2025 Beginner's Essential Stock Investment Guide: Building Your Investment System from Scratch

Looking to start investing but don’t know where to begin? Feeling eager when seeing others’ investment returns but afraid of踩坑? This comprehensive stock beginner’s guide will help you clarify your investment ideas and avoid many unnecessary detours.

Three Questions to Ask Yourself Before Investing

Before you truly start trading, beginners need to think clearly:

1. How much idle money do you have for investment?
Don’t use essential living funds; the money invested should be idle funds that won’t be needed within 3 years. This way, even if you incur losses, it won’t affect your daily life.

2. What level of risk fluctuation can you accept?
Can you tolerate 10% volatility, or only 3%? Your risk tolerance determines which investment products suit you. Aggressive investors may look at growth stocks or CFDs, while conservative ones prefer ETFs or dollar-cost averaging.

3. How much time can you dedicate to managing investments?
Can you spend 1 hour daily monitoring the market, or only check on weekends? This decision influences whether you do short-term trading, swing trading, or long-term holding.

Choosing a Brokerage: Finding the Right “Teammate” Is Key

Selecting a broker is like choosing a teammate; it directly impacts your costs and experience. When choosing, consider these aspects:

Comparison of Fees

Taiwan stock trading fees are generally around 0.1425%, but discounts vary among brokers. Some established brokers offer 60-65% of standard fees, while smaller brokers may cut fees to 20-30%, and over time, these differences add up significantly.

For US stocks, trading is done via re-entrusted accounts or overseas brokers, with fees ranging from 0.25% to 1%. Also consider exchange fees at 0.0008% and activity fees; these hidden costs can add up.

Trading Interface and Service Experience

Beginners especially need an intuitive interface. A straightforward operation process helps you get started quickly and reduces order mistakes. If choosing overseas brokers, Chinese interface and local customer support greatly reduce usage difficulty.

Also, check if the account supports TWD deposits and withdrawals. Some platforms offer TWD wire transfers or direct linking to Taiwanese bank accounts, saving currency exchange steps and costs.

Additional Features and Services

Compare whether the platform offers dollar-cost averaging functions—very important for small investors. Also see if research reports, stock selection tools, or demo trading are provided. Many quality platforms offer demo accounts for practice, so you can get comfortable before investing real money.

Taiwan Stock vs. US Stock: Two Different Investment Paths

Reasons and Risks of Investing in Taiwan Stocks

Advantages of Taiwan Stocks:

• High familiarity: as a Taiwanese investor, you understand local companies better and can grasp industry trends faster
• Strict regulation: financial supervisory authorities like the FSC oversee the market carefully

Disadvantages of Taiwan Stocks:

• Limited market size, lower liquidity than international markets, large capital inflows/outflows can impact stock prices
• Some companies’ financial transparency and corporate governance still need improvement

Investment Channels and Cost References:

Direct trading via securities account:

• Commission fee 0.1425%, securities transaction tax (on sell) 0.3%

Indirect participation via Taiwan ETFs or funds:

• ETF fee 0.1425%, transaction tax 0.1%, internal costs about 0.4-1%
• Stock funds subscription fee about 3%, bond funds 1.5%, annual management fee 0.2%, manager fee 1-2.5%, custody fee 0.2%

Reasons and Risks of Investing in US Stocks

Why more beginners choose US stocks:

• Rich investment targets: Apple, Microsoft, Tesla, and other top global companies across tech, healthcare, consumer sectors
• Great growth potential: many innovative companies (AI, EVs, etc.) are listed in the US
• Favorable trading costs: low fees, no securities transaction tax
• One ETF can cover global markets, providing good diversification

But watch out for these risks:

• High research costs: US companies are numerous, industries differ greatly from Taiwan, requiring more research time
• Time zone inconvenience: US market hours are 21:30–4:00 Taiwan time, not friendly for daytime workers
• Currency risk: most US stocks are traded in USD; TWD fluctuations can eat into your returns

Investment channels and fee benchmarks:

Buying individual stocks directly (via re-entrusted accounts or overseas brokers):

• Order fee 0.25-1%, exchange fee 0.0008%, activity fee per shares × 0.000145

US ETF investment:

• Management fee about 0.03-0.2%, trading fees similar to stocks with discounts

Comparing Three US Stock Investment Methods

Method 1: Buying Individual Stocks

The most traditional way—owning shares of listed companies directly.

Suitable for: Investors who have in-depth research on specific companies and want to hold long-term for dividends.

Advantages:

• High liquidity: top stocks daily trading volume exceeds 100 million, easy to buy/sell anytime
• Transparent info: US SEC regulation is strict, financial reports are audited, investment is more secure
• Suitable for long-term: can buy fractional shares, even small investors can be shareholders of blue-chip stocks

Disadvantages:

• Multiple fees: remittance costs, exchange rate spreads, intermediary charges
• Limited trading hours, after-hours trading has low liquidity
• Converting back to TWD incurs additional costs

Method 2: CFD Contracts for Difference

Trade via CFD platforms, no actual stock ownership, profit from price differences.

Suitable for: Small investors, those wanting multi-market allocation, flexible capital use.

Advantages:

• Low entry barrier: starting with a few hundred dollars, much cheaper than buying real stocks
• Two-way trading: go long or short, profit regardless of market direction
• Leverage allows small capital to control large positions, high capital efficiency
• 24-hour operation, global markets available anytime, one account can manage multiple markets

Disadvantages:

• High leverage amplifies risk; no strict stop-loss can accelerate losses
• No dividends, only profit from price differences
• Platform choice must be cautious; must be regulated by FCA, ASIC, etc.

Cost reference: Spread costs plus overnight interest

Method 3: ETF Investment

Buy index funds that bundle multiple stocks in one purchase.

Suitable for: Lazy investors, moderate risk tolerance, seeking diversification.

Advantages:

• Low transaction costs, tax only about 1/3 of stock transaction tax
• Hands-off, no need to pick stocks; one ETF can contain dozens or hundreds of quality companies
• Good risk diversification, small capital can participate in global markets

Disadvantages:

• Not suitable for short-term trading; high-frequency trading eats into profits
• Steady returns, no rapid surges or crashes; those seeking quick wealth may find it lacking excitement

Newbie tip: Start with broad-based ETFs like SPY (S&P 500) or VT (global market), combined with dollar-cost averaging, for the most cost-effective long-term growth.

Practical Guide to Opening Accounts and Placing Orders

Account Opening Process

Opening a Taiwan securities account is simple: choose a trusted broker, bring ID and seal, visit the branch to apply. Staff will guide you step-by-step; just sign the contract. Many brokers now offer online account opening, no need to visit in person—done via phone or computer at home.

Overseas broker accounts differ slightly: usually require registration → identity verification (KYC) → deposit to activate. The whole process typically takes 5-10 minutes.

Basic Order Placement

While interfaces differ, the basic logic is similar:

1. Log into trading platform
2. Search for stock code (e.g., TSLA for Tesla, AAPL for Apple)
3. Choose order type (buy or sell)
4. Enter number of shares
5. Confirm and execute order

Basic Market Monitoring Tips

Essential price concepts:

• Current price: latest traded price of the stock
• Closing price: last price of previous trading day
• Opening price: first trade of the day
• High/Low: highest and lowest prices today

Hover over the desired time point to see open, close, high, low prices in the top left corner. During trading hours, prices update in real-time.

Advanced techniques: candlestick analysis, moving averages, MACD signals, order book analysis, etc. But for beginners, start with basic price movements, get familiar, then gradually learn more.

Four Principles for Beginners to Pick Stocks

Step 1: Start with familiar industries
“Buy stocks you understand!” If you often buy tech gadgets, consider semiconductor stocks; if you love bubble tea, look into food and beverage stocks. Familiar industries make judgment easier and reduce guesswork.

Step 2: Prioritize large companies
Market leaders with big market caps (like TSMC, Hon Hai) tend to be more stable, unlike small caps that can be easily manipulated and volatile.

Step 3: Use fundamentals to estimate fair price
Use P/E ratio (stock price/EPS) or dividend yield to assess if a stock is reasonably valued.

Step 4: Diversify your portfolio
“Don’t put all eggs in one basket.” Mix dividend-paying stocks and growth stocks to balance opportunities regardless of market direction.

Four Common Mistakes New Investors Make

1. Not choosing brokers carefully
A 1% difference in fees over time can be huge. Choosing the wrong broker is like choosing the wrong teammate—affects your performance long-term. When trading large volumes, always seek fee discounts.

2. Blindly following trends without research
Buying stocks without understanding what the company does is risky. Before investing, check basic info (industry, main products), analyze financials (EPS, gross margin), and follow major news. During the shipping stock boom, many bought blindly without knowing the “Container Three Giants,” ending up trapped at the top.

3. Lacking discipline in execution
Many retail investors lose money because they take profits too early and hold losers too long. Set clear rules: take profit at 20%, sell half, move stop-loss; cut losses at 10%, don’t hope for a rebound.

4. Not finding a suitable investment style
Short-term day trading, long-term buy-and-hold, swing trading—all have their methods. The key is to find a rhythm that suits you. Don’t blindly copy others’ gains; that often leads to high buy-in and panic selling.

Sincere Advice for Beginners

Step 1: Practice with demo accounts for 3 months
Most platforms offer free demo accounts. Use virtual funds to practice order placement, experience market fluctuations, and test your psychology. No rush to invest real money initially.

Step 2: Control initial capital
Even if ready, don’t invest all at once. Start small—limit each trade to about 5% of your total funds.

Step 3: Summarize every trade
After each trade, record: why you bought, at what price, when you sold, profit/loss, lessons learned. Over time, these notes help you develop your investment style.

Final words: Stock investing is not gambling; it requires knowledge, strategy, and discipline. Spend time learning the basics, build a correct mindset, and avoid chasing quick gains. Wishing you find your own investment path in 2025!