I'm sure you have heard of advice from people saying that
investing should be done early to take advantage of compounding interest. I
wouldn't go into too much details about compounding interest, here's a quote to
think about.
Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn't, pays it. - Albert Einstein
When I was a teen I wished I had read upon such posts about how to get started about investing. I had always wanted to try it out, but thought it too much of a hassle to get started. Moving on years later, I decided to help people get started on investing. Now that I have taken the time to research and gather the information, lets get our feet wet.
The first thing you would have to do is of course open an
broker account. But which bank?
Options available:
Kim Eng Maybank
DBS Vickers
Poems
Standard Charted Bank
After comparison of several brokers, the choice was to start
with Standard Chartered Online Equities Trading account for the main reason:
No Mimimum Commision
This is one of the main reasons for choosing SCB over the rest of the options. With no mimimum commision, you save money on trades. Lets demonstrate with an example:
Case: 1 lot of Starhub at $4
Standard Chartered commission fees(0.2%):
$4 * 1000 * 0.2% = 80 cents
Other Brokerages with $25 minimum fees:
$4 * 1000 * 0.2% = 80 cents
80cents < $25 = $25
Furthermore, shares can now be bought in 100
units so there would be more savings for smaller investors.
Too good to be true?
Well if its so good, why isn't everyone using
SCB?
1) Shares purchased are not deposited
into your CDP account but instead held in a custodian account under Standard
Chartered Bank
What this means - SCB owns the stocks for you,
no annual reports, shareholder voting forms etc.
Also, in the unlikely event that SCB falls, your
stocks would most likely be gone. Not likely, but just for your information.
2) Inadequate Trading platform
The platform does not provide much tools
compared to the other brokers, and there are no prices are delayed
One way to workaround would be to open accounts
with other brokerage and use their tools, or use free tools online. Google
finance and yahoo finance are quite good places to start.
Application
You can apply either online or physically at the bank, and I would recommend going to the bank itself as you still have to submit the forms anyway.
Requirements:
- Minimum
age 21
- Fulfill
Customer Assessment Review (CAR)
Basically CAR checks if you have any relevant
experience or qualifications.
I possess investment
experience in listed specified investment products (SIP) and I have
transacted at least six (6) times in listed SIPs in the last three (3) years.
Now this is tricky, how can you trade if
you do not even possess an account? One possible way to get around it is to do
the sgx quiz.
There I hoped I have helped you out in taking your first step towards investing.
You
don't have to see the whole staircase. Just take the first step. - Martin
Luther King Jr.
