Have you been thinking of starting to trade stocks but feel a little intimidated by the world of trading?
Stocks trading is not complicated.
In fact, many people considere it a “plain-vanilla product” – the most basic form of financial instrument that can help grow your wealth.
The most important thing before even learning how to choose stocks is to set up your stocks trading account first.
We break down the process for you in 3 easy steps.
To be able to trade stocks in Singapore, you’re going to need 2 accounts – a stocks trading account and a CDP account.
Step 1: Opening A CDP Account
The CDP account safeguards the shares you have purchased in the local stock market.
To open a CDP account, you have to be: at least 18 years old; not an un-discharged bankrupt.
2 ways you can open an account:
1. Open a Direct Securities Account with CDP – book an appointment here.
2. Open a sub-account with the brokerage firms – your broker will be able to provide you with the necessary forms to fill in and advise what are the required documents.
Step 2: Opening A Stocks Trading Account
A brokerage account is an account you have with a broker that enables you to buy and sell shares.
General documents you’ll need include:
- Identification Cards/Passport for foreigners
- Bank account statement issued within last 3 months and latest tax statement
- Supporting documents for mailing address (if different from ID)
There are many brokers you can choose from – some brokerages provide more than just trading services for stocks, extending to other asset classes such as Contracts for Difference (CFD), Forex trading or futures.
Local banks such as DBS, UOB and OCBC have their own broking arm as well.
You should choose a firm where you can have easy access to when you need help and have easy funding options for you. Fees and commission charges vary little between the firms as rates are pretty competitive.
Here are some of the popular brokerages in Singapore:
• CIMB Securities
• DBS Vickers
• KGI Fraser Securities
• Lim & Tan Securities
• Maybank Kim Eng
• OCBC Securities
• RHB Securities Singapore
• UOB KayHian
• Saxo Capital
Step 3: Funding Your Account
Most brokers do not require you to put up any minimum amount to open an account, except for OCBC and Saxo Capital.
If you want to catch a good trade when it comes, you’ll want to fund your account so that you can purchase shares immediately so that you do not need to spend time transferring your funds in.
You can fund your trading account in various ways, such as those listed below:
• Electronic payment for shares (EPS)
• Internet bill payment
• Quick cheque deposit
• Direct payment at the brokerage (usually cash or cheque only)
• Telegraphic transfers
The account set up process should finish within 1 to 2 weeks, depending if you already have your CDP account ready.
Now that your account is set up, it’s time to get ready and start making money from stocks trading.