Investment - how to get started on buying shares?

Hey folks, apologies for the lack of update the past three weeks because some dreaded things happened and I just had to get them right. Well, all was not bad for there were some other stuffs to divert my attention elsewhere. Okay, before this turns into a personal blog....

Let's start talking about investment. While the topics on this blog have so far focused on getting free money, earning more interest from banks and such, I personally believe that if one wants to go on to the road of riches, he would have to look towards investments.

Investment is quite a broad term - it can range from the commonly-known company shares, properties, commodities, forex, to another spectrum such as collections of art pieces, antiques, numismatics. All these are leveraging of resources, I would say. As I shared with my colleague before, leveraging of resources is probably the only way to multiply your earnings; this would be another topic all together.

Although I have mentioned a few investment vehicles in the previous paragraph, the focus of this post would only be on company shares.Specifically, this post aims to shed some light on how to get started on trading (buy or sell) shares listed on the Singapore Exchange (SGX). There are two essential accounts which you need in order to start trading - a brokerage account and a Central Depository Pte Ltd (CDP) account.

A. Brokerage account
This is the account you need to trade shares and the broker you choose has to be an SGX member (please refer to http://www.sgx.com/wps/wcm/connect/sgx_en/Misc/regulations/directory+of+members/ for the listing). There is no limit to the number of brokers to open an account with, for example, I have accounts with Philip Securities, UOB Kay Hian, DBS Vickers and Kim Eng Securities. I shall briefly talk about the pros and cons of these brokers in another post.

B. CDP account
A CDP account is where all the shares you bought on the SGX are kept. Conversely, any shares sold on the SGX would be debited from your CDP account. In case you are wondering, SGX is based on a scripless system in which there are no shares certificate moving around like in the past.

C. Good-to-have services
(i) Electronic Payment for Shares (EPS)
Gone are the days you need to send cheques or make a trip to the broker to pay for share purchase, and vice versa. The EPS is a service where you can designate your bank account to receive sales proceeds and pay for shares purchases directly. When this service has been set up, you can make transactions through your bank's ATM or Internet Banking platform.

(ii) Direct Crediting Service (DCS)
Okay, this is quite important - it is for the receiving of dividends ($_$) or other cash entitlements given by the companies which you have shares with. With this service, you will be able to receive the $$$ on the payment date; no need to wait for cheques no more!

(iii) CDP Internet Access
By default, a person would receive half-yearly paper statement on his share holdings in the CDP account; or a monthly statement if there are trading activities made that month. It is kind of inconvenient as you would need to wait till month-end to check on your positions. Good news is that you could apply for CDP Internet Access and with that, you would be able to check your positions anytime, anywhere!

How to get started?
I shall share with you my personal experience of "getting started". When I first started, I chose Philip Securities (http://www.poems.com.sg/) - reason being they are commonly-known. What I did was to walk in to their investor centre and said I want to open a trading account. As I was totally new back then, they gave me the forms to open a trading account and CDP account; the application for EPS and DCS services were also done on the same trip. Well, that's quite hassle-free.

Thereafter, you would need to wait for a few letters to arrive in your mailbox, to name a few: i) welcome package from your broker, ii) phone/internet pin for your trading account, iii) welcome from CDP, iv) confirmation of bank account linkage for EPS and v) confirmation of bank account linkage for DCS.

That's basically all you need to start trading. I guess the process is more or less the same if you go for other brokers. As for the CDP Internet Access, I guess you would need to make a trip to the CDP Customer Service to get the application form and submit it. That's kind of troublesome, but no choice (CDP seems quite strict when it comes to signatures).