How To Choose The Best Stock Broker For You

Money does not come from trees! Choosing what is best for you should be influenced by strategic research on the available brokerage firms in the country. Consider these factors…

STICK TO THE BUDGET

It goes without saying that your performance in the stock market depends on your budget. If you want to start investing, but do not have thousands of dollars in your arsenal then, you can start with as little as S$1,000.

Say that you want to own stocks through the CDP (The Central Depository) then, you will have to set up a CDP securities account. The CDP account is operated by the Singapore Exchange. It provides integrated clearing, settlement, and depository facilities for customers in the Singapore securities market.

To be eligible to open an account, you must at least 18 years old and not an undischarged bankrupt. You can deal with as many brokerage firms as you want with one CDP account.

COMPARE THE BROKERAGE FEES

Brokerage firms allow you to buy and sell shares on the stock market. It is important to note that they charge you brokerage or commission fees for every transaction you make. When you buy shares, you get charged. When you sell shares, you get charged. These fees add up!

Most investors want to buy low and sell high. Expect to be charged commission fees multiple times by doing so. On the other hand, commission fees won’t make much difference to your if you just want to “park” your money.

KNOW THE DIFFERENCES ONLINE

Kids, there was a time when investors where required to call their brokers to deal with them directly. Do not get me started with how stock prices and other information were passed down! Those days are gone!

Nowadays, investors are blessed with online trading platforms that allow them to check stock prices and complete deals on the go. Some brokerage firms even have mobile applications.

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It is good to familiarize yourself with these online features before you open an account. For instance, day traders need to have a live and streaming data to get started. Choose a broker whose online features (e.g., daily news, company reports, or strategy guides) are suited to your lifestyle. Consider opening several trial accounts with many online brokers to immerse yourself with their service before signing up.

Sources: 1 & 2

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How To Start Investing With S$100 A Month

Oh, adulting! It comes in a slate of responsibilities thrown at a person all at the same time. To survive the challenges of life, one must establish a healthy savings plan. Long-term savings include having an insurance policy, a good credit score, and an emergency fund. Many people grow their savings thru investing.

Investing is an overwhelming idea for many Singaporeans as they perceive it to be expensive. Few people outside the financial industry have thought of investing their money for themselves. However, you do not need to have S$10,000 or more to start investing. You can grow your wealth with just S$100 per month.

Here are some strategies that you may apply.

#1: MAKE SMALL INVESTMENTS REGULARLY

It comes as no surprise that one advantage of making small invest regularly is that you are not trying to time the market. Instead, you are relying on your money’s “time in the market”. This is important because stocks have their ups and downs, but their prices tend to increase as time passes. This is a strategy known as dollar-cost averaging, which will average out the cost of share purchases in a period of time.

For as little as S$100 a month, you may start investing in DBS Invest-Saver as it allows you to buy an Exchange Traded Fund (ETF) that mirrors the performance of the Singapore stock market or a bond ETF.

#2: CONSIDER REGULAR SHARES SAVINGS

One of the most affordable ways to get inside the Singapore Exchange (SGX) is through Regular Shares Savings (RSS) plans. RSS can be opened with the help of a local brokerage firm or bank.

The broker of the financial institution will invest a fixed amount of money every month based on your instructions or financial capabilities. For instance, you may choose to invest S$100 each month into the Straits Times Index (STI) Exchange Traded Fund (ETF).

Control is one of the best parts of RSS plans. If you wish to invest money in different companies each month, you may do so. If you wish to stop investing in a company each month, you may do so. Simply instruct your broker and adjust your monthly investments. Some financial institutions allow you to take control of your RSS plan through online platforms.

#3: APPLY FOR UNIT TRUSTS

If you prefer to have someone else control your investments then, you may choose to invest in unit trusts. Unit trusts work by collecting money from many investors. A professional fund manager will take this pool of money and grow it following a specific investment strategy. It is a collective investment, which is why you do not have personal control over the individual components of the investment portfolio.

A common misconception about investing thru unit trusts is that you do not need to do anything. This is not true! As an investor, you must do your research before deciding which unit trusts you wish to invest in. By doing your research, you will know that both DBS and OCBC unit trusts allow you to either invest a lump sum of S$1,000 or S$100 per month.

Image Credits: pixabay.com

Good luck with your investment journey!

Sources:1 & 2

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Simple Acronyms That Can Help You Save Money

Stuck in a rot? Consider imbibing some or all of these four acronyms to maximize your daily savings!

1: BYOB – Bring Your Own Beverage

Bid farewell to your endless Starbucks trips and say hello to BYOB. Bringing your own beverage and food to school or work has many benefits. For starters, you can choose what you eat for the rest of the day. This is especially helpful to the people who vowed to lose weight or to eat healthier meals this year. Lastly, bringing your own beverage and food lessens your chances of dining out. BYOB prevents you from mindlessly breaking the bank on food expenses.

2: PIYS- Put In Your Savings

Aside from having a physically fit body, you must strive to have a financially fit account. Luckily for you, you can just PIYS. Whether you have accumulated loose change or have work incentives, you can PIYS. Do not spend your extra money! Put it in your savings account instead. You may also enroll your account to an institution’s automatic savings program to ensure that you do not touch your money.

3: YODA – You Overspent Days Ago

If you need a reminder on why you need to save, just think of Baby YODA. This adorable Star Wars character cannot only charm your heart, but also give you a potent reminder. “You Overspent Days Ago or You Overspent Decades Ago” is something that resonates many Singaporeans. If you are bound to repeat the same financial mistakes you have done in the past then, what does that make you? It is time to learn from the past and focus on your needs.

Image Credits: pixabay.com

Start building a future that you will be proud of. When faced with another temptation to spend, simply evoke the name of YODA. May the force be with you!

4: ABC – Allocate, Budget, and Cut

Did you know that budgeting is as easy as ABCs? Simply start with Allocation, proceed to Budgeting, and apply the Cut. Allocation is the processes of listing down your expenses and identifying which ones are important. Allocate the right amount of money per expense category.

Image Credits: pixabay.com

Then, maintain a budget that you will keep track of. Monitor your progress and the money you are currently saving. Lastly, apply cost-cutting when your savings remain too low. Cut down unnecessary expenses and focus on expenses that will help you survive.

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7 Habits to Adopt to Achieve Financial Freedom

As happiness guru Gretchen Rubin wrote, “What you do every day matters more than what you do once in a while.” This couldn’t be truer when it comes to money. Unless you win the lottery, wealth building is something you accomplish little by little. You work for your money, but are you putting in the effort to ensure it is working for you? Here are some habits to adopt to set you on your way to going from feeling powerless to powerful, and enjoying financial freedom.

Keep an Eye on Your Money

The first step toward financial responsibility is knowing where your money goes. This is easier today than ever before, with online banking and personal finance apps that link to your accounts. Many of them will automatically assign categories to your spending. You’ll want to log in once a week or so to make sure everything ended up in the correct category and to check for fraudulent purchases. You can also set up an alert to notify when there’s a payment that exceeds a given dollar amount, or when your balance drops below a certain level.

Follow a Budget

Once you’ve identified your spending patterns, you can use your personal finance app to create a budget. A good place to start is the 50/30/20 rule. If you’re living paycheck to paycheck, you should try to stick to your budget as closely as possible. If you’ve got a little more breathing room, you don’t have to be quite as strict, but you should pay enough attention to know how close you are to the limits you’ve set for yourself.

Pay Bills on Time

No doubt you have a lot of demands on your time. It’s easy to overlook paying a bill, but when you do, it’s like going to work every day and telling your boss to keep the paycheck. Late fees are a waste of money, period. Make a habit of paying your bills on time.

Better yet, join the 21st century and set up your bill payments to be automatically deducted from your checking account. If you’re a longtime customer with an impeccable payment history and you do make a goof, chances are good that you will be successful in having the occasional late fee reversed. You earned that money, so keep it in your pocket!

Pay Your Credit Card Bill in Full

Repeat the following to yourself: Credit cards are for emergencies. Once you’ve gotten used to sticking to a budget, it’s fine to use credit cards for everyday expenses as long as you have the money in your checking account to pay the bill in full each month. If you don’t have the personal discipline to follow this rule, switch to a debit card.

The interest rate on credit card balances will eat up your money faster than almost anything else, so do everything you can to avoid it. Once you’ve paid off any balance, your top priority should be to establish a 3 to 6-month emergency fund. Keep in mind that a financial emergency is something that threatens your ability to live and work. A burning desire for a vacation or a big-screen TV doesn’t count.

Put Money Towards Savings

Nobody wants to save money they could be having fun spending. To avoid succumbing to temptation, keep the portion of your monthly income you plan to save from ever hitting your checking account. Talk to your employer about having part of your paycheck directly deposited into a savings account. If you’re having trouble finding money in your paycheck to put towards savings, do the best you can. The next time you get a raise, have it diverted into savings so you never see it. Pain-free savings!

Research Your Purchases

Doing your homework before buying something accomplishes three things. First, you’re more likely to buy a product that meets your exact needs rather than spending money on features you’ll never use. Second, buying quality means the product will last longer and you’ll spend less on repairs or replacement. Third, taking the time to research a potential purchase builds in a “cooling off” period that reduces the likelihood you’ll buy on impulse. You may decide you don’t need that widget after all.

Review yearly

If you own a stock portfolio, you should rebalance your asset allocation once a year. If you’re not there yet, that’s okay. Sit down once a year to reflect on how your journey to financial freedom is progressing. Are you on target to meet your goals? If not, what needs to be changed? If you’re close to meeting your goal, decide what you’d like the next one to be. Make financial responsibility a habit and you’ll have less stress in the long run.

 

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Stocks 101: A Guide For Newbies

Original investments for the next 10 years

Tackle your busy life while earning money on the side by investing your money. Let your money work for you to achieve the future you have always dreamed of. Renowned investor Warren Buffett defines investing as the “the process of laying out money now to receive more money in the future.”

Investing Like Warren Buffett

(Image credit: Fortune Live Media, via Flickr)

To start investing, you must know what is a stock is first.

WHAT IS A STOCK?

Whether you call it security or equity, a share of stock is a legal ownership in a business. Businesses or corporations issue stocks to gain money. It comes in two varieties – preferred and common. Preferred stock comes with a predetermined dividend payment. While, the common stock allows the stockholder an access to a proportionate share of a company’a profits or losses. It is to you to choose whichever suits you best.

HOW DO YOU MAKE MONEY WITH STOCKS?

There are two ways to make money from owning and investing in stocks. You can make money by reaping the increase in stock price or dividends. Because these two accumulate over time, just one year’s investment in a premium can yield a solid return in the next couple of decades. You can look up blue chip companies such as Coca-Cola and Disney.

The Father of Value Investing, Benjamin Graham, once said:

“The real money in investing will have to be made—as most of it has been in the past—not out of buying and selling, but out of owning and holding securities, receiving interest and dividends, and benefiting from their long-term increase in value.”

WHY SHOULD YOU INVEST?

The stock market provides high returns. You should invest to grow your wealth. However, I cannot guarantee how your stocks will perform. You need to understand that strategy application and diversification aids in growing your wealth. Diversifying your investments by including stocks along with your bonds and assets can help protect you from the inherent volatility of the financial markets.

WHAT IS DIVERSIFICATION?

To provide cushion from the risks that come with the stock market, one can apply diversification. Think of it as not putting all your eggs in one basket. In order to diversify your stocks portfolio, you may need a significant amount of money to invest. It is nearly impossible to create a well-diversified portfolio with S$1,000 alone.

This is where mutual funds come into play. Mutual funds tend to have a large number of stocks and other investments whereby it is controlled by a portfolio manager. It is more diversified than a single stock in one company. This is something that you must think about.

Sources: 1 & 2

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