Invest. It's not as scary as you think with JSE Limited
Introduction to share investment
Share investment is, but one of many investment options available out there. Based on the investment objective, potential investor is able to make an appropriate decision. There are two categories in share investment – unlistedand listed shares. The former refer to shares trading over-the-counter (OTC), i.e. being bought and sold between the parties involved outside the stock market. The latter refer to the shares registered or listedfor trading on the stock the exchange. The exchange is a platform or market which manages the process of exchanging ownership of shares and money with which they are being bought. Simply, an exchange is a market place where shares are bought and sold. The stock exchange in South Africa is called the JSE Limited, and it is the only shares or equities market in the country. Stocks or shares are also known as equities.
Companies wishing to raise primary capital by means of selling shares on the exchange are required to register with the JSE. This process is called listing. The question may be asked, what are shares? Shares represent components part ownership of a company. The total value of a company and everything it owns is divided into many equal parts. These are called shares. Since companies are unequal in size and value, some companies have several millions of shares. These may be owned by many different people and institutions. Individual people investing on the market are referred to as private investors, and organizations or business units investing in other businesses are called institutional investors. All the investors bring their savings onto the market with the sole intention – to grow their savings in value. It is important that everyone’ savings do above because inflation. Inflation causes money to decrease in value at some rate, and does so whether the money is invested or not. Consequently goods and services generally get more and more expensive over time.
The JSE was founded more than a century ago, to be precise on 8th November 1887. That was a year after the discovery of gold in Johannesburg. Sudden demand of capital by the flexing mining business necessitated that new ways and means to accessing capital be established - hence the selling of shares at an exchange came into being. Today the exchange stands tall as the engine room of the South African economy – having companies listed from different sectors of the economy. Here, companies from across spectrum of industry and commerce gather to raise the public capital that will allows them to expand, in the process creating new jobs, products, services and opportunities.
If you own an insurance policy, a retirement annuity, a unit trust or even a simple savings account, the JSE is where much of your money goes to make more money for you.
Directly or indirectly, the movements of the market matters to millions of South Africans, and that's why more and more South Africans are choosing the direct route to the market - by investing on the JSE.
The next episode will look at procedures involved in buying and selling shares on the JSE
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