Investing in JSE shares: What you need to know

Investing in shares is one of the best ways to create wealth over time. However, many investors find it overwhelming to know when to buy, hold, and sell.

Many people make the mistake of believing they should only buy when the market dips, hoping to capitalise on lower prices. This is a short-term investment mindset that can easily lead to missed opportunities.

When it comes to owning shares, adopting a long-term perspective allows you to benefit from the inflation-beating returns that this asset class provides.

Wendy Myers, head of securities at PSG Wealth, provides tips on how to invest in shares.

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How to buy shares

She says investors need to open an account with a registered stockbroker to buy shares. Once the account is opened, it must be funded before a trade can be made, meaning the investor places either a “market” order or a “limit” order to buy the shares.

“Shares are the best-performing asset class over the long term, offering inflation-beating returns.

“However, they come with risks, including market fluctuations in response to macroeconomic events such as interest rate hikes and inflation, as well as company-specific downturns such as CEO resignations or, in the worst-case scenario, fraud allegations.”

Myers advises investors to conduct thorough research before buying shares. A reputable stockbroking platform will provide reliable research that investors can reference before trading.

This research guides the investor in identifying the best buying points and highlights the potential upside.

Purchasing shares directly

She adds that unit trusts and exchange-traded funds (ETFs) offer investors access to a diversified basket of shares at predefined percentage allocations.

“The benefits of buying shares directly are that the investor can choose (based on his risk profile) which shares he wishes to invest in, in which sector, and the percentage allocation in the context of the full portfolio. 

“The investor can also decide when to purchase the share, should he want to capitalise on short-term market fluctuations.”

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Holding period

Myers says a buy-and-hold strategy is recommended to benefit from long-term growth when investing in a solid company.

Financial experts generally advise holding shares for a minimum of five years to ride out market volatility and maximise returns.

“Reviewing your portfolio annually is also wise to ensure no share exceeds a 5% allocation.

“This strategy helps maintain diversification and reduces exposure to excessive risk. If any stock grows disproportionately in value, you may need to rebalance your portfolio by selling a portion.”

She adds that investing in shares requires emotional resilience.

“It is quite normal for share prices to fluctuate by 1% to 2% every day. For new investors, the market’s occasional 3–5% swing can be unsettling.

“So, it’s important to exercise patience and focus on your investments’ potential for long-term growth. Speak to a certified financial adviser to assist you in paving the best route for your journey to financial wealth.”

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