You can invest in the stock market directly by buying shares yourself. It is also possible to invest indirectly by investing in unit trusts or certain products offered by insurance companies. All direct buying and selling should be done through a stockbroker who will be able to offer advice on which companies are suitable for your investment objectives.

Costs of Buying and Selling Shares

When you buy and sell most investments there are fees involved and shares are no exception. Stockbrokers may offer discounts for large transactions but generally there is a fee (called brokerage) of 1,2% of the purchase value to be paid when shares are bought. When selling there is also a brokerage fee of 1,2% of the selling price which is deducted from the proceeds.

Funds Investing

Government tax, called market securities tax (MST), at the rate of 1,5% is also payable when shares are purchased. No MST is payable when shares are sold.

What Type of Shares?

There are various types of shares but they normally fall into the categories of “speculative” and “non-speculative”. Speculative shares are ones in which you may lose the bulk of your money or make a large profit. These type of shares are often in mining companies which are outlaying large sums of money looking for substances such as gold and platinum. They may sell for as little as a few cents each, so that you could double your money with a rise in price as small as from two cents to four cents.

The market lives on rumours and there is no shortage of people to give you “sure winners”. It is common to meet somebody who has a friend who is a friend of a geologist who has just heard that the Ace Mining Company is about to strike a major gold reef. There is nothing wrong with having a flutter on this sort of information if you understand that it is pure speculation and you are likely to lose your money. This sort of “inside knowledge” is about as reliable as racing tips.

The stock market consists of large established companies such as Barlows, Gencor, Anglo American and De Beers, smaller but strong companies like Plate Glass, and aggressive expanding corporations such as the FSI Group. There are also “high technology”‘ shares in companies like Altech where investors who have picked the right company have made huge profits.

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