A Quick & Dirty Guide to Investing in the Jamaican Stock Market
So, you've heard the good news about investing locally, 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 wont 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 middle-man of sorts. You can't just trade shares off the exchange on your own, 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 15 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. Regardless of who you go with the steps and required documents 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 like, "Are you sure? Stocks are dangerous, you could lose all your money! You need an expert to analyze 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.
Be prepared to supply these things to get the account open. If your broker has an online trading platform (its 2022, they all 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, especially the dividend mandate as this allows you to get dividends delivered directly to your bank or brokerage account instead of having the cheque sent to you and having to go deposit it yourself. 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 and gets some knowledge before starting out. So save these tools for your future use as they'll come in handy..
Education
JSE’s Overview - The JSE has a nice little overview for people new to the market, Check it out at the link. They cover a few of the early questions that anyone might.
GRWR - I teach a Beginner Investing Course called GRWR (It stands for Grow Rich With Research). I’ve been doing it since 2019 and at this point I’ve taught over a thousand people how to get started and how best to approach the stock market as a regular person regardless of your level of finance knowledge. If you want an idea of what a GRWR class is like, click here. If you’re sure you’re ready and you want to dive right in then click here to sign up for the next GRWR sitting. GRWR is usually done monthly and attendance is via live streaming. Further details can be found via the link.
Business News
Tracking Tools
MyMoneyJA.com <— The best option.
Randy's Investment Tracker (NO LONGER ACTIVELY SUPPORTED & REQUIRES: Excel 2013 or later)
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 JA.
A broker.
Account Opening Prerequisites.
Completed Application
Proof of Address
Valid ID(s)
Source of Income
Indemnity Forms
Money
www.MyMoneyJA.com or the old Excel Portfolio Tracker <- (REQUIRES: Excel 2013 or later)
Stay tuned to www.everymickle.com for more on investing locally. I plan to cover strategies, things to know, basic tips, my personal picks and whatever else you guys may want to hear about. You can also follow me on Twitter where I tweet every year or so, but take questions whenever asked.
See you next time!