We always hear a lot about investing in stocks. We hear a lot about the good returns and also about the risks involved. Perhaps many of us hesitate to invest in stocks because of the risk factor. But if you’ve finally decided to give it a shot, you’re going to need to know how to open a CDP account and start trading stocks in Singapore.
Why do I need a CDP account?
You might be wondering what a CDP account is. Before you can start buying shares on Singapore’s market, you need a Direct Securities account to be opened with the Central Depository Limited, also commonly referred to as a CDP account. The Central Depository Limited is a subsidiary wholly owned by the Singapore Exchange Market (SGX).
Now you can open your own CDP account, or have a nominee account with a broker firm. The main reason many choose to have their own CDP account is that once a share has been bought, the shares are owned by you. This gives you a lot more advantages, as you can attend AGM meetings and voting rights, amongst others. With a nominee account, shares are bought on behalf of the brokerage firm and placed in your account, but the ownership still belongs to the brokerage firm. You can have several nominee accounts, but you only need one CDP account.
How to open a CDP account
The simple eligibility criteria mean almost everyone can open one! You must:
- Be 18 years old and above
- Not be un-discharged bankrupt
- Have a bank account with one of the following banks in Singapore – Citibank, DBS/POSB, HSBC, Maybank, OCBC, Standard Chartered Bank and UOB.
Then you download and complete the form from the SGX website. Once filled out, send a copy of your IC and any one of the following: a copy of your Central Provident Fund (CPF) statement, a bank statement from any Monetary Authority of Singapore (MAS) licensed banks, or your latest notice of your Income Tax. Whichever you choose, the statement must be from the last three months. After that, all that’s left is to send the documents to either The Central Depository or a broker you’re looking to open an account with.
Great! Where do I go to start trading?
Now you know how to open a CDP account, it’s time to look at which brokerage firms you can choose from. Before you buy your first stock and start winning in life, we want to try to ease you into the trading world. It’s important to realise that there’s a lot of jargon and technical mumbo-jumbo that might not make sense. Don’t be intimidated by it – even the most seasoned veterans had to go through this rite of passage to get to where they are.
Before we became so tech-savvy, people had to deal directly with the brokers over the phone or in person. Now that we’re connected with apps, we cam trade on-the-go with mobile trading platforms. You’ll need to bear in mind whether your app is available on the iOS or Android app stores.
The best brokerage firms in Singapore
Every time you buy a stock, your brokerage firm will charge you a commission fee. Brokerage fees are calculated as a percentage of each transaction. They’re similar across the board with a few exceptions. The minimum fee usually ranges around S$25 per transaction.
|Brokerage firm||Minimum fee||Trading commissions (≤ S$50K)||Trading commissions (S$50K-S$100K)||Trading commissions (> S$100K)|
|Saxo Capital Markets||15||0.12%||0.12%||0.12%|
|Lim & Tan Securities||25||0.28%||0.22%||0.18%|
|UOB Kay Hian||25||0.275%||0.22%||0.20%|
Our pick of the best brokerage firms includes Saxo Capital Markets and iFast Financial. The commission fees are low and the minimum fee per transaction isn’t unreasonable. It’s worth noting that iFast Financial is a new player on the block, and gives people a chance to enter the Hong Kong market as well.
At this point, you should be ready to start earning that passive income with the knowledge in mind. By the time you’ve started, you’ll be a trading pro in no time!
Happy trading, investers!
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