What made you want to start investing in Singapore’s stock market?

Dr. Clemen Chiang
Dr. Clemen Chiang

Why invest in stocks? And why in the Singapore Exchange (SGX)? The answers to these simple questions may be taken for granted easily enough by seasoned investors. But to those who have yet to commit their hard-earned dollars to a carefully considered investment, those answers spell the difference between investing in relative uncertainty, or in the stability of one of the world’s leading stock markets.

First, a simple case study.

The young Singaporean investor behind the popular blog, SG Young Investment, traces his first steps in investing back to reading Robert Kiyosaki’s “Rich Dad, Poor Dad.” The book made him want to develop good money management and investment habits.

The young investor decided to start investing in the stock market in his early 20’s, with SingTel as his very first stock buy. But it wasn’t until his first major loss during the European debt crisis of 2011, that he really began to get serious about the stock market.

He now receives four-figure profits and double-digit percentage returns from the stock market, by investing primarily in long-term income-generating assets. He aims to have an annual passive income of at least SGD10,000 by the time he turns 30.

So what makes people in general want to invest at all?

The answer to this one depends on you. You have to know what you want in life, and what you want your investments to do (which is usually what you want in life). Knowing this at the get-go is going to guide you for the rest of your life as an investor.

For example, like the young investor above, do you want to make at least 10 grand a year without lifting a finger by age 30? Or do you want build a little home for two (or three or more) when the time comes? When the time arrives, do you want send the three or more to university abroad?

The answers to these questions in turn, will affect how much risk you are willing to take with your money on the bourse. How old you are also plays a key role in this decision, as it is usually in direct proportion with your life goals.

Some people have fun doing homework.

How complicated investing can be, can also be a deciding factor for some people to invest. Some people (having barely passed maths class) don’t want to have to bother with number-crunching or learning the ins and outs of finance, let alone “ETF’s”, “REIT’s” and other stock market jargon.

But there are those who might actually find it fun to learn and are willing to put in the hours to do so. There are those who thoroughly enjoy the stock-picking process, and look forward to “doing their homework” or finding out which stocks make the best buys.

Some people see stocks as the surest.

However old you are or whatever your financial situation might be, there is an investment mix out there that is right for you. With 800 companies listed on the SGX (and realistic goals), you’re bound to find investment opportunities that will help you meet your goals, and match your risk preferences.

Many investors turn to stock markets in general because they see it as the surest means of generating substantial income. Instead of waiting to win the lottery or for a rich relative to make you their heir, gradual and regular investing puts you in the driver’s seat of your own finances.

Investors know that investing is actually getting your money (or assets) to work for you instead of having to work yourself. Very simply, an investment is using money with the goal of making more money through one of two ways:

  • Earning interest on savings
  • Buying and selling assets (such as stocks) with increasing value

What makes people want to invest specifically in the SGX?

Singaporeans and overseas investors alike choose the SGX simply because it is the stock market of one of the world’s leading economies.

But on top of saving in a bank with its low deposit rates, the SGX itself gives investors five reasons and advantages of investing in its listed shares:

1. Value goes up over time. Very simply, buying shares in a company means buying a piece of that company. As the company grows, so do its income and profits, which means the value of your piece of that company grows, too.

2. We can make “passive income”. When a company you’ve invested in make a profit, it can either reinvest those profits back into itself to fund further growth, or give it back to its investors as dividends. Those dividends count as passive income, which can then be paid to you quarterly, semiannually or annually depending on the company.

3. It doesn’t take a lot of money. Buying shares lets you invest in different kinds of companies with small amounts of money. You can invest in more than one company belonging to different sectors by buying a minimum of just 100 shares each.

4. Buy and sell when you want. Unlike investments in property or fixed deposits, investing in shares is easy and flexible. This means that instead of having to sell your entire investment, you only convert the amount you want to into cash. All you have to do is buy or sell the minimum of 100 shares in any company.

5. Share prices are public. You can easily see how much the shares you want to buy or sell are worth. You even have the option of buying or selling at the market price or a price you name.

SGX makes it simple.

The SGX also has regulations in place to help facilitate the investing process:

  • Since 2015, blue chip securities haven’t been as expensive as they once were. Plus, the lot size for SGX-listed securities is now 100 units each instead of 1,000, making it more affordable for younger investors to choose from more kinds of stocks.
  • The SGX places companies with share prices lower than the minimum trading price of SGD0.20 on a watch list. Should these companies fail to meet requirements within 36 months, they will be delisted. This protects investors against trading price fluctuations which could lead to major losses.

And to help investors who are just starting out, the SGX offers free investing lessons at its SGX Academy.

More reasons to invest in the SGX.

But don’t take the SGX’s word for it — thenewsavvy.com offers more compelling reasons to invest in the stock market, particularly in Singapore:

1. It’s easy. You can buy your first stocks over the phone or getting in touch with your broker online. Trading itself can likewise be done online, where it’s as simple as logging in, entering details, and confirming what you entered.

2. It’s pretty high tech. The SGX ETS (Electronic Trading System) enables trading that is truly global, with 80% of the system’s customers hailing from other countries. The system doesn’t break for lunch, either, which means you can trade any time, all day between 9AM and 5PM.

3. It’s tax-free. The SGX has no capital gains tax, which means you will not be taxed for any profits made on any shares you sold.

Get ahead on the SGX with Spiking!

Spiking is an app that allows you to follow the trading activities of more than 8,000 top Singaporean investors on the SGX. Spiking’s real-time updates let you know which stocks are spiking and when, so that you lose no time in getting in on the action, should you choose, as it happens.

Download the Spiking app today and take your place among the many successful investors who have chosen to grow their money on the Singapore Exchange.