The National Treasury of South Africa predicts economic growth of 2.1% in 2022. However, many people are still bearing the brunt of the inflation effects, especially with the escalating fuel and food prices.
The slump in the job market and inevitable government borrowing are not helping financial matters, at least as far as the common citizen is concerned.
So what can a newbie investor do to make profit in this market? One approach is to invest in JSE top 40 and get long-term financial benefits. This article will outline the steps on how to go about this.
South Africa Investment Environment
South Africa remains an attractive investment destination even after the trying times of the global pandemic. It is one of the largest economies in Africa with a share of 16% of the GDP. The Johannesburg Stock Exchange (JSE) is the most powerful in Africa and boasts of a $1.3 trillion market capitalization. In regards to the recent challenges of COVID-19, the economy has managed to rebound strongly and is expected to grow in 2022.
A strong economy is one of the investment attractions, and South Africa scores highly on this front. The fact that the country has a big population and a rapidly growing middle class crowns it all. By investing in the JSE, one would be joining an emerging global market that is extremely stable.
Investing in the JSE top 40 Worthwhile
The JSE top 40 comprises the largest 40 companies listed on the Johannesburg Stock Exchange (JSE) based on their market capitalization. This index is a fair representation of the status of the stock market in South Africa because the 40 companies usually represent at least 80% of the market cap of all listed companies.
The technology and population of South Africa are on an upward trajectory so investing in the JSE top 40 would be a sure bet for long-term profits. For a newbie just starting the investment journey, the JSE top 40 provides a secure environment for buying shares. It is the perfect environment for anyone looking to grow investments even for retirement funds.
Steps to make it in the JSE top 40 as a newbie
So you wish to start your investment in the JSE top 40 but are a newbie.
The first thing to do is to find a certified broker and register with them. The JSE has a list of registered brokers for the sole purpose of offering stock brokerage services. Banks have also joined this business so it is possible to find some of them offering these services.
Once the registration is complete, the paperwork will follow as part of opening a stock trading account. The most commonly required documents include a copy of the ID, physical address, and bank account information. This is an important step since it helps the JSE counter money laundering risks.
That’s all the setup that is needed because next up, the investor can choose the preferred type of investment. Deep research is recommended here because there are so many options. Depending on one’s financial goals, there are Exchange-Traded Funds (ETFs), mutual funds, and individual stocks.
Finally, one can choose the most suitable investment platform, which can be a bank or trading platform like Admirals. Each platform has its pros and cons so weigh your options carefully. For instance, banks offer the highest convenience, but their fees could be higher.
Shares to Watch in 2022
If you are looking for the best shares to buy in the JSE in 2022, Gold Fields Limited would be at the top of the list. This mining company has perpetually performed well in the market. Away from the mining sector, there are popular shares such as Naspers, Anglo American Plc, and Tesla.
Conclusion
With this guide, even the most inexperienced investor is now ready to invest and become a JSE top 40 index investor. South Africa has an attractive investment climate, more so for those interested in the stock market.
