There are various reasons that a lot of us come up with when it comes to avoiding playing the stock market: “I don’t have enough money to invest”; “I don’t understand it”; “I don’t have time for it,” etc. On top of that, unfortunately, stockbrokers are predominantly male, and many have been said to have a tendency to dismiss women.
“Many women themselves buy into the misperception that women aren’t good investors and are afraid that they will make mistakes and lose money,” says Amelia Morgenrood, a financial adviser at PSG Wealth. In a nutshell, it centres around feeling confident around the stock market.
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But the truth is that women have the potential to be great stock pickers. They are generally less aggressive, they do more research, and they are able to identify a bargain.
Now we just need to get the message across that there is nothing particularly complex or mysterious about shares.
“Take a step back and think logically about it. When you are buying a share, you are essentially buying a small part of somebody else’s business,” says Amelia. You may wish to start with investigating companies you’re already familiar and comfortable with as a customer, such as Shoprite or Woolworths for example.
“Realise that you already possess all the necessary skills required to invest in shares, you just haven’t necessarily put them to use in this context,” says Amelia.
“Your fear of risk and losing money can be addressed by increasing your knowledge and finding a great adviser who will help you to address any gaps in knowledge or information.”
It’s also important to keep in mind that shares should form part of a bigger overall financial plan and you need to understand the advantages, and risks, they offer. “Shares are not always liquid and can be volatile, so they should not replace other investments, like emergency savings, for example,” says Morgenrood.
Best tips for beginners:
- Start reading the financial media today. Invest 10 minutes a day in your future – even if you only read the headlines, you will start building a knowledge base, and this will hopefully fuel your curiosity to want to know more.
- Speak to someone you know and respect about how they got started with investing in shares, and ask them for any advice they have to share. If you don’t have anyone to turn to, consider discussing it with a financial adviser. They will be able to help you formulate an investment philosophy and strategy to apply to your share portfolio.
- Look for quality. The safest bet is to buy shares in large, stable, well-established companies such as Anglo American, Firstrand, Discovery etc. Shares in these companies are called "blue chip shares". They generally offer steady growth in market value over the medium- to long-term and offer a good hedge against inflation. Blue chip companies have a reputation for honest business practices and are generally considered less risky. In contrast, “speculative shares” are shares in companies with less of a track record. The price of these shares can literally soar or plummet overnight. In other words, there might be potential for huge gains, but also for devastating losses. Our advice is steer clear of speculation in general, and especially when you are first getting started.
- Never buy shares on "hot tips" alone - only buy after you have thoroughly researched the share and would have bought it even without the tip.
- Always justify your purchases by backing them up with exact reasons - write down your reasons so you can examine them with hindsight later.
- Don’t let your emotions take over. It’s important not to get too excited when you make money, or too despondent when you lose it.
- Never marry your shares – in other words, don’t get too attached to your "winning" shares or shun your "losers".
- Never buy shares with borrowed money!
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