Understanding Shares
A share represents a unit of ownership in a company, giving shareholders a claim to a portion of the company’s profits and assets. Shareholders may receive dividends, and the more shares owned, the higher the potential dividend. Shares can be held digitally through brokers, providing a modern and accessible way to invest.
Why Invest in Shares
Shares offer long-term potential for capital growth and dividend income, often outperforming other investment vehicles over time. They also provide a hedge against inflation. For example, R5,000 invested in a fixed deposit could grow to just over R40,000 in 20 years, while the same amount invested in the stock market with an average annual return of 18.3% could exceed R140,000. People invest for various reasons, including wealth growth, regular income, or retirement planning.
Types of Shares
- Ordinary Shares: Standard ownership with voting rights.
- Preference Shares: Priority on dividend payments and asset claims.
- Blue-Chip Shares: Large, financially sound companies with established reputations.
- Growth Shares: Companies with above-average expected earnings growth, often reinvesting profits rather than paying dividends.
- Value Shares: Undervalued companies with strong dividend potential.
- Income Shares: Low-risk shares providing steady income streams.
- Cyclical Shares: Sensitive to economic cycles, offering growth during booms.
- Capitalisation Categories: Large-cap (USD 10B+), mid-cap (USD 2–10B), small-cap (USD 250M–2B).
- Penny Shares: Highly speculative, low-liquidity investments.
- Rand-Hedge Shares: JSE-listed companies earning mostly in foreign currencies, providing protection against rand depreciation.
Getting Started
Investors can manage their own portfolios or consult an investment specialist for guidance. Exchange-Traded Funds (ETFs) allow diversified investment in multiple assets at lower costs, tracking indices such as shares, bonds, or commodities. ETFs trade like ordinary shares, making them ideal for beginners.
Start Investing
Standard Bank provides an easy-to-use Online Share Trading platform offering a range of trading services and investment solutions. It is designed to help investors grow their portfolios while matching their individual risk profile, objectives, and financial circumstances.