Everyone remembers their first stock.
It could be something introduced by friends or family, or one that you decided to put money into after weeks of research.
Where to start is one of the biggest questions a rookie investor has.
Using a handful of basic principles, here’s a step-by-step guide to choosing your first stock in Singapore.
Start With Companies You Understand
Businesses that you already recognise or use in daily life are a great spot to start.
They are easier to understand, to follow, and would be less intimidating for a rookie investor.
These businesses could be banks such as DBS Group Holdings (SGX: D05) or United Overseas Bank Ltd (SGX: U11), essential businesses like Sheng Siong Group Ltd (SGX: OV8), and transport companies like SBS Transit Ltd (SGX: S61) and ComfortDelGro Corporation Ltd (SGX: C52).
If you can explain what the company does in a clear sentence, it could be a good place to start.
Look for Stable, Established Companies
As your first foray into the stock market, avoid risky, new, or small companies.
You want to look for stability and reliability.
Focus on the well-known and established companies that have been around for many years.
Many of these businesses are blue-chip companies, such as DBS, Singtel (SGX: Z74), CapitaLand Integrated Commercial Trust (SGX: C38U, or CICT), and Keppel Corporation (SGX: BN4).
Stability trumps excitement when you are getting your first stock.
Check If the Company Pays Dividends
Dividends are cash payments that companies give to their shareholders.
Beginner investors should look out for dividend-paying stocks as they provide regular income and reassurance.
Many blue chips, such as DBS and UOB, pay regular dividends.
Dividends make investing rewarding and motivating.
Reinvested dividends can also help you grow your holdings without additional capital, allowing you to benefit from the power of compounding.
Keep It Affordable and Start Small
You don’t need S$10,000 to start investing, and it is okay to begin with just one stock.
While DBS is a powerhouse, its high price per share can be a hurdle for beginners because the standard lot size in Singapore is 100 shares.
One lot of DBS stock hovers around S$5,650, and if that is too much, look for something else that fits your budget.
There are other blue chips on the market that trade at much lower share prices, allowing you to build a diversified portfolio with just a few hundred dollars.
For example, buying one lot of Singtel shares would cost approximately S$458, and one lot of ST Engineering (SGX: S63) shares is approximately S$840.
Buy whatever fits your budget and investment goals.
As a rookie investor, focus on learning the process rather than chasing big returns blindly.
Remember, starting small is better than not starting at all.
Avoid Chasing “Hot Tips” or Fast Gains
You might have heard of “sure-win” stocks from friends, social media, or online forums.
If they are sure-wins, why isn’t everyone millionaires yet?
Furthermore, fast-moving stocks can fall just as quickly.
As a beginner, slow and steady is safer than listening to insider “tips” and investing in “sure-wins”.
Knowing that you invested in a well-established stock that provides steady dividends helps you sleep better at night.
Think Long Term, Not Short Term
Market movements are normal.
Stock prices go up and down, and your first stock would not double overnight.
Trying to time the market or doing frequent trades can be stressful and lead to mistakes.
Focus your energy and money on owning a solid company with a strong balance sheet and give it time to grow.
Investing works best when you think long term.
What This Means for New Investors
To begin investing, you do not need perfect timing or a lot of money.
A familiar, dividend-paying Singapore stock is often the best way to start investing.
Do your due diligence and learn along the way.
The most important thing in investing is getting started.
Get Smart: Your First Step Matters More Than Perfection
Every experienced investor started with one stock.
Choose a company that you understand, start small, and be patient.
Starting your investing journey with confidence is better than trying to pick that perfect stock or enter at the “best” time.
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Disclosure: Wenting owns shares of UOB.
