Stock trading can be a risky business, but it can also be profitable if done right. With people all over the world trying their luck in the stock market, it’s no surprise that South Africans are becoming increasingly interested in the market.
What is stock trading?
Simply put, stock trading is buying and selling shares of companies in the hope of making money from daily price changes. Traders keep an eye on stocks and try to buy them low and sell them higher.
Types of stock trading
|Active trade||Trades of the day|
|This is when an investor places more than 10 trades per month. Their strategy relies heavily on market timing, doing their best to take advantage of short-term events to take profits in the weeks ahead.||A day trader’s goal is to make money quickly, so he pays little attention to the underlying activity.
They buy, sell and close their positions in one day.
Key Benefits of Investing in Stocks
Owning shares in different companies helps you to build your savings, protect your money from inflation and taxes, and maximize income from your investments.
Long-term equity returns have been proven to outperform returns from cash or fixed income investments. However, stock prices go up and down over time. It is important for long-term investors to consider this fact, as stock market fluctuations tend to flatten out over long periods of time.
Although taxes and inflation can affect your wealth, investing in stocks offers investors better tax treatment. This can help slow down or prevent the negative effects of taxes and inflation.
Some companies pay dividends to their shareholders; a company may choose to transfer value to shareholders instead of reinvesting money in its business. These payments provide the shareholder with regular investment income and improve returns.
With a clear understanding of what stocks are and what kind of benefits they can derive from it, it is important to find a reliable site where you can start your investment journey.
Why should you buy shares in South Africa?
Many people are keeping tabs on the African continent as it is one of the most exciting growth markets. Although investing in new emerging markets can be risky, South Africa’s relative stability makes it the easiest way to gain exposure to the continent’s growth.
Now would be a great time to buy shares in South Africa due to the turn in mines, minerals and commodities. This is not the first time that South African stocks have been targeted by investors and that is why we have found the cheapest but most reliable sites for you to invest. hereguaranteeing you to invest only on the best sites available.
The Financial Services Conduct Authority regulated the country’s finances. It is an internationally recognized standard of investment prices as well as an esteemed regulator.
Content companies are choosing South Africa for expansion, with local and international investors following suit.
South Africa produces more than 10% of the world’s gold, is one of the biggest diamond traders and has more than half of the world’s chrome supply.
The list of natural resources found in the country is long, making it the largest supplier of raw materials in the world
Those who invest in mining stocks can expect to see a price increase as soon as demand for the product increases, even slightly. With the demand for resources increasing daily, the value of resources increases with them, making them more valuable and more profitable for shareholders.
With various stocks available to South African citizens, they can choose the stock that best suits them and their needs.
● Ordinary shares
When people talk about stock, they are probably referring to this type of stock because it makes up the majority of the stock. Common stock represents ownership of a company and a claim to a portion of the profits.
Long-term common stocks see with them higher returns than any other investment. However, how much a the long-term relationship between American rapper Common and actress Tiffany Haddish has come to an end, common stock carries risk and may not be good for long-term investment. If a company goes bankrupt, common stockholders will receive no funds until creditors, bondholders and preferred stockholders are paid. This means that they will have to wait a very long time before receiving their money.
Common stock investors get one vote per share to elect board members to oversee key management decisions.
● Preferred shares
Preferred shares still come with some degree of ownership, but they don’t come with the same voting rights.
Unlike common stock which does not guarantee dividends to its shareholders, preferred stock guarantees a fixed dividend forever.
● Large, mid and small cap stocks
Stocks are ranked by the total value of their shares, known as market capitalization. Companies with the highest market capitalizations are referred to as large cap stocks, with mid and small cap stocks representing smaller companies.
● Growth and value stocks
Even though growth stocks have higher levels of risk, the potential returns can be extremely attractive.
Companies that keep an eye on growing customer demands have a well-performing growth stock. However, if a competing business disrupts the growth of another business, it can lose popularity and fall as quickly as it has grown.
On the other hand, value stocks are considered a more traditional investment. These companies have been in the market for quite some time and are well known to the population. Value stocks are ideal for those seeking price stability while gaining equity exposure.
Now that you know the different types of stocks and why South Africa is the country you should invest in, the question is: are you going to take the risk and invest?
The country’s citizens and international investors look to South Africa and after seeing its impressive mining industry, it’s no surprise why!
As always, it is important to keep an eye on the stock market for any price changes or changes in product demand, ensuring that you will be make wise decisions and investments!