Investing in stocks has become quite popular in South Africa. More and more people are willing to dive into this world and test their skills and knowledge to come up with a solid income. Even though many think that buying stocks is simple, it is far from it.
There are plenty of things that every South African resident, or a foreigner who thinks of investing in South Africa, should consider. That is exactly the topic that we wanted to discuss in this article. We are going to explain some of the more general things that you should know when buying shares in this country.
Taxation in South Africa may be subject to payments of two different levels. The first one is the central government, while the second one is from the local government. Logically, profits made from investing in shares are taxed in this country, so you need to check what the regulations are.
Ever since 2001, the tax system in South Africa is residence-based and non-residents are only subject to domestic taxes. Speaking of taxes, it is worth noting that when you are thinking of investing money, fees are charged, regardless if you use brokerage firms or online trading platforms.
Should You Use Brokerage Firms?
Speaking of brokerage firms, many novice investors are faced with the dilemma of which brokerage firm they should use. There are plenty of things to consider here. Some of them include fees, customer support, number of shares available, whether the chosen stockbroker allows you to buy shares online, etc.
We are more than willing to help you out in that quest, which is why we found a list of the best stock brokers in South Africa. All of the listed companies have certain strengths and your task is to choose the broker that fits your individual preferences the most. So, feel free to check the article out.
One piece of advice that we would give you is to choose a broker that allows you to trade online. Online trading has proved to be extremely efficient and more effective.
The Most Developed Sectors in South Africa
Next up, research is a key part of investing in South Africa and any other country, for that matter. When doing your research, check which are the most developed sectors in South Africa and then, see which companies are the most stable.
Now, when we say most stable, we are not thinking of a company that has always managed to make substantial amounts of profit because that is nearly impossible. The market is extremely volatile and every company will be faced with numerous challenges.
The better they are at dealing with those challenges, the more stable they will be. So, the goal here is to see which companies have had bad periods, but managed to come out on top. As for the most developed sectors in South Africa, they are finance, real estate, retail and motor trade, catering, manufacturing, and accommodation. South Africa also has the second-largest economy on the continent.
The Objective of Your Investment
Finally, you need to know what the objective of your investment is. Objectives vary from one investor to another. Some are doing it so that they can receive income over a short or long period, depending on their goals, while some do it just to build up their resume. Whatever the goal of your investment is, make sure you calculate the risks.
One additional good tip is to always have an emergency fund in case your investment fails. That way, you will not experience a massive drought and have money to get back on your feet and start planning your next move.
The more you follow these steps, the higher your chances of success will be.