How to Invest in Stocks: A Step-by-Step Guide for Beginners

Investing in stocks can seem intimidating for beginners, but with the right guidance, anyone can start building a strong investment portfolio.

This step-by-step guide is designed to help beginners understand the fundamentals of investing in stocks, from what stocks are to the different types of brokerage accounts in the market. We'll also share some practical tips to help you get started and avoid common pitfalls.

Investing doesn't have to be overwhelming!

Basics of Stock Market

Firstly, what are stocks and how they work? Stocks represent ownership in a company. Buying a stock means you own part of that company.

There are two main ways to make money: capital gains (selling stocks for a profit) and dividends (company earnings shared with you).

Stocks are traded on exchanges such as SGX, NYSE and NASDAQ... There are many more! Some of the major indexes are Straits Times Index (STI) which tracks the top 30 companies listed in Singapore, DJI, S&P 500, IXIC that helps to track the US market.

Common essential terms that you should know includes:

• Bull markets (prices going up) 🐂

• Bear markets (prices going down) 🐻

• Volatility (how much prices move) 📈

• Diversification (spreading your investments to lower risk) 📊

Opening a Brokerage Account

To begin investing, you must open a brokerage account. In the current market, there are 2 types of brokerage accounts that you can choose from.

1. Cash Account (a.k.a contra account a.k.a buy first, pay later)

   A contra account allows you to trade on a buy/sell limit, meaning you can buy stocks without having the full amount of money upfront. You are given a period (usually a few days) to settle the balance. This account type is useful for those who want to act on investment opportunities without waiting to transfer funds.

2. Prepaid Account

   A prepaid account requires you to deposit funds before you can start trading. This type of account ensures you only trade with available funds. However, do check with your broker if there are any margin facility tied to this to avoid any unnecessary margin interest, should you use borrowed funds to buy shares.

Joey and team post Top SG Stock Ideas, Market Updates, Research Reports and training videos on a daily basis at NO additional cost.

If you wish to open a FREE brokerage account with us, click here!

Beginner Investing Tips

Once you have opened your brokerage account, make sure to familiarize yourself with the platform first! DO NOT RUSH INTO BUYING STOCKS, THE MARKET WILL ALWAYS BE HERE!

When you start investing, it's essential to have a clear trading plan to keep you on track. Some questions to ask yourself:

• What is my entry plan and exit plan?

• What is my stop loss price and plan?

• How many shares can I buy?

• How much am I risking for this trade in accordance to my capital?

Start with small investments to gain experience and learn how the market works.

Managing your emotions is key to avoiding panic selling during market ups and downs. By having a clear trading plan also helps!

Always do thorough research and due diligence before making any investment decisions. Avoid following any random Whatsapp/Telegram groups that boast high returns as they are usually scams!

Lastly, consider paper trading account with your brokerage firm for a start. This lets you practice without using any real money to have a feel of placing the trades and gain more confidence before embarking on using your hard-earned money!

Hope you have found the above useful 😃 

If you would like to get access to Joey’s Top US Stocks Ideas via Monthly Live Zoom Call, check it out here!

Look forward to see you on the inside!

- Joey, Bervyn & Zee

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