Playing the stock market can be a experience. Get your ducks in a row
IShadrak writes: want to start investing on the JSE and have read about Top Trader Markets, which will charge me R18 200 to set up the portfolio and R250 a month to maintain the portfolio. It also provides sharetracking software that will enable me to trade successfully with the knowledge of which shares to pick and drop at certain times. Is this a good way to start investing? Ridwaan Moolla, a stockbroker, replies: ooking at the company website, it seems Top Trader Markets is basically selling you a software package that will provide technical analyses of the stock market. Companies such as these are likely to come under closer scrutiny from the Financial Services Board (FSB) and valid stockbrokers are upset because such companies create false expectations for investors with promises of “making money before lunchtime”.
Share trading is not about making a quick buck. Most reputable stockbrokers will provide a free, basic technical analysis. If you are starting out as a share investor, the technical analysis program you are sold by companies such as Top Trader Markets is probably going to be very complex, resulting in confusion.
As a novice investor, you are much better off making a debit order investment – for example, R300 a month via FNB Share Saver.
If you have a capital outlay of R18 000 available, you would earn a much better return investing in an exchange-traded fund such as the Satrix Top 40, which gives you access to the top 40 stocks on the JSE.
When you are approached by companies such as Top Trader Markets, you should be asking:
Are you or your sales agents accredited by Financial Advisory and Intermediary Services? If so, what is your financial services provider (FSP) number? (You can then check the FSP number on the FSB’s website at www.fsb.co.za)
Are you a registered stockbroker? (This information can be double-checked with the JSE, which maintains a database of registered stockbrokers.)