SINGAPORE: Ms Lim Pei Yan’s investment journey started in her early 20s with a robo-adviser , and then with a financial adviser who helped her dip into unit trusts and exchange-traded funds.
Since last year, she has also been using online share-trading platforms, starting from Saxo Markets before switching to Tiger Brokers on the back of a friend’s recommendation.
The 26-year-old said she is "just trying out" these platforms, adding that it takes less than 15 minutes to create an account. “It’s really easy to just download an app and do another Know Your Client (form during sign-up).”
New sign-ups with Tiger Brokers at the time received one free share in tech giant Apple, and months of commission-free trades.
Ms Lim said not having to pay commission allows new investors like her “to test the waters” of stock investing.
“I could buy one stock at a time to try it out and not have to worry about commission,” she told CNA. “This really encouraged a lot of people like us to try because we don’t want to risk putting a huge sum of money in.”
The COVID-19 pandemic and work-from-home arrangements have spurred a flurry of new retail investors, especially younger, first-time retail investors, and newer players in the online trading market – like Tiger Brokers and moomoo – have rushed in.
Tiger Brokers, which entered Singapore in February last year, has more than 1.4 million users worldwide, with investors aged between 18 and 24 years old making up 30 per cent of its users here.
The moomoo platform, which launched in March, has 100,000 paying clients and more than 220,000 users in Singapore as of June. It said that 77 per cent of its users are aged between 18 and 41 years old.
These two new entrants have been aggressively courting investors, with advertisements in newspapers, at bus stops and at MRT stations. They also dangle free shares, commission-free trading and the promise of super easy investing, all the way from sign-up to the actual trade.
The ease of use and cheaper trading offered by these new platforms “is a plus for all investors” and can spur existing players to improve their processes, experts said.
But these experts are urging trading platforms to do more in promoting financial literacy and responsible trading. This includes providing more financial education, putting up better risk disclosures and sending alerts when a user’s portfolio becomes too risky, they told CNA.
The risks of investing come with serious consequences.
In the US, a 20-year-old took his own life in June last year when he mistakenly believed he had lost nearly US$750,000 in a risky bet on Robinhood, an app that lets users with no experience buy and sell stocks without paying fees.
Robinhood had allowed Alex Kearns to buy and sell options, a risky financial instrument with the potential for huge losses. But attorneys for Mr Kearns’ family believe he might not have lost money at all, because of the way the options bets were structured.
The family has since sued Robinhood for wrongful death, negligent infliction of emotional distress and unfair business practices, CBS News reported.
In Singapore, the Monetary Authority of Singapore (MAS) requires platforms that allow the trading of listed specified investment products to conduct a customer account review, based on the user’s educational qualifications, investment experience and work experience.
For instance, those who are qualified in a finance-related field, or have invested in a specified product at least six times in the last three years, are considered to have satisfied the review. Those who fail the criteria must pass a learning module before opening an account.
Disqualified users can choose to start an account nonetheless, but must provide written confirmation on their decision and be informed of the risks and responsibilities involved.
Trading platforms here told CNA they are doing their part.
Some upload investment courses and financial news on their platforms, and implement a trading limit for first-time investors. Others have considered stopping users from buying stocks that become too volatile.
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Since last year, she has also been using online share-trading platforms, starting from Saxo Markets before switching to Tiger Brokers on the back of a friend’s recommendation.
The 26-year-old said she is "just trying out" these platforms, adding that it takes less than 15 minutes to create an account. “It’s really easy to just download an app and do another Know Your Client (form during sign-up).”
New sign-ups with Tiger Brokers at the time received one free share in tech giant Apple, and months of commission-free trades.
Ms Lim said not having to pay commission allows new investors like her “to test the waters” of stock investing.
“I could buy one stock at a time to try it out and not have to worry about commission,” she told CNA. “This really encouraged a lot of people like us to try because we don’t want to risk putting a huge sum of money in.”
The COVID-19 pandemic and work-from-home arrangements have spurred a flurry of new retail investors, especially younger, first-time retail investors, and newer players in the online trading market – like Tiger Brokers and moomoo – have rushed in.
Tiger Brokers, which entered Singapore in February last year, has more than 1.4 million users worldwide, with investors aged between 18 and 24 years old making up 30 per cent of its users here.
The moomoo platform, which launched in March, has 100,000 paying clients and more than 220,000 users in Singapore as of June. It said that 77 per cent of its users are aged between 18 and 41 years old.
These two new entrants have been aggressively courting investors, with advertisements in newspapers, at bus stops and at MRT stations. They also dangle free shares, commission-free trading and the promise of super easy investing, all the way from sign-up to the actual trade.
The ease of use and cheaper trading offered by these new platforms “is a plus for all investors” and can spur existing players to improve their processes, experts said.
But these experts are urging trading platforms to do more in promoting financial literacy and responsible trading. This includes providing more financial education, putting up better risk disclosures and sending alerts when a user’s portfolio becomes too risky, they told CNA.
REAL CONSEQUENCES
The risks of investing come with serious consequences.
In the US, a 20-year-old took his own life in June last year when he mistakenly believed he had lost nearly US$750,000 in a risky bet on Robinhood, an app that lets users with no experience buy and sell stocks without paying fees.
Robinhood had allowed Alex Kearns to buy and sell options, a risky financial instrument with the potential for huge losses. But attorneys for Mr Kearns’ family believe he might not have lost money at all, because of the way the options bets were structured.
The family has since sued Robinhood for wrongful death, negligent infliction of emotional distress and unfair business practices, CBS News reported.
In Singapore, the Monetary Authority of Singapore (MAS) requires platforms that allow the trading of listed specified investment products to conduct a customer account review, based on the user’s educational qualifications, investment experience and work experience.
For instance, those who are qualified in a finance-related field, or have invested in a specified product at least six times in the last three years, are considered to have satisfied the review. Those who fail the criteria must pass a learning module before opening an account.
Disqualified users can choose to start an account nonetheless, but must provide written confirmation on their decision and be informed of the risks and responsibilities involved.
Trading platforms here told CNA they are doing their part.
Some upload investment courses and financial news on their platforms, and implement a trading limit for first-time investors. Others have considered stopping users from buying stocks that become too volatile.
Continue reading...