Top tips to getting started investing in the stock market

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Investing in shares on the stock market is not just for the wealthy or those who have the experience. Just as starting to save at any age is a good idea, so is beginning to invest in shares.

Chief executive officer of Share Investing at FNB Wealth and Investments, Aneesa Razack, shares a few tips to help you get started.

  1. Start investing now, don’t wait. The sooner you start to invest, the better. Time is an investor’s best friend, because it gives compounding interest and returns a chance to work for you. The earlier you start the less you should invest to reach your goal.
  2. Do some research. Before you buy a share, find out everything you can about the company, its management and competitors, its earnings and growth potential.
  3. Invest regularly. Investing is not a once-off exercise; it is something that you must continue doing throughout your life to be able to get good returns on your investment
  4. Start with the Top 40. When you start investing in shares, it is advisable to first focus on buying shares that form part of the JSE Top 40. These shares are generally less risky over the long term and can provide good returns if you buy and hold.
  5. Diversify your share portfolio. Spread your investment across different companies and over different sectors. The biggest risk in investing is putting all your eggs in one basket. With FNB Share Investing you can invest in both shares or directly in gold with Krugerrands and build a diverse portfolio for yourself.
  6. Be patient. Don’t expect to be right all the time. Investing for the long term will let you ride out the unavoidable ups and downs of the market.

She also advises managing your own portfolio, explaining that it’s the “best way to understand the stock market”.

“This initial step will help you in understanding the process and how the shares market works,” she explains.

“This money can then be used for your long-term goals like your retirement or for your child’s education”.

She also warns that if you have no risk tolerance, then stocks might not be the best option for you.

“The stock market demands patience, if you are going to pull out during every ‘bear’ (negative) period then you’ll never be invested for the ‘bull’ (positive) times,” she cautions.

However, she advises the risk averse types to consider “unit trusts or exchange traded funds (ETFs)”.

“These collective investments cushion the risk somewhat while still allowing you to grow your money,” she explains.

“Investing in shares can help you reach your financial goals faster and ultimately benefit you in the future,” she advises.

“Ensure that you are aware of your environment and the risks associated before taking the step to invest in shares,” is her last piece of advice.

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