/ 11 March 2010

How do I invest on the JSE?

How can I start investing on the Johannesburg Stock Exchange (JSE), asks a young teacher

Maya replies:
There are three ways to invest in companies that are listed on the stock exchange.

  • 1. Invest directly by buying shares in listed companies through a stock broker.
  • 2. Invest in what is called an index tracking fund, like Satrix, which invests in the largest companies on the JSE. This is a very cost effective way to invest with smaller amounts of money
  • 3. Invest through a fund manager like Investec, Coronation, Stanlib, Old Mutual, or Allan Gray, etc. The fund managers make the investment decisions for you and invest in the shares that they believe will perform.

Based on your question, I will focus just on the direct investment through a stock broker.

Usually you need to start off with about R5 000 to be cost effective due to the minimum fees charged by a broker. You would invest this in one or two shares and then when you have another lump sum you would buy another share to add to your portfolio. However Standard Bank’s Online Share Trading has a product called Auto Share Invest (ASI) that allows you to invest directly in the market with a monthly debit order and is relatively cost effective for smaller investments.

Every month you invest R500 or more and on 25th of each month Standard Bank will buy the shares you have chosen from their range of selected shares which includes the 40 largest companies listed on the JSE.

It costs about R25, which works out to 5% on a R500 investment. This means that the share price must first increase by 5% before you are making money. If you want to become an active investor on the JSE it is advisable that you attend Online Share Trading’s educational seminar to familiarise yourself with the markets. It’s is free and you can contact them 0860 121 161 or email [email protected] for details and venues.