A Guide to Stocks

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You would be missing out on a good avenue to grow your wealth if you think that investing in the stock market is an activity only suited to the older generation. Investing from a young age gives you the advantage of time, and building a good investment portfolio over a longer period will bring many financial benefits in the long run. Read on to learn how to get started in stock market investing and you’ll be well on your way towards building a solid investment portfolio!


Understanding Stocks and Investments

Before you begin, it is important to know that investing in stocks is a long-term decision and as such, do not expect to reap fast rewards. The primary benefit of long-term investing is the compound interest earned, being the interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.

You must also be willing to learn the skills required to invest, and take the time to do your own research on the best stocks in which to invest. Of course, if you like to keep abreast of current economic issues globally, investing in the stock market may be right up your alley as the economic standing of a country has an impact on share price movements.

Selecting The Right Stocks For Investment

In Malaysia, you can trade stocks through Bursa Malaysia by first opening a Central Depository System (CDS) account. To do so, you may enlist the services of an investment broker, open one yourself by visiting any investment bank branch, providing photocopies of your NRIC and paying a fee of RM10. Subsequently, you will receive your CDS account’s documentation by mail.

Next, determine the industry and companies in which you are keen to invest. Before deciding, carry out your due diligence by reading up on the past performance, cash flow and profitability of the companies to determine their value and overall standing.

Additionally, you should consider your risk appetite, which is the level of risk that you would be comfortable taking on. Assess whether you want a low-, medium- or high-risk investment. It is also helpful to familiarise yourself with the technical terms used in stock investments.

Before you can begin trading, you will need to acquire some stocks. The minimum number of shares or stocks that you can buy or sell per transaction is 100 units. For example, if the share is priced at RM1 per unit, you will need at least RM100 to make the purchase.

Now that you’re aware of the basics of investing, it’s time to take your first step towards becoming a shareholder! Remember, good investments will bring great rewards in the long term.

This article was contributed by www.CompareHero.my