Motivation for young people to explore opportunities in the stock market
By Dr. Oladokun Nafiu Olaniyi
The main dream of our young population is to have a better life. Achieving a better life in the future depends on how well we plan for it at a younger age. One of the crucial components of this is having a strong financial plan.
Cultivating an investment culture at a young age is one of the means of achieving this dream, and one of the investment vehicles to explore is the stock market.
Stock markets can be defined as places where stock shares and other financial securities of publicly held companies are bought and sold. Investors who want to be part of the owners of big companies such as Sime Darby Plantation, Petronas or Nestlé can achieve it by buying the shares of those companies in the stock market.
One of the greatest assets young people have is time, which affords them the opportunity for long-term investment appreciation. For example, a 20-year-old investor with a retirement goal will have the benefit of at least 40 years of capital appreciation accumulation and dividends which should be enough to cover his consumption needs for his remaining years.
This basically suggests that stock markets possess huge wealth accumulation opportunities, especially for younger investors. In view of this, I will briefly discuss the basic steps to investing in the Malaysian stock market.
If you are a prospective investor, the first thing you will need to do is to select a reliable stockbroker. Stockbrokers serve as intermediaries and facilitate the buying and selling of shares on the stock market. Many banks such as Alliance Bank, CIMB Bank and RHB Bank act as stockbrokers in Malaysia. Apart from banks, there are also specialist stockbrokers.
Investors need to consider brokerage fees, other fees, the range of security and markets covered, flexibility, and customer support when selecting stockbrokers. Once a stockbroker is selected, the investor will be registered in Bursa Malaysia’s Central Depository System (CDS) and a CDS account will be opened in his name for the purpose of registering and trading shares.
On the other hand, trades will be registered and credited into the appointed stockbroker’s account on behalf of the investor if registration is under a nominee account, meaning the stockbroker holds the investor’s shares for safekeeping and to make buying and selling those shares easier.
Either option has its pros and cons.
Once investors are registered under a CDS or nominee account, they can start deciding on buying and selling shares of companies they want. As a new investor, there is a need for a good understanding of stocks selection. In this regard, investors need to be updated about the financial health and growth prospects of the companies they want to invest in. They also need to follow the latest information about the Malaysian economy and how it influences companies.
In conclusion, motivating the young generation to invest in the stock market can serve as alternative source of revenue for them, as well as a means to achieve better and sustainable life in retirement. In addition, this will contribute to the development of the stock market and the nation’s economic growth.
Dr. Oladokun is a senior lecturer in the Department of Accounting, Finance and Economics at Curtin Malaysia’s Faculty of Business. He holds a PhD in Finance from International Islamic University and is a member of the Malaysian Finance Association. His research interests includes efficiency in financial institutions, financial innovation and FINTECH. He can be contacted via email at email@example.com.