1 Presenter Date How to Start Investing Ana Forssman

2 2 What is a share? If you own a share, you own part of a company –Your slice of the company pie! Someone who owns shares is called a shareholder Shareholders may receive part of the profit (dividends) if the company performs well –Check the company dividend policy Shareholders can vote on company matters You can also call a share, ‘equity’ or ‘stock’.

3 3 What is the share price? The price at which a particular share can be bought or sold Factors affecting the share price When there are more buyers than sellers, the share price rises With more sellers than buyers, the share price falls Some share prices rise while others fall. It’s all about supply and demand. If a company is very profitable, a share will rise as more people think it is a good investment Factors such as economic and political events also influence share prices

4 4 How do I know which company to invest in? Do research on the stock market: read financial literature, attend investment courses, get expert advice (eg from a stockbroker) Assess the company’s financial wellbeing: read their financial statements or newspaper articles and analyst reports –This will enable you to make educated decisions

5 5 How do I know which company to invest in? Decide how much risk you want to take on, how much return (profit) you expect and which products meet your needs –Get advice from broker Be committed to this objective. Be patient Invest for the long run, eg 5 years Decide how long you are prepared to wait for a return Invest with money you can afford to lose Although you can make a profit, remember the risk of losing money in the short run

6 6 Are there different types of shares and investment products? There are various types of shares and investment products to suit different individual needs, eg –conservative or “safe” shares –riskier shares Basic share investment products Ordinary shares Preference shares Exchange Traded Funds

7 7 What is RISK? Risk is the possibility of losing part or all of your initial investment Different products have different levels of risk Lower risk investments include: Cash in a money market account that earns interest; Government bonds (too expensive for most; generally R1m each!); ETFs (Exchange Traded Funds) Higher risk securities include: Shares, warrants, derivatives and corporate bonds

8 8 Is there a risk involved when investing in shares? Investing on the stock market is riskier than some other investments –Share prices rise and fall as economic forces change Lets talk ETF’s eg.: New Gold / Top 40 / Div + Share trading normally does not make you rich overnight –Treat it as a long term investment

9 9 Can I minimize the risk of my investment? You can minimize your investment risk by diversifying your investmen t –This means to invest in a variety of different investments –When one investment doesn’t perform well, another’ s could Choose your investments from several sectors, companies and investment products If you can’t afford that, choose an ETF

10 Is it difficult to manage my investment portfolio? Certain investment products require little or no management. However, always be aware of how your investments are performing Stockbrokers offer services to help you manage your investments: Discretionary – investment decisions made by the stockbroker without checking with you, but in line with agreed aim Non-discretionary – investment decisions made by you, after stockbroker has given advice

11 Is it difficult to manage my investment portfolio? Managing a portfolio can be tricky for many people Inexperienced investors can use a single investment product that offers you exposure a ‘basket’ of shares This product is known as an Exchange Traded Fund (ETF)Exchange Traded Fund (ETF) ETFs offer lower costs and can spread risk across a variety of shares Note: ETFs do not offer you voting rights Note: you don’t always get cash dividends

12 Do I need a lot of money to start investing? You don’t need a lot of money to start investing Some products, like ETFs, offer investment plans –Monthly debit order (minimum of R300) –Once-off lump sum (minimum of R1,000) Stockbrokers don’t always require a minimum investment amount –Through online share trading, and ETF platforms you can invest any amount via the internet –Approach your bank for details Remember: stockbrokers charge fees The JSE website has a list of stockbrokers, list of all ETF’s & ETF Issuers dealing with individual investors

13 How do I gain access to the stock market? To buy or sell shares on the JSE, you need to open a brokerage account with a stockbrokerstockbroker To find out how to open a brokerage account, see our website You don’t need a broker to buy and sell ETFs. Contact the ETF provider directly or ETF platforms (ETFSA / iTransact) Owning a brokerage account allows you to invest in all investment products, not only ETFs

14 Some things to consider Invest an amount that makes sense in comparison to the amount of brokerage fees that you’ll be paying Plan your investment objective, exercise self-discipline and monitor your investment performance Don’t borrow money to invest Be patient Don’t get emotionally attached to your investments. Some days they will go up and other days, down Ensure that you diversify your portfolio

15 JSE Liberty Life Investment Challenge Introduces learners to real life economics and commerce Enables learners to learn about investment through simulated trading Open to all universities Runs from March to September every year Students participate in teams Team creates virtual portfolio of R1 million Great prizes: First: R25,000 and trip to overseas stock exchange; Second: R20,000; Third: R15,000 Game is played online

16 Here’s to successful investing!