How to Invest in the JSE

invest in the jse

When it comes to investing money, a lot of people think that it is only for the wealthy. But today we are here to tell you that this is not the case! If you have a basic monthly income and you manage your money well, investing on the Johannesburg Stock Exchange (JSE) is completely in your reach. Sure, if you don’t make a lot of money you will have to start small. But that is exactly the point. You can start small! The fact of the matter is that you don’t have to start off by investing tens of thousands of Rands. So if your dream is to invest in the JSE but you don’t think you’ll ever be rich enough, keep reading!

What does it mean to Invest in the JSE?

Investing in the JSE does not mean that you give money to the JSE to help them grow as an individual company. The JSE, like any other stock exchange, is there to facilitate the buying and selling of company shares, stock and commodities.

So if you want to invest in the JSE, you basically place an order with them. In other words, if you identified a company that you want to have a share in, you place an order for that share with your stockbroker (that’s us). Your broker then goes ahead and places the order with the JSE. They find someone that is willing to sell a share in that company at the price that you offered and only then can the transaction take place. After that, you own that share in the specific company that you chose. A share is the same as stock or equity – these terms are interchangeable. If you own a share in a company, you own a little piece of that company and can earn dividends as that company grows.

Similarly, you can buy commodities such as gold and silver via a JSE Commodity Derivatives Member such as ABSA Bank, Investec Bank and so on.

Who can invest in the JSE?

invest in the jse
Can anyone just start an investment account?

Any person that has a fixed income and has some spare money at the end of the month can invest in the JSE. Technically, there is no minimum amount of money that you can invest on the JSE. However, you will have to pay service fees for your investment. So investing R5.00 is not the best idea because your service fees will be more expensive than the investment. Typically, it is best to start off an investment account with around R5000.00.

So, if you have very little to spare at the end of each month, put that money aside in a spare savings account. And then, once you have accumulated enough money to start investing, contact us and set up your investment account!

How to invest in the JSE?

There are various ways to invest in the JSE:

  • You can invest via a stockbroker (like us).
  • Through a Financial Services Provider (FSP) like Standard Bank, ABSA etc.
  • Via an Exchange Traded Fund (ETF) like Ashburton or Stanlib.

You cannot buy shares directly from the JSE because their regulations do not allow for that kind of transaction to take place. For new investors, it is always better to buy stock via a stockbroker. Especially if you are not a financial fundi and do not keep an eye on the rise and fall of index prices. So, if you want to invest in the JSE, click here to register a free investment account with us. One of our consultants will contact you soon to find out how much you want to invest and what level of risk you are willing to take.

Risk!? Yes, of course, there is risk involved in investing. Nobody can guarantee that a company will keep on growing. We can definitely not give you guarantees that the money you invest will increase or decrease. But we can tell you which companies have a proven track record that shows growth and grit. And those are the companies you want to invest in.

In which stocks should you invest?

invest in the jse
Which stocks are solid investments?

As a beginner in the investment world, it is advisable to invest in stable companies that show a track record of good governance and continuous growth. You also do not want to put all of your money into a single equity, no matter how good the prospects look. Think about it, if something goes wrong with that one company that you put all of your hope (and money) in, you might lose everything. So rather spread your funds over a variety of companies.

You can also invest in market-related indices. Indices are trading groups where different companies are put into one group that you can invest your money in. These indices can either belong to the same industry, like the Resources Index (companies in the resource sector). Or like the JSE Top 40 Index, where the 40 largest companies (by market capitalisation) are grouped together. Investing in an index will be like spreading your money over all of the companies in that specific index. The index value is determined by the combined average of the stock prices for all of the companies in the said index. This is normally a safe way to invest your money because companies in an index tend to balance each other out. If one goes down, the other might go up, so your money will stay fairly safe.

Can I invest in a company without going through the JSE or a stockbroker?

This is a question we get a lot. In this age, where information is freely available everywhere, people always want to do things on their own. If you are sick, you don’t go to the doctor, you put your symptoms into Google and self-diagnose. Unfortunately, Google is not a doctor and sometimes (most of the times) you end up with the wrong diagnosis and end up getting sicker.

And we see the same thing with investing. There are ways to invest without going through regulated stock exchanges, but it is a risky business. For that reason, we decided not to tell you how to go about investing money all on your lonesome. You may think that we are only trying to create business for ourselves. However, we care about your financial wellbeing and we do not want to lead you astray. So stay safe and start an investment account with a broker.