So, you’ve heard the good news about investing in the local stock market, or maybe you’ve just been budgeting properly and have some extra cash you want to invest, or maybe you simply got tired of your bank’s joke of an interest rate and have decided that you need to have your money make you money. Well, regardless of the reason, this is Randy’s Quick and Dirty Guide to Investing in Jamaican Stocks.
Now this guide won’t make you a top trader just by reading it. Instead, this guide is aimed at those who want to know how to get started buying stocks on the local stock market. So, without further ado;
Step 1. You Need A Broker
So, buying and selling shares on the Jamaica Stock Exchange (JSE) requires a middleman of sorts. You can’t just trade shares off the exchange on your own so you have to instruct your broker to trade for you. The broker then checks the exchange, sees if the shares you want are available, buys them in your name, and charges a small fee for doing this, along with collecting any applicable taxes for the government. Having a good broker is important as they are going to be your constant touch point when investing. The JSE has 12 brokerage houses registered. You can see them listed here.
Different brokers have all have different pros and cons, so you’ll have to do your research on choosing the one that’s right for you. Most brokers however, have websites listing their benefits and are all willing to take your calls and explain their features. I have been a long time customer of Jamaica Money Market Brokers (JMMB) so I’ll be using that as my default while explaining this process. However, regardless of who you choose, the steps will be very similar.
Step 2. Opening the Account
You want to go to them, and ask to open an Equity Account (or Stock Trading account, or Securities Account, etc., etc.). Many brokers call their equity accounts different things, but once you explain that you want to trade stocks, they’ll know what you mean…then they’ll likely try to dissuade you. Brokerage houses prefer to put your money in one of their investment products since they make more money off you that way. Look out for this dissuasion. It will likely start with, “Are you sure? Stocks are dangerous, you could lose all your money! You need an expert to analyse the market for you. Why not try our <insert internal product which makes them at least double whatever they’re guaranteeing to give you here> instead?”
Don’t get caught by this, press on and get your account opened.
They will likely require the following things:
- Completed Application Form
- Proof of Identity (Valid Gov. Issued ID, some may ask for 2)
- Tax Registration Number
- Proof of Address (A bill or 2 in your name, at your address)
- Proof/Source of Income
- References for you (This varies depending on the broker. JMMB accepts references from other long standing clients. Whoever you choose will tell you who they accept.)
- Money $$$$$$. All accounts require some money to get started, the minimum is set by your broker. (JMMB’s minimum amount is JMD$10,000)
Be prepared to supply these things to get the account open. If your broker has an online trading platform (its 2016, they should have one) then you will also want to sign any indemnity forms that they may have. These forms allow you to instruct your broker on trades using communication tools (emails, faxes, phone calls etc). Ask for and sign every applicable indemnity form they have. This may save you a world of headaches later on.
Step 3. Respect the Research!
You now have the broker, the account and the money. Technically you can start trading right away, but a smart investor does their research, so save these tools for your future use as they’ll come in handy..
Step 4. Profit!
We’re in this to make money, never forget that. Profit is the motive. Follow the steps, get the account open, and profit will follow.
Here’s a quick summary of what you need to get started trading stocks in Jamaica.
- A broker.
- Account Opening Prerequisites.
- Completed Application
- Proof of Address
- Valid ID(s)
- Source of Income
- Indemnity Forms
- News Sources/Portfolio Tracker
This article originally appeared on EveryMickle.com.