When his investment in Yuuzoo Corp plunged from 82 cents to 20 cents a share, student Arthur Cheong lost a few thousand dollars, but he learnt the importance of having a strict stop-loss point to keep losses from snowballing.
Mr Cheong, who is in his final year of an economics degree at Nanyang Technological University, told The Straits Times: "I learnt about the need to differentiate between trading and investing when buying a stock.
"Before entering a trade now, I use technical analysis to determine where my stop-loss point is. When you drop to a certain price point, you just need to cut losses."
Mr Cheong, 23, is among a growing number of young people investing in stocks.
People 25 years and younger represent 31 per cent of new retail CDP account holders, up from 19 per cent in 2009, according to the Singapore Exchange (SGX). The legal age for opening a trading account is 18 years.
Mr Cheong, a former vice-president of NTU's Investment Interactive Club, has been investing in Singapore stocks for the past two years.
Up to 40 per cent of his portfolio is in growth-oriented companies, including BreadTalk Group and CWT, a further 40 per cent is in defensive plays such as Keppel Reit and Fraser Commercial Trust, and about 20 per cent is in speculative shares like Sino Grandness Food Industry Group.
"Last year was a very tough year for the stock market. Liquidity dropped a lot. It was hard to make money trading small and mid-size counters, which I feel have more growth potential than blue chips," he said.
SGX head of retail investors, Ms Lynn Gaspar, noted that more people are investing at a younger age due in part to the proliferation of investment clubs at universities and a plethora of online investment education resources.
"They recognise that savings alone isn't enough, and they have to find ways for their cash to earn higher returns. They are concerned with whether they can afford their first house, first car, tuition for children," she said.
Market participants believe this trend is not strong enough to affect trading volume, given that the average transaction value of young investors tends to be less than $10,000.
"But it is important to get them educated. If you see a core group of young investors coming in now, it bodes well for the future," said Phillip Futures analyst Howie Lee.
"They may not have much capital to start with, but they have time on their side."
Ultimately, it is important for them to first understand what is their investment goal before charting out strategy and which stocks to get, Ms Gaspar said.
At SGX's recent My First Stock Carnival, about 80 per cent of young investors were interested in blue-chip counters and real estate investment trusts, she said.
In particular, many were keen on blue chips as the capital outlay is now less prohibitive after the reduction in the board lot size from 1,000 shares to 100 on Jan 19.
"The younger you are, you should be more growth-oriented than income-oriented. But most of the young investors we saw prefer a good blue-chip company that pays decent dividends. That gives them comfort," noted Ms Gaspar.
There is also a growing number of young investors willing to speculate in more volatile plays.
One investor, who declined to be named, said that as a 24-year-old he lost $100,000 dabbling in S-chips or China stocks after several were suspended from trading due to issues over governance or finances.
"I naively thought I could trust the accounts of these S-chip companies because they had big-name Singapore investors who were shareholders. But the valuations couldn't be trusted at all," he said.
He was eventually able to make good on his losses as his other investments in property counters, including LCD Global Investments, SC Global Developments and Ho Bee Land, did well.
Remisier Alvin Yong noted that unlike older investors, who tend to rely on trading representatives to handle their transactions, many younger ones would rather do their own research and transact online.
"Remisiers should reinvent themselves. Instead of being an order taker, they can provide more value-added financial advice," he said.