It is the price you pay for a potential reward. The greater the risk the greater the potential reward should be. Every investor needs to find the level of risk that is comfortable while still offering the potential of return necessary to achieve financial goals. The fundamental rule is: The higher one's risk, the greater the expectation of receiving a high return.
The opposite is also true however: the higher the risk, the greater the chance that that the return will be zero or negative. Generally, as a beginner, you should start your share portfolio with less risky shares or exchange traded funds.
In general, the lower risk shares of large companies produce lower returns than their small company counterparts, but because of their size and stability, they tend to be more predictable and they also pay regular dividends.
ETFs are attractive as investments because of their low costs, tax efficiency and share like features. As you become more experienced and comfortable with investing in shares, you may wish to start investing in medium to high risk shares, found in medium and small companies. The two disciplines that play an important role in understanding the performance of a company's shares are: Accounting and Economics.
An analysis of a company that involves looking at its financial statements, management, competitors, markets where it operates, competitive advantages etc. Refer to Analysing a company for a detailed discussion on this subject. In contrast, technical analysis primarily uses charts often complex to study past share prices, volumes and indices to predict future share price trends, and to assist with the timing of purchase and sale decisions.
Note: Technical analysis is not covered on this website. The share market and economics work hand in hand. Factors that influence the one will always influence the other. This is valid for good and bad influences. Factors that influence the market Keep these in mind when analysing shares :.
The term asset class refers to a set of related investments that have similar risk and return characteristics. For example, the cash category money market accounts, bank deposits etc. The same thing is true for the other asset classes. Generally, the best time to learn about investments is when you're young. Investments grow with time and the earlier you start, the better. A young person usually has a higher risk tolerance an ability to handle declines in his or her portfolio and can tolerate volatility in his or her investment portfolio in the short-term; therefore a young person should keep a large percentage of his or her investments in shares for best returns.
Generally, when you start to approach retirement the focus moves towards protecting your investments. Therefore, an older person should keep a large percentage of his or her investments in less volatile investment vehicles such as cash, bonds etc. Industry classification benchmarks. The JSE classifies listed companies into sectors that take the company's core business activities into account and groups companies that share general industrial and economic themes together. The broad economic sector industry categories are:.
When analysing the industry, you may ask yourself the following questions:. The market is measured on a daily basis, during the exchange working hours. Indices give a basic idea of how well or badly the overall market is doing and these are good to use as a benchmark. For every sector on the JSE there is an index, listing all the companies in that sector. If the prices of the shares comprising the index increase during the period; that particular index will increase.
The best place to look is the company's annual report. Annual reports are also referred to as 'Financial statements'. All companies listed on the JSE are required by law to send their shareholders a copy of their financial statements once a year and most companies also post their financials on their respective websites. When reading newspapers and most financial reports about a company, journalists use the terminology that we'll be discussing in this section.
Financial ratio analysis makes use of historical financial data of a company to determine whether it is worthwhile to invest in its shares. Ratio analysis uses different numbers from the balance sheet, income statement, and cash flow statement to calculate ratios that can be compared to previous years, or other companies in similar industries. There are different types of ratios that give different types of information. After evaluating the Income Statement profitability , Balance Sheet financial position and the Cash Flow Statement cash flow based on the numbers, you may support the analysis of the numbers by using ratios.
Only the most common ratios used by investors will be discussed. The EPS shows the company's profits earnings allocated to each share in issue. The higher the company's EPS, the better. A high and growing EPS is an indication that the company is growing and doing well for its shareholders, a low and decreasing EPS is a sign that the company might be struggling. Remember that there are two ways to benefit from investing in shares: capital growth and dividend income.
A PE ratio of 15 for example means that it will take 15 years for the company to recover the money originally spent to buy the share. In reality this is not usually the case, as companies can earn the same profits in a much shorter time profits change year to year. Dividend cover calculates how many times the dividend is covered by earnings as follows:. The lower the dividend cover, the higher the percentage of total earnings paid out as dividends to shareholders.
For example, if the dividend per share is R1 and the earnings per share is R4 the dividend cover is 4 times. A dividend cover measures how conservative or generous the board of directors is when it comes to dividend declaration. Dividend cover varies from company to company depending on each company's dividend policy, cash flow and performance. The calculation is usually done if an investor is interested in knowing how the company is positioned in the sector as well as how strong it is in relation to other companies in the same sector.
As a general rule, companies with a large market capitalisation are safer less risky than smaller companies with a smaller market capitalisation. Small companies are more exposed to competition, and tend to be illiquid when their shares are up for sale there may be no buyers. Note: Market capitalisation is not always a good indicator. You have to look at this indicator in conjunction with other fundamental indicators.
Buy and Hold Strategy - History and other success stories support this strategy. A buy and hold strategy is when an investor buys a share with the intention of holding it for a while without selling it, usually for the medium to long term regardless of the market fluctuations. The aim is to buy shares in companies that promise strong earning potential. The reason behind this idea is that profits will keep expanding as the economy grows and both dividends and the share price will increase as a result.
There may be short-term market fluctuations e. Reinvest your dividends for faster growth. Produce more wealth with your dividends Companies distribute dividends once or twice a year. You can re-invest this money in shares to create more wealth.
Comparing shares in your portfolio to an appropriate benchmark provides insights into their performance. It is important to compare like with like for a useful comparison. For example:. Shares attract two kinds of returns, capital growth appreciation and dividends. If you hold a share as a long-term investment the time period of holding the share is taken into account , any capital growth appreciation upon disposal will be subject to Capital Gains Tax. On the other hand, if you were to buy and sell shares many times at short intervals, you may be considered as holding shares as trading stock and any capital gain will be subject to Income Tax.
Income Tax is higher than Capital Gains Tax. Interest income vs. Dividend income. Dividends Tax DT became effective 1 April DT is categorised as a withholding tax, as the tax is withheld and paid to SARS by the company paying the dividend or by a regulated intermediary i. Dividend declarations need to be submitted on time by the beneficial owner of the dividend to the company paying the dividend to determine the correct withholding tax amounts.
No deductions are allowed for expenses incurred to produce foreign dividends. Foreign dividends paid from foreign companies not listed on the JSE fall outside the scope of dividends withholding tax in SA, However, on assessment, the SA resident must include this amount when declaring his world wide income to SARS.
Interest received: Example:. The SA taxpayer receives interest of R50 from his investment account. His taxable amount:. The taxpayer must report the full gross interest received.
The exemption will be calculated by SARS on assessment. From 1 March , the interest exemption will increase from R22 to R23 Taxpayer receives a dividend of R50 from a South African company during the tax year ended Feb How to calculate real returns?
To calculate a real return on the amount invested, subtract the inflation rate and tax you'll pay on any interest earned, from the interest you are quoted.
How much return can you earn? It's unfortunately quite easy for your investment to fail to beat the breakthrough point interest rate at which you will start to receive a real rate of return on your money , as there are a lot of investment products that offer lower rate of returns than the breakthrough point.
As an investor you are not only looking to equal the breakthrough point, you should aim to obtain a little more than the breakthrough point as a reward for not spending money in the first place. Krugerrands, the world's most widely held bullion coins, are ounce-denominated gold bullion coins that have been designed for investors around the world who wish to invest in gold.
What sizes are available? Krugerrands are available in four sizes of pure gold all of which you can buy from FNB Share Investing. How pure are Krugerrands? The Krugerrand, issued only in South Africa, was the first gold coin to be denominated in ounces of pure gold. World's first bullion coin. It was first mass produced as a 1oz gold bullion coin in The imagery and name of the Krugerrand is known to millions of people all around the world. Krugerrands can be bought from, or sold to, thousands of coin dealers and banks worldwide.
As the Krugerrand is so well recognised, buying and selling these coins internationally is very easy. Traded for their gold content. Krugerrands carry only a small premium mark-up over the value of their true gold content.
This is unlike any other collector or numismatic coins, where the value is normally dependent on their rarity and condition. In a nutshell, Krugerrands have been designed for people who want to invest in gold. This is because the gold price is quoted internationally in troy ounces. They have always been legal tender coins under South Africa legislation. As legal tender coins, they do not need to be assayed or melted down upon re-sale, unlike many other gold cast and minted bars.
Krugerrands are sturdy and have a gold purity of 22 carat, which makes them hard enough to resist normal scratching and denting. This is a very important feature as most soft 24 carat coins and bars are more easily damaged and require protective packaging. Rand Refinery Ltd. The following information tables the various specs that are present in the range of Krugerrands that are available to the public.
For many centuries, gold has been the investment of choice. Gold provides a safe haven and hedge against the loss of money inflation as well as provides a store of value during tough times wars, political and economic uncertainty.
Krugerrands are the easiest and cheapest way to invest directly in gold bullion. In South Africa, we as residents cannot invest in actual gold bars, and if we could, they would be VAT'able. There are no limits to the amount of Krugerrands you can own and there are currently no FICA restrictions and consideration requirements. In some countries at certain times, the need to own gold may be overwhelming.
At other times, it may be less so. Although the value of gold may increase or decrease, over the past century alone millions of individuals in almost every country worldwide have benefited from owning gold at the right time. Predicting the right time has not always been easy. For this reason, many people have held some gold as a form of insurance against the 'unexpected', or as a safe commodity to preserve their wealth.
Therefore Krugerrands provide a great safe haven and a good store of value. No special knowledge is needed when buying or selling Krugerrands.
We guarantee the buy-back of your coins if you store them at Rand Refinery Ltd. To sell your coins is as easy as buying them. The account balance is calculated by adding the market value of your holdings to your cash balance. This report is issued by all companies on an annual basis to reflect the performance of the company for the past year. Any item owned by an individual or a corporation with an economic value that can be converted into cash e. A set of investments that have similar risk and return characteristics.
For example, the cash category represents a group of investments that have the same characteristics, are subject to the same laws and regulations have similar levels of risk and respond similarly to market conditions. The same is true for the other classes, such as property, bonds and shares. The process of deciding what percentages of a portfolio will be held in different asset classes e. An order to buy or sell shares at the best market price at a certain time, determined at the discretion of the broker executing the order.
An order to buy or sell shares, to be executed immediately at the market price, against the best available opposite order. A qualified person usually a chartered accountant or an independent firm of chartered accountants authorised to approve and sign company accounts. In South Africa, the financial statements of private and public companies have to be verified by an independent firm of accountants every year.
The portion of your cash balance that is available for you to transfer or can be used to buy Krugerrands. The balance sheet is a snapshot of the company's financial history at a specific date.
The amounts reported in the balance sheet are balances of the accounts at that precise moment in time. In terms of investing, it is a measure of an asset's volatility, in relation to the market. The highest price a person is willing to pay to buy a share at that point in time. Shares of companies known for having a record of sound and solid performance. They are usually the more expensive shares and have the greatest market capitalisation. A loan made by the investor bondholder to a company or to the country's government bond issuer.
The bond issuer promises to pay regular interest to the bondholder and repay the original investment on a set date in the future. Broker see also Stockbroker. In the context of the share market, a person who handles orders to buy or sell shares. Some of the entries in the income statement and balance sheet do not involve actual cash inflow and outflow of funds; for example depreciation.
Although depreciation reduces the profit of the company, no money is actually spent. The purpose of the cash flow is to disclose information about the events that affected cash flow during the period, just as the name suggests. Capital growth gain or appreciation.
Any reference to any specific country, financial product or asset class is used for illustration or information purposes only and you should not rely on it for any purpose. We have done all we can to make sure that the information in this document is accurate at the time of printing, but we do not guarantee that it is accurate.
If any of the information becomes out of date or is inaccurate, we do not have to update it. We and OCBC Securities Private Limited will not be responsible for any loss or damage arising directly or indirectly in connection with, or as a result of, any person acting on any information provided in this document. Please do not reproduce or share any of the information in this document without our written permission. If the 22nd of the month happens to be on a non-business day, the purchase will be executed on the next business day.
By investing an equal amount of money on a regular basis over a specific period of time, you will purchase more shares when prices are lower and fewer shares when prices are higher. This will potentially lower your average price per share.
You can choose to invest all at once , or invest regularly every month for 6 months. For the same investment amount, you may have gotten more shares because it lowers your market risk by averaging the prices out. Why you will love this Who can apply. Why you will love this.
Who can apply. Apply now. Build a stable financial future with access to blue chip shares, all from one flexible, hassle-free and affordable investment plan. Features and Benefits. Find out how dollar cost averaging works.
How it works. Choose how much and what to invest. Decide on your monthly investment amount and select one or more of our 20 BCIP counters to invest in. Apply for BCIP. Build your portfolio. We receive your orders from the first day of the month up to 12pm on the last business day of the month , and will carry out your instructions on the 22nd of the following month, or in the event we are unable to do so, on the 22nd of the second following month.
You will enjoy dividends, whenever declared by the respective companies or exchange traded funds ETF. Review your portfolio. More information about BCIP counters. What are blue chips? How are ETFs different from Stocks?
Illustration of DCA over time. For more description of the available BCIP counters, please refer here. Below are some objectives you may consider: To invest for Income, you may choose to focus on the dividends paid out by the company. To Invest for Capital appreciation, you may look at companies which have exhibited higher than average growth over the years, and focus on how the company has grown in terms of their total return.
For portfolio diversification, you may look at ETFs with different asset classes or companies from different sectors. Ways to pay. SGX Code. The Fund is the first to offer investors easy access to SGD-denominated, investment grade corporate bonds in affordable units. This allows investors to diversify their overall portfolios with corporate bonds from high quality issuers.
The Fund is designed for investors who seek an "index-based" approach to investing in a portfolio of Singapore listed securities in a cost effective and easy to access manner. United Overseas Bank Limited Top pick. Capitaland Limited Top pick. Headquartered in Singapore, the multinational company's core businesses in real estate, hospitality and real estate financial services are focused in growth cities in Asia Pacific, Europe and the Gulf Cooperation Council GCC countries.
The company's real estate and hospitality portfolio spans more than cities in over 20 countries. The Fund's investment objective is to replicate as closely as possible, before expenses, the performance of the Hang Seng Tech Index. The Index is designed to represent the 30 largest technology companies listed in Hong Kong which have high business exposure to technology themes.
The principal activities of the DBS Group consists of investment holding, banking and financing, the provision of mortgage financing, lease and hire purchase financing, corporate advisory services, nominee and trustee services, funds management services, stockbroking, primary dealership in Singapore Government securities, merchant banking, factoring, credit card and venture capital operations, and other financial services.
Savings accounts offer steady growth and are normally quickly accessible so you should look to keep enough money in them for emergencies and short term expenses before thinking about investing.
You can set-up a regular scheduled investment You can set up a direct debit on your share dealing account and select which investment to buy, when and at what cost or quantity. You can then sit back and leave the rest to us. You can change the amount or investment at any time.
This means no leftover cash when you have asked us to invest it for you. Read more about our investment options. This table shows the dealing commission and account charges you'll pay as standard. You may also pay government taxes and levies depending on the investment you choose. Supported Browsers.
Enroll in a Direct Stock Purchase Plan today to build your investment portfolio. Compare and choose from more than investment plans. Purchase and sell shares at your convenience, view account balances, and reinvest your dividends. Easily enroll online if available in your company's plan, view your account, download Employee Plan materials, change your enrollment, make transactions and more.
EQ Customer Care professionals are available to help you and answer questions about your account. EQ has suspended its walk-in service hours at our Milwaukee and Minnesota locations until further notice.
We apologize for this inconvenience and look forward to serving your in-person needs again in the near future.
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