A. Opening a Stock Account
To engage in stock trading, one must have a brokerage account. Nowadays, opening an account has become easier and faster through brokerage apps, eliminating the need for face-to-face interactions. Simply search for "brokerage account" on app stores, and you will find numerous apps marked as "account opening available." Choose an app you prefer and install it. Account setup usually takes around 3 to 5 minutes, but remember to have your identification documents, such as your resident registration card or driver's license, ready for scanning.
There are various types of accounts to choose from, including CMA accounts, comprehensive trading accounts, retirement savings accounts, futures and options accounts, and physical gold accounts. Don't be overwhelmed; take your time to understand each type. For instance, CMA accounts serve as asset management accounts with slight interest accrual, suitable for domestic stock trading. Comprehensive trading accounts extend beyond CMA functionality to include international stock trading. Deciding on the right account might seem complex, but aim for a stock account that offers commission exemptions. Minimizing service charges can help enhance your overall returns.
B. Checking Trading Hours
Understanding trading hours is crucial for successful stock trading. Regular trading hours in South Korea are from 9:00 AM to 3:30 PM, Monday through Friday. Trading is unavailable on weekends and public holidays. Familiarize yourself with these regular hours first, as a beginner.
Other trading periods include:
1. Opening Call Auction: 8:30 AM - 9:00 AM
2. Closing Call Auction: 3:20 PM - 3:30 PM
3. After-Hours Closing Price: 3:40 PM - 4:00 PM
4. After-Hours Single Price: 4:00 PM - 6:00 PM
While these terms may appear daunting, remember that the stock market operates beyond regular trading hours. However, be aware that price fluctuations during opening and closing periods can be substantial, resulting in both opportunities and risks. For novice investors, adopting a long-term perspective is advised.
C. Understanding Trading Fees: Real Profits Are Lower Than You Think
As you become a shareholder, you'll need to grasp the concept of trading fees. Stock trading, whether buying or selling, involves associated fees. Notably, selling stocks incurs a securities transaction tax. In 2023, this tax amounts to 0.2% of the transaction amount (reduced from 0.25%). Consider the effects of service charges and the securities transaction tax on your overall returns. For instance, even if you earn a 1% profit on a 500,000 KRW investment, it might seem like you'll gain 5,000 KRW. However, when you account for service fees and taxes, the actual profit might be less than 4,000 KRW.
Conclusion: Advice for Novice Stock Investors
Warren Buffett once said, "You should be able to sleep like a baby even while your money is working for you." Diversifying income sources is key, and stock investment is a route accessible to all young individuals. Furthermore, stock investment contributes to a better society. As an investor, you become a part-owner of a company. Your support aids in the creation of better products, services, and jobs, fostering positive societal and economic growth.
If you're just starting with stock investment, remain patient and have faith in the growth of the companies you invest in. Initially, you might feel anxious and check your app multiple times a day. However, stock prices won't rise or fall simply because you monitor them frequently. Instead, keep an eye on the company's growth and industry trends. Undervalued companies' true worth will eventually be recognized.