Oran Hall|Investing in Common Stock | Business

Question: I’m interested in buying stocks, but I don’t know where to start. I saw your e-mail address on the Internet, so I am writing to you to find out more.


In Jamaica, shares trade on the Jamaica Stock Exchange (JSE), which is a company that facilitates and promotes the trading of shares and other securities listed on it. Trading is done electronically and not physically on the exchange.

Brokerage firms licensed to trade on stock exchanges execute buy and sell orders for their clients through their authorized representatives. For a list of stock brokers, see the JSE website (www.jamstockex.com.) You can also check the telephone directory under “Investment Advisory and Securities Service”.

Brokerage houses charge a commission for executing buy and sell orders. They also provide research and advice on securities to buy and sell, provide regular updates on market conditions, and help clients keep accurate records of their market transactions. Although the broker provides you with advice and information, you are ultimately responsible for making the decisions.

Before choosing a stockbroker, do as much research as you can, including talking to friends or acquaintances who have already dealt with those you might have an interest in engaging, and then maintain a keen interest in your account by keeping in touch with the broker. lodge.

You must open an account with the brokerage firm before you can do business with them. You can find valuable information on how to open an account as well as the forms needed to do so on its website. You will need to produce two references, proof of address and your tax registration number.

I suggest you first learn about the stock market: read, read, read. The Jamaica Stock Exchange has resources that can help you. It also publishes daily trading reports and news. There is a lot of information on the Internet about investing, but you have to be selective. Listen too. The electronic media also provide information on stock market activity.

Discover publicly traded companies. They provide a lot of information on their websites, but the JSE website ( www.jamstockex.com) is a very convenient place to visit. It contains current and historical data on listed companies. The information includes companies’ annual reports and most, if not all of these reports contain historical information about companies’ financial statements.

Learn more about the economy. Over time, you may develop a particular interest in particular areas of it. This is not bad because it will give you reason to watch certain companies in these sectors closely and buy shares of them.

Once you have chosen the stock you wish to buy, after careful research, you will indicate, preferably in writing, the number of units you want and the price you are willing to pay, but expect your broker asks you for a deposit of approximately 50 percent of the cost of your order when you place it.

You can place a market order, which specifies the number of shares you want to buy or sell at the best available price. You can also place a limit order, in which you specify the maximum price you are willing to pay or the minimum price at which you are willing to sell. You can choose to place a daily order, which is only valid for the day the order is placed.

Transactions are made in cash, ie you must pay cash or check for the share(s) you buy, and you must clearly own all the shares you sell. Trades are settled two business days after your broker executes the order.

Minimum order sizes vary. One broker, for example, requires a minimum of $25,000, but others require less. Another requires a minimum of 100 share units but charges a flat minimum commission. Once the order has been executed, your broker will issue a contract note giving details, including commission and other charges.

In addition to the stockbroker’s fee, there are fees payable on the Jamaica Stock Exchange: a trading fee which varies depending on the size of the trade; and a tax based on the value of the transaction. General consumption tax applies to all fees.

The standard is for securities to be held in electronic form, which is facilitated by the Jamaica Central Securities Depository (JCSD). This makes it possible to process transactions by accounting entry. Your broker will create an account for you at the JCSD from the information you provide for the creation of your broker account.

In summary, learn what you can about the economy and the stock market, including listed companies in which you may have an interest. Determine how much money you are investing. Select a stockbroker and make an appointment. Complete the account opening process and place your order. It is preferable to have an initial contact face to face although other arrangements can be facilitated.

– Oran A. Hall, the author of Understanding Investments and lead author of The Personal Financial Planning Handbook, offers personal advice and guidance on financial planning. Send an email to finviser.jm@gmail.com

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