The Financial 15 Index
While the industrial companies often dominate the stock market, the Financial 15 has given it a good run for its money, performance wise. When you are putting together an investment portfolio for the first time or should you be looking to update your current investments, you will want to be diverse with your shares. A diverse investment portfolio is one that is sure to pay out great dividends. And just like the industrial sector, the Financial 15 is going to be the place where you can make those worthwhile investments.
The Financial 15 consists of the 15 biggest finance focused companies currently trading on the JSE.
When navigating the Johannesburg Stock Exchange you need to know that the JSE classifies trading companies according to their core business. Companies that have common themes, for instance, those all working in the same field, will be grouped together within an index. In this case, the Financial 15 consists of all companies within the financial field.
Because of the strength and the continuous growth of these companies, you could say that it is quite safe to put your money into their stock. Well, your money is safer here than in other companies, let’s put it like that. The stock exchange is always going to carry a certain amount of risk, as is the case with all investments, but when you choose your investments wisely, you won’t have too many sleepless nights.
It is without a doubt that the financial index does make a lot of money for investors, and should the history of these listed companies be anything to go by, they continue to be a great option for investors.
About the Financial 15
The Johannesburg Stock Exchange is split into three sectors. By breaking up companies into similar fields, the investor’s choice making is made a little bit easier. You can quickly find the companies that you actually want to invest in, allowing you to diversify your portfolio.
The three sectors we’re talking about are:
- SA Resources: All listed companies belonging to the ICB Industries Oil and Gas.
- SA Financials: All listed companies within the ICB Industry Financials.
- SA Industrials: All of the other listed companies which belong to neither category.
The JSE classifies the top 15 financial companies as the JSE Financial 15 FINI. As these are the 15 biggest financial companies trading on the exchange, a very careful eye is kept on their performance. The companies are ranked according to their market capitalisation, or market value, and they include insurance brokers as well as South African banks.
Before you start worrying about investing in South Africa banks, considering the recent reports and perceived troubles faced by our financial institutions, there are a few things to keep in mind. Firstly, it pays to talk to a broker or to do some of your own research into the stability of the bank. Remember that companies listed on the JSE are all publicly trading, so their financial records are open to the public. And secondly, know that South African banks are closely monitored by the South African Reserve Bank. It is the responsibility of this bank to safeguard investors and clients alike.
The Financial 15 is a part of the large-cap sector of the JSE. It showed an upward trend as of December 2017 and continues to strengthen.
The Benefits of Investing in the Financial Index
There are various reasons why you should be investing in the JSE period. They are all good, and while there can always be a risk in investing, the outcome is generally one of the profitable dividends. The Johannesburg Stock Exchange has been helping companies to trade since 1887. By 2003 it had over 700 companies listed and that number has continued to grow ever since.
There are two great reasons to be investing in any company, and they are two-sided. There is the benefit of getting a potential windfall of cash when your company strikes gold, so to speak, and then there is the benefit of helping companies and therefore the economy grow.
There are three caps that companies arranged in; the small cap, the mid-cap and the large cap. Those in the Financial 15 are considered large-cap companies. Their goal is to continue turning a profit and to continue growing. This, when compared to small-cap companies that are generally looking for investors to help them grow, can make a difference when it comes to the reasons why you are investing.
In short, here are a few other reasons why you should invest in the Financials 15:
- As the 15 biggest companies listed on the JSE financial sector, you can be certain that they are stable and therefore, you are unlikely to lose your investment. When investing in a bigger company, you can watch your investment grow over time, leaving it knowing that the company is very unlikely to shut its doors overnight. With that being said it is always good to be realistic about investing. Sometimes infighting happens and companies are forced to close. Luckily, because of the value of the company, any hint of trouble is usually picked up well before something drastic happens.
- Again because these are big companies, you are sure to get paid a dividend when the company makes a profit. You can talk to a broker or do some research to find out when the company will pay dividends, sometimes it’s an annual payout.
- While you will have risks, your risks will be fewer than if you were investing in a new, small-cap The Financial 15 are some of the best-performing companies and they are perfect for your portfolio if you are mixing up a few small-cap companies with a few bigger, large-cap listings.
Three Quick Investment Tips
You could be a veteran investor looking for a reminder or someone new to investing, but keeping these tips at the back of your mind can help to improve your approach to building a portfolio.
- Know what you are buying and have an end goal in mind. If you are looking to make money then make sure that the company you invest in is one that will help you achieve your goal. The more informed you are, the less risk is involved because you will be making sound decisions.
- Know that there is a time to keep your shares and a time to sell them. If you hold onto them for too long, you might miss a real financial opportunity.
- Finally, have long-term and short-term investment goals. They will guide you when buying shares.