This account serves as an intermediary connecting you, the investor, to the stock market. Through this platform, you can initiate orders to buy or sell stocks. Singapore offers a wide array of brokerage platforms, each with its commission rates, features, and user interfaces. It is essential to research, compare various platforms, and choose the one that best aligns with your investment requirements and preferences.

The specific requirements for opening an online brokerage account may vary slightly between different platforms, but the general requirements typically include:

• At least 18 years of age.
• Ownership of CDP account.
• Proof of identity (NRIC/Passport/Work Permit/Employment Pass).
• Proof of address (Provided via Utility bills/Bank statements).

Once you have met the requirements, you can sign up with your preferred brokerage firm. Popular brokerage platforms include:

• DBS Vickers
• OCBC Securities
• UOB Kay Hian
• Philip Securities
• Interactive Brokers
• Saxo
• Webull Singapore

Read also: Webull vs Moomoo comparison

3. Fund Your Account

Once your brokerage account is set up, the next step is funding it. You can achieve this by transferring funds from your bank account. This capital will be utilized for the purchase of shares or stocks. Bear in mind that investing carries inherent risks, so you should only invest funds that you can afford to potentially lose.

4. Choose a Stock - Blue Chip Stocks, ETFs, or REITs

Now that your account is funded, you are all set to decide which stocks to invest in. You have several options to consider. You might choose to invest in blue-chip stocks, which are shares from well-established companies known for their financial stability, reliability, and consistent earnings.

Think of companies like DBS Group, Singtel, or Keppel Corp. Alternatively, you could consider Exchange Traded Funds (ETFs), which are funds that track indexes like the Straits Times Index (STI).

Alternatively, Exchange Traded Funds (ETFs) are an option. ETFs track indexes like the Straits Times Index (STI), providing diversification by investing in multiple companies within the index. Real Estate Investment Trusts (REITs) are also an attractive choice, allowing investors to participate in the real estate market without the need to purchase physical properties.

5. Purchase the stock

Now, you have reached the final stage – buying and investing in shares in Singapore. However, keep in mind that patience is a valuable asset in the world of investing. Avoid rushing into buying stocks. Instead, take the time to conduct thorough research on the companies you are interested in. Evaluate their financial health, growth potential, and earnings stability. Ensure you have a clear understanding of the risks that come with stock investments, and don't hesitate to seek guidance from financial experts. Only when you have completed your due diligence and are confident in your decision should you proceed to place your order through your brokerage account.

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How Do You Receive Dividends?

Receiving dividends in Singapore is straightforward for stock investors. Here is how you can receive dividends from the companies that you invest in:

• Invest in Dividend-Paying Stocks: Start by investing in stocks of companies that regularly pay dividends.
• Monitor Dividend Declarations: Keep track of dividend announcements by companies to know when and how much they will pay.
• Link CDP Account: Ensure you have a Central Depository (CDP) account linked to your stock investment account.
• Verify CDP Information: Confirm that your CDP account details, including your bank information, are accurate.
• Payment Date: On the designated payment date, the company will transfer dividends to your CDP account.
• Bank Deposit: The dividends credited to your CDP account will be deposited into your linked bank account.
• Consider Dividend Reinvestment Plans (DRIPs): Some investors opt for DRIPs to receive additional shares instead of cash.
• Tax Considerations: While there is no withholding tax on dividends for individuals in Singapore, international investors should be aware of their home country's tax regulations.
• Record Keeping: Maintain records of your dividend income for tax purposes.
• ‍Enjoy Regular Income: With these steps in place, you can enjoy a consistent income stream from your dividend investments.

Should You Invest in Stocks?  

Investing in stocks can be a rewarding endeavor for those with a clear investment strategy and a long-term outlook. If you are willing to regularly do the following, you could consider investing in stocks:

1. Define Your Investment Strategy: Start by determining your preferred approach, whether it's hands-on DIY investing, the convenience of robo-advisors, or the expertise of personal managers. Choose what aligns best with your financial goals and comfort level.
2. Understand Investment Options: Differentiate between individual stocks and investment funds like ETFs and Unit Trusts. This knowledge empowers you to diversify effectively and manage risk within your portfolio.
3. Set a Thoughtful Budget: Consider your financial resources and allocate them wisely across various investment opportunities. A diversified portfolio can help spread risk and enhance potential returns.
4. Embrace Long-Term Investing: Resist the urge to constantly monitor your investments. Commit to a long-term strategy and stay focused on your financial goals, even in times of market fluctuations.
5. Regularly Review and Adjust: Periodically assess your stock portfolio to ensure it remains aligned with your objectives. Make adjustments as necessary to stay on track toward your financial well-being.

By following these steps, you can embark on a journey of financial growth and work towards securing your future through the dynamic world of stock investments.

Final Thoughts about Buying Stock and Shares in Singapore

Overall, it is important to understand that investing in Singaporean stocks and shares carries potential for profit but also comes with risks. The value of these assets can fluctuate due to factors like corporate performance, economic conditions, and market sentiment. While you can experience significant wealth growth, there's also the possibility of losses.

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Furthermore, investing in stocks requires research, ongoing portfolio monitoring, and a good understanding of market trends and financial analysis. It can be time-consuming and demands financial acumen.

For those looking for alternatives, platforms like Kilde offer an attractive option. Kilde is a peer-to-peer lending platform that allows investors to earn returns of up to 13.5% annually, which can compete with or surpass average stock returns.

With Kilde, you lend your capital to carefully vetted borrowers, earning interest. The platform prioritizes risk management, assessing loans meticulously and accepting only creditworthy borrowers, enhancing security.

Moreover, investing in Kilde does not require extensive financial knowledge or constant market trend monitoring. The platform simplifies the investment process, offering a hassle-free alternative for wealth growth.

To sum up, while investing in stocks and shares in Singapore has profit potential, it's not the only way to grow wealth. Alternative platforms like Kilde offer competitive returns with a different risk profile. The key is diversifying your portfolio, understanding risks, and choosing investments aligned with your financial goals and risk tolerance.

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Source on Buying Stocks or Shares in Singapore:

1. sgx.com

2. investors.sgx.com/cdp-account-opening/

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_{*KILDE PTE LTD (“Kilde”) is incorporated in Singapore (registration no. 201929587K) is licenced and regulated by the Monetary Authority Singapore and holds a Capital Markets Services Licence (CMS101016) and an Exempted Financial Advisor License under the Financial Adviser Act. The information provided in this marketing material is intended for “accredited investors” and “institutional investors” (collectively “qualified persons”) only. This marketing material, and any information in this marketing material, or any documentation that Kilde provides in relation to this marketing material is provided without any representation or any kind of warranties whatsoever (whether express or implied by law).}

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