Stockbrokers act as agents while also providing
an advisory function during the process of stock
trading. Bryan Adams (2014 Financial Planner
of the year finalist) defines this function as,
“understanding people and their unique set
of needs” because “only then can we suggest
solutions that help people merge their money
with their life in a way that adds tangible value.”
For the tech-savvy, there are a number of online
companies who can assist you. Standard Bank,
PSG and First National Bank are among a long
list of these platforms - many of them offer
training courses and debit order options that
are suitable for just about any pocket.
Decisions, decisions, decisions…
Once you’ve chosen your advisor they’re likely
to tell you that one of the keys to successful
trading is a diverse portfolio. In other words,
making sure you have investments in different
sectors will eventually prove beneficial.
Preferred Stocks usually have fixed dividends.
Although investors of preferred stocks have the
disadvantage of not benefiting as profits increase,
they still have their advantages. In the event of
liquidation, preferred stockholders must be paid
off before common stockholders. However, this
type of stock can be resold (or callable), which
means that companies or other investors can buy
them back at any time.
In simple English, the stock market is the web of
transactions that facilitates the trading of stock and
the stock exchange is an entity whose focus is to
motivate these transactions. The latter, therefore,
provides services to facilitate trade between
buyers and sellers.
Getting started
Nerine Visser (head of Beta & EFTs at Nedbank
Capital) believes, “with just a little education,
anyone can gain the necessary confidence and
skill to manage their own money.”
One would imagine it’s an expensive and
complicated venture – but really, all you really
have to do is invest as little as R300 per month.
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Investing in top companies such as MTN,
SABMiller and Sasol, mitigates risk as these
organizations are established and research
material is readily available. However, investing
in smaller companies, although a greater risk,
increases earning potential. These companies
have the space to grow at a more rapid rate.
Nonetheless, keeping investments of smaller
companies at less than 15% of your portfolio is
always advisable.
It’s also important to decide if you plan to be a
long-term investor or if your role in the game of
stock is that of a trader.
As profitable as it may all be, this is a risky
business and true to Suze Orman’s words,
“one should never invest emergency money
in the stock market.” However, if you can find
a satisfactory amount and expert institutions/
people for advice, getting involved in the stock
market can be quite lucrative.
There will be good days as well as the converse.
But it’s not how wrong you are that matters;
what counts is how much money you make
when right and how much you don’t lose when
wrong. So go forth and prosper…
By Nobusi Maqubela
IMBO/ ISSUE 32/ '14