How to Buy Stocks in Singapore: 6 Steps to Begin Investing in Shares (2024)

Rewarding investors with dividend returns and the potential for capital gains, it’s easy to see the appeal of stocks and shares. Here’s a complete guide to get you started on your stock-picking journey.

Robo-advisors and cryptocurrencies have been the investment classes dominating our conversations over the past year. The former continued to expand their offerings, targeting different investment objectives that investors have.

Cryptocurrencies have been volatile (as usual), but also constantly reaching new highs, most notably rocketing to more than US$60,000 per Bitcoin in April 2021, but also plunging to US$30,000 in May 2021 — yes, that’s just a month apart.

With the current bear market and crypto "winter", you may think having a conservative approach is the way to go. That may be true to some extent, but taking a longer lens to the history of market cycles, markets eventually recover. As the saying goes, time in the market beats timing the market.

To help you open your account (quite literally), here’s a guide with all the stepping stones in place.

But first, why should you invest in stocks?

As a retail investor, you can purchase the shares of companies listed on almost any stock exchange. Investing in shares of companies you believe in is one way to ride on the firm’s growth in the coming years. It can reap handsome returns, be it in terms of capital gains or dividends.

If you’re not confident when it comes to stock-picking, you can always opt to purchase Exchange Traded Funds (ETFs) instead, which are low-cost funds that track a particular index.

ETFs can also be purchased in the same way as stocks, so read on.

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Step-by-step guide to investing in stocks

Step 1: Open a CDP account (For Singapore stocks)

You need a CDP account because it stores and safekeep your Singapore securities. This includes stocks, bonds and other securities listed on the SGX as well as Singapore Government Securities.

You will also need to link your bank account to your CDP for dividends to be credited to it.

But if you’re asking if this step can be skipped because account openings can be a hassle at times, the answer is yes, you can.

That’s provided you plan to:

• Use a custodian brokerage account (rather than a CDP-linked brokerage account). You’ll notice that the CDP account is specific to Singapore securities, which means to say that if you’re purchasing overseas stocks, having a CDP account won’t matter. Instead, the broker you open your account with will act as the custodian for your overseas stock purchases.
• Set up a Regular Savings Plan. A regular savings plan is one way to buy shares in Singapore without a broker. You can set up a regular savings plan easily online with a provider that offers it, such as DBS, OCBC, UOB, POEMS, and FSMOne. Find out more about regular savings plans.

However, if you’re unsure or undecided whether you need a CDP account, there’s absolutely no harm in creating one anyway. It costs nothing but a few minutes of your time!

(Fun fact: This process was more cumbersome a few years ago because you had to go down to the CDP branch in person to set it up.)

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Step 2: Open an online brokerage account

Your online brokerage account is the platform in which you’ll be making your ‘Buy’ and ‘Sell’ trades.

This begs the all-important question: Which online brokerage should you choose?

That’s a question worth an entire article, so check out our article on the best brokerage accounts in Singapore. It covers all brokerage fees, whether you should choose a custodian or CDP-linked account, what to look out for when choosing one, and finally, the best ones in town.

Alternatively, you can use SingSaver’s comparison page to filter for you!

When you’ve decided on the brokerage account to go for, simply follow the steps of the application process. These days, the signup process is quick and your account can be set up in minutes — especially for the newer brokerages such as moomoo SG and Tiger Brokers.

(Pro tip: Use SingPass when you sign up! This will speed up the process by reducing the manual information inputs required.)

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Step 3: Fund your account

If you’re using a custodian or pre-funded account, you’ll need to fund the account in order to be able to purchase your stocks. It’s just like how you’d have to top up your e-wallet before you can make a purchase.

Another reason to fund your account (even if you don’t have plans to buy a stock immediately) is that it could be an eligibility requirement for signup rewards, much like how some credit cards require a minimum spend. (Psst, check out some of the best credit card promotions!)

So how much money should you put into your online brokerage account? S$100, S$1,000 or S$10,000? This depends on:

• How many shares you want to buy and how much they cost
• The funding requirements in the terms and conditions for the signup promotion. This can range from S$1,000 to S$3,000, depending on the offer being run. Think free shares, in-depth market data, and more.
• How much money you can afford to invest. Don’t forget to set aside enough money in your emergency funds!

As a rule of thumb, it’s always better to have slightly more than what you think you’ll require in your account, because there are also fees to factor into the final amount, such as the commission fees. But more on that later.

Once you’ve funded your account, you’re ready to go!

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Step 4: Choose a stock

Now you’re onto the next dilemma: How do you find a stock to purchase?

One way is to look at the everyday companies around you. Big names like OCBC, CapitaLand, Dairy Farm, Keppel, Singtel and more are all companies listed on the SGX.

Looking abroad, corporations like Facebook, Apple, Netflix, Nike, and Coca-Cola are all companies that are well-known and tradable on the market.

Rather than making a snap decision to buy a stock, you should take some time to read articles and beef up your knowledge. This means understanding what the company does, how their financials are, looking at their historical data and the plans the company has for the future.

This would also help to reassure you of your investment choice.

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Step 5: Purchase the stock

When using your brokerage platform to purchase the stock, there are two key things to look out for:

• Price: What price are you buying the stock at?
• Number of lots/units: How many units of the stock are you buying? Is there a minimum number of lots to purchase? The minimum number of shares to buy for Singapore stocks is typically 100. So what this means is, if you’re buying DBS shares at S$30 each, 100 lots would cost you S$3,000 (before fees).

These two factors (along with the fees charged), would determine the final price you’ll have to fork out to own the shares.

Too many, too soon?

Rather than sitting on idle cash months on end while deciding which stock to choose, you can reduce the opportunity cost by first investing in an ETF that tracks an index. Here are some of the best Singapore ETFs and best US ETFs to invest in.

Alternatively, there’s always the option of investing with a robo-advisor. These algorithm-driven investment platforms invest in ETFs as well, so you won’t be missing out when you invest through them.

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Step 6: Check that the stock is in your account

Once you’ve made the purchase, the final step is to check if your order has been triggered. Once the order goes through, you should be able to see the stock in your account. For certain platforms, you’d receive an SMS and/or email when you’ve made a successful order.

If you’re using a custodian account, you can easily check if the stock is in your wallet. This is typically under the section called ‘Trade’, for platforms like moomoo SG and Tiger Brokers.

If you’ve opened a CDP account and used a CDP-linked brokerage account, you can check if the stock is in your CDP account.

The CDP account is great because you can see all your consolidated Singapore securities purchases in a single place, even if you have used different brokerage accounts to make the purchase.

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How do I receive dividends?

Some companies reward their shareholders with dividend payouts — also the reason why you’d invest in some of these stocks. These could be disbursed annually, semi-annually, or even quarterly. You’ll need to check the company’s dividend history for a better understanding of how frequently it doles these out.

If you’ve used a CDP-linked brokerage account to make the purchase, the stocks will be held in your CDP account and the dividends will be credited to the bank account linked to your CDP.

This is what it would look like:

If you’ve used a custodian account to purchase the stock, the dividends would be distributed into your custodian account. You can log into your brokerage platform to check for transaction notifications, such as the one below given by Tiger Brokers.

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What fees should I be aware of?

When you invest in a stock, the total cost listed isn’t just the share’s price multiplied by the number of lots that you’d like to purchase. A set of fees will be levied as well. These can either be listed clearly, like an online brokerage’s commission fee, or tucked away in the FAQs section. Even cash deposits and withdrawals aren’t spared, depending on the circ*mstances.

Here’s everything you need to know about the fees charged when investing in stocks.

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What are ‘blue-chip’ stocks?

You’d often hear the term ‘blue-chip stocks’ being thrown around, but what does it mean?

Essentially, blue-chip stocks are large multinational corporations with a great reputation. They would’ve been operating for many years and are often leaders in their respective industries. Take Apple and Microsoft in the tech sector for example.

The SGX has its fair share of blue-chip stocks as well. Find out who they are and how you can start investing in them.

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How do I invest in stocks via ETFs?

Exchange-traded funds, also known as ETFs, are traded on the stock exchange just like any company’s shares would be. These funds can contain a variety of assets, be it stocks, bonds, commodities, or even currencies. However, the most common would be ETFs that track a stock index, such as the S&P 500 or Dow Jones Industrial Average.

If you’re interested in this cost-effective method to diversify your portfolio, here’s a guide to get started.

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How do I invest in the Chinese stock market specifically?

The world’s second-largest economy has been on a tear, with companies like Alibaba and Baidu being publicly listed on multiple stock exchanges. However, buying their individual stocks isn’t the only way that you can invest in these companies.

Here’s how you can invest in the Chinese economy and what would be the best method to do so.

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What is value, growth, and dividend investing?

There are various schools of thought when it comes to investing in stocks, mainly value, growth, and dividend investing. Fret not, because you can easily incorporate the concepts learned from each style of investing into your own portfolio. There’s no need to stick with just one ‘type’ of stock because diversification is key to having a profitable set of assets.

Here’s a more complete look at what value investing and dividend investing are.

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Where can I get my daily fix of stock news?

All stock exchanges across the globe move quickly on a daily basis. If you plan to invest actively, you’ll need to keep abreast of all the latest developments. This is where dedicated investment and business websites come into play, being more focused in their content as compared to a general news or features platform.

Find out which are the best publications to get your daily fix of stock news.

P.S One option might be more familiar than you think.

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Read these next:
Investment Guide: SingSaver’s One-Stop Investment Shop
Best Brokerage Accounts To Start Your Investment Journey In Singapore
Robo-Investing vs DIY Investing: Which One Should You Choose?
7 Popular Types Of Investment In Singapore (And Tips To Use Them For Optimal Gains)
Best Robo Advisors To Auto-Pilot Your Investments In Singapore