You spend 10 hours a day in an office and another four hours on the road. All to make ends meet and maybe save up for a short holiday. Some days, it works out. On other days, it just doesn’t feel like you’re making enough.
For some, that’s about the time you start thinking of doing freelance work, starting your own business and even taking up a second job. Because let’s face it. Salaries have not risen with inflation levels.
What people don’t usually consider is stock trading. For the most part, it’s seen as complicated, expensive and risky. Something that should be left to people who already have a lot money or who have connections to the financial industry.
Luckily for you, technology has removed a number of these barriers and Rakuten Trade, a new and licensed broker has removed the rest making stock trading as simple and accessible as watching Netflix.
A brief introduction to stocks
Before utilising the advantages of online stockbroking, we first have to understand how stocks work.
In a nutshell, this simply means that someone is buying or selling their ‘ownership’ in a company. Whoever owns the most shares, controls the company. Imagine it like a bowl of rice.
That bowl of rice is the “company”. Now, picture three bowls of rice: white rice, brown rice, and pandan flavoured rice. Taking or “buying” a few grains of rice from the bowl is called a “share”.
Everyone knows that the white rice is a much safer option; the brown rice, is healthier but maybe not the tastiest. NOW, the pandan flavoured rice is the biggest maybe, you might really hate it and never touch it again, or it could turn out to be the best thing you have ever tasted.
In the same breath, the white rice will probably give you little in return. The brown rice is
a mixed bag; you might lose money on the investment, but that’s a small chance. On the other hand the pandan flavoured rice could make you a lot of money, result in a big loss. This is the high risk, high reward stock. The kind that could either make you very rich or blow up in your face. Generally, risky options are not recommended for first time stock traders.
It’s basically supply and demand, the more people who want that particular rice, the higher its value. How much a particular stock is worth depends on the demand for it and how much profit the company could potentially make.
Covering everything there is to know about stocks could cover several textbooks, but this is generally what you need to know to get started. Things get a little more complicated with things like the various stock exchanges, special types of stocks, voting rights and hostile takeovers. But you’re not likely to run into those situations just yet.
Enter the online stockbroker
Dabbling in stock trading used to involve calling a stockbroker and getting them to do the work for you. Today, it’s all a matter of logging into a website and calling the shots yourself. Essentially, everyone can now be a potential stock trader by using technology to enter the stock market.
There are several online digital stock trading options available in Malaysia, and each offers a different sort of experience.
All these options will require you to open an account (similar to applying for a credit card) but these requirements might differ based on individual companies’ requirements as you might only need to submit your documents online and do away with having to pay a visit to the stockbroking firm.
What are the fees involved?
First off, to open an account, Bursa Malaysia requires all brokers to charge RM10 as the account opening fee for each account opened. This account is unique to the broker and cannot be moved from broker to broker.
Once your account is activated, you will be charged a brokerage fee for any trading activity conducted. Brokerage fees are like commissions and is the way brokers earn their money. It is charged on top of the cost of the shares being bought or sold.
These fees vary according to different brokers and, also, according to the value of the transaction. Currently, Rakuten Trade offers one of the lowest brokerage fees in town and provides a good baseline from which you should be judging other brokers.
| Trading Value Per Transaction/Stock | Cash Upfront Brokerage Via Web/iSPEED.my | Contra Brokerage Via Web/iSPEED.my | |
|---|---|---|---|
| Below | RM1,000.00 | RM7.00 | RM8.00 |
| Between | RM1000.00 - RM9,999.99 | RM8.00 | RM15.00 |
| Between | RM10,000.00 - RM99,999.99 | 0.10% of trading value | 0.18% of trading value |
| Equal & Above | RM100,000.00 | RM100 | 0.15% of trading value |
Why online trading?
Very simply; it is cheaper, more efficient and more private.
It’s cheaper because as the stockbrokers are able to save on overhead and operation costs by being completely online thereby transferring the cost savings to the customers.
It is also more efficient because like Netflix, you can watch the market any time, from anywhere. Plus, companies like Rakuten Trade allow customers to do everything via their mobile app; including opening an account. So no more arranging to meet an agent, photocopying documents and going to a bank in the middle of a working day.
Buy, buy, sell
It’s not easy to figure out which stocks will make a good investment. Especially if you haven’t figured out if you want to be in for the long run, or for short term gains.
Knowing which stocks to buy is a practice that will likely consume your every waking hour. Even then, it’s near impossible to process everything that’s happening. So where do you start?
Many stockbrokers provide investment advice for people looking to get started with stock trading. Online sites are no different. Although it’s less about having someone sit down to give you a risk assessment and more about providing recommendations on which stocks might be worth watching that week.
More invested platforms, like Rakuten Trade, also provide online and offline seminars to educate their userbase on the basics of stock trading.
Regardless, you should still do your homework and take responsibility for your investment as it is your money at stake.
Don’t get rich, get wealthy
The idea of stock trading is not to get rich quick. Rich people have a lot of money but are not always in a secure position. Instead, the idea is to use the money that you have to become wealthy but the smart way.
Being wealthy means having a diversified and sustainable income. One that is completely independent of your day job. An income safety net if you will.
