First of all, congratulations to you! We believe you are here reading this article because you have finally decided to start investing.
Before we look at how to kickstart your stock market investment journey, we need to understand what investing is all about.
Investing is buying assets that increase in value over time and provide returns through income payments or capital gains. These assets can be stocks, bonds, property or anything that can give you some returns.
This article will share how to kickstart your stock market investment journey.
Perhaps you might be wondering how to start investing for the first time. First of all, to invest in the stock market, you will need three things.
You will need investment knowledge, some money as your capital and an account to buy stocks. To make your life easier, let us help you how to kickstart your stock market investment journey.
Here are the things that you need to consider before you begin investing in the stock market.
Kickstart Your Stock Market Investment Journey#1 Understand the Instrument or Product That You Want to Invest In
To invest in Bursa Malaysia, you must know their products and services. Among the products available are equities, bonds, derivatives and many more.
Under equities are shares, company warrants, structured warrants, Exchange Traded Funds (ETFs), Real Estate Investment Trusts (REITs), Closed-end Funds, Business Trusts and Stapled Securities.
As a beginner, we would suggest you begin with shares or stocks. According to Investopedia, a stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation.
If you purchase company shares, you are one of the owners because you own a fraction of ownership in that company. You may not be the major shareholder, but at least you can proudly say you are part of the company business.
Once you understand what stocks are and how they work, do not stop learning and keep searching for more reading materials and videos over the internet. Believe me. If you wish to sustain long enough in the stock market, there is no shortcut.
Kickstart Your Stock Market Investment Journey#2 Decide How Much to Invest
Each investor may have a different size of capital to start with. Some may be able to start small such as RM1,000. Meanwhile, others who have higher capital perhaps wish to start with more than RM10,000.
As a beginner, always start small. You need to get some experience before you go with higher capital. The most important thing is to only invest with your surplus cash.
Never invest with your emergency funds. Investors who invest with their emergency funds tend to trade emotionally, affecting their decision-making.
Different sizes of capital require different strategies.
If you have bigger capital, you might want to diversify your portfolio by purchasing stocks from different sectors or instruments. A piece of advice to new investors and traders. Don’t put all your eggs in one basket.
So let’s see an example. Assuming that you have RM30,000, to begin with. Our suggestion for you is you can split the RM30,000 into three different stocks, which means each stock is purchased with RM10,000.
The three types of stocks that you can consider are:
- High dividend yield stocks that can give consistent dividends
- Good momentum stocks for short to medium term
- Large market cap stocks that are more stable for long term
Kickstart Your Stock Market Investment Journey#3 Open a Central Depository System (CDS) & Trading Account
After deciding which broker to open an account with, the next step is to open a CDS & trading account.
Any investors who wish to trade in securities listed on Bursa Malaysia must open a CDS & trading account. A CDS account acts like a wallet. Any stocks bought or sold will be credited into your CDS account & debited from your CDS account accordingly.
Simply put, when you buy stocks, shares are credited into your CDS account, and when you sell your stocks, they are debited from your CDS account.
Meanwhile, trading accounts enable you to buy and sell shares on the stock exchange. Normally, CDS and trading accounts will be opened together when you open with the brokers. The list of Participating Organisations can be found on the Bursa Malaysia website.
Do you have a trading account? If not, you are invited to open an account with one of the brokers available in Malaysia.
Click this link to open an account with CGS-CIMB: https://www.cgs-cimb.com.my/en/Account-opening-Tr.jsp
Don’t forget to key in PR1M495 in the Remisier Reference section.
A designated Dealer’s Representative will attend and assist you with your account opening.
There you go with some tips to kickstart your stock market investment journey. All the best!