Investing in shares sounds like a daunting task that requires one to have a PHD in money, but that’s not the case! Investing can be easy, fun and profitable. The feeling of watching a share grow in value is unbelievable. For an example, in 2002 had you invested R10 000 in Capitec on the day it listed in at R1.80 a share, that investment would be worth nearly R4.2 million. So what are you waiting for? There’s money to be made, let’s invest! Asijiki!!!
Investing is all about collecting assets that increase in value over time. An asset can be defined as something that has an economic value that can be converted into cash. Owning a Rolex, the house you live in or a vrr phaa (Golf 7 GTI), means you own an asset. Assets can be sold for money and used as collateral. If you have money to burn like a moreki, you should consider buying shares.
A share is a unit of ownership in a company. It’s a digital or physical certificate that shows you own a small part of a big company like Capitec. Shares are also referred to as stocks or equities. Really u6 no9, they all mean the same thing.
Large companies like Capitec are highly profitable and often make a lot of money, which makes them great assets. Unfortunately, most of us don’t have the Gazillions to buy a large company. However, we can own a small piece of the company by purchasing a share. When the company makes money, we make money! In 2016 Capitec reported that it had 7.9 million active clients, making it the third largest bank in South Africa. In addition, it’s profits increased by 26% and it’s earning per share by R27.87. A Capitec share is currently at R758.94 (14 March 2017, 12:01); its share price.
If you buy the share(s) of a company, you become a shareholder (The Boss Zonke). Shares are purchased and sold at a stock market. In South Africa, we have the Johannesburg Stock Exchange (JSE). A stock market is where companies can sell shares to the public. When a company sells shares at the stock market, we call it a public company, because members of the public can own a part of the company. You can purchase and sell shares only through a stockbroker or a financial service provider. These are companies, people or online platforms like Easy Equities, who are licensed to buy and sell shares directly at the stock market on your behalf.
So how do you benefit from shares? You could sell a share for more than you paid for it. Capitec shares were originally listed at R1.80 in 2002. Today the share price is R758.94. A PROFIT of R757.14 per share, meaning you could sell the share for more than you paid for it. Alternatively, you could purchase shares that pay out cash payments. These are called dividends. Shares like every other investment has risks!
For an example, two weeks ago I bought Capitec and Steinhoff international holding shares. I bought 13 Steinhoff shares for R952.00. Since then the share price has gone down and the shares are worth R903.7. I made a loss of R48.53 (-5.1%). On the flip side, I bought 16 Capitec shares for R11 928. The share price has since increased and the shares are now worth R12 585.32. I made a profit of R657.32. Overall I have made a profit of R609.01