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Frequently Asked Questions (FAQ's)

Frequently Asked Questions (FAQ's) 

Consider the following Frequently Asked Questions (FAQ’s) to gain better understanding about investing in SPX listed entities.

Who may invest in Shares?
  • Investing in shares is not reserved for only the financial professionals, for the rich or companies.
  • Anyone who has savings can be an investor in the stock market, including school and university students.
What are the advantages/incentives of investing in Shares?
  • Tax-free dividends for resident & non-resident investors
  • No Capital Gains Tax applicable on gains made
  • Good hedge against inflation
  • Suitable for long-term financial goals
  • Liquidity - a ready market available 
  • Expert advice available from licensed stockbrokers
  • Regulated (RBF & SPX) – readily available information
  • Although past performance is not a guarantee of future performance, research has indicated that share investment outperforms all other forms of investment in the long term
What are the risks of investing in Shares?
  • Price Fluctuations – Active & Mid to Long-Term Investing are critical!
  • Liquidity – at times, finding a matching order may take time.
What kind of returns can I expect from share investments?
The money a person makes from an investment is called “a return”. In the case of shares, the return to shareholders can come from:
  • Dividends – companies pay part or all of their after-tax profits to their shareholders in the form of dividends. Companies typically pay dividends up to twice a year.
  • Capital growth – if the company performs well the shares may increase in value over time, allowing you to sell them at a profit.
What is the minimum amount of investment I can get started with?
There is no minimum amount to invest, however, usually as a first time investor, people have been seen to invest in amounts of around $500-$1,000 and then continue to build on their initial investment.

Once you meet with a licensed stockbroker and discuss your risks, investment objectives and financial circumstances, the licensed stockbrokers will be able to assist you further and provide recommendations on which shares best suit your investment objective.

What are some of the things to look for when analysing shares?
  • Historical and projected company performance - Revenues, profits, net assets, etc
  • Products and services -Demand, quality, competitiveness
  • Market share
  • Quality of management
  • Industry
  • Special advantages – economies of scale, trade secrets, R&D edge
When should I start investing?
How you approach the share market may depend on your investment horizon. When taking a long-term view, the best time to buy shares is not about timing the market but rather about time in the market. For those investors who have a short term investment timeframe, timing the market does become important as short term volatility may present trading opportunities. You can learn about the share market by observing it and keeping an eye on how your shares perform under different market conditions.

People often think they should put off the idea of investing until they get certain other things out of the way – finish their degree, get the kids in a good school or pay off the mortgage. If this sounds like you, remember that no matter how small your investment portfolio is at the start, it could be growing while you do all that. Finding the sources of investment funds now will mean that your investment will be significantly larger in the future than if you waited to start.

What happens when I buy shares?
When you buy shares in a company, you become a shareholder.This means that you become a part owner of that company.You do not, however, have to worry about managing the company. A board of directors and group of professional managers will do this. As a shareholder, you will be advised regularly about how the company has been performing. Listed entities are required to make regular disclosures to the public on matters that will influence its share price. All the market announcements, financial reports and other material information pertaining to all listed companies are readily available on the SPX website.
What are the costs of trading on SPX?
  • Consideration/Value = price * volume
  • Brokerage – broker commission - 1.5% of consideration or $30 minimum
  • SPX Fee & RBF Levy - Small fee for facilitating trading and investor compensation fund
  • Example:
     An investor wants to buy 600 ABC Ltd shares at $2.80, the investor cost would be (estimated)
   > Consideration = $1,680 (600 * $2.80)
   > Brokerage = $30.00
   > SPX facility fee & RBF levy = $16.80 (at 1%)
   > Total cost =$1,726.80 ($1,680+$30.00+$16.80)

What should I do after Investing?
  • Register for the Online Shareholder Portal through Central Share Registry and keep abreast with your investments
  • Maintain Your Investment Records
  • Monitor Your Investments Regularly – you can also visit the SPX website for the latest market information and announcements
  • Cut your Losses - Sometimes you will have to make an informed decision to take some losses on your investments rather than just hope that their performance will recover. Knowing when to sell an investment, even at a loss, is an important part of investing as well.
Can I sell my Shares when I want to?
When you invest in entities listed on the stock exchange, you have access to a liquid market for the shares. This means that you may sell your shares at any time that you to realize your investment, as long as there is a willing buyer for the same shares. If you want to sell your shares you must again use the services of a licensed broker who will place your sell order on the SPX Electronic Trading Platform.