Shares Are For All

Think of the stock market as a busy marketplace where companies sell tiny pieces of themselves, called shares, to people like you. Buying shares means owning a part of that company, sharing in its profits and having a say in its future. You don’t need to be rich to join; start small with just 100 shares through trusted agents called stockbrokers.

While prices can rise and fall, investing wisely could grow your money over time and even earn you extra cash called dividends. It’s a way to turn spare cash into future opportunities. These questions will get you started.

1. What is a stock market?

A stock market is a formalised platform that serves two purposes:

• It allows companies to raise money by selling part of the company (called shares) to people or businesses (investors) who want to own a part of the company (invest) and make a profit.
• It gives investors a safe and organised place to buy and sell shares, with clear rules to make sure everything is fair and open. Once you’ve bought shares, you can also sell them on the same platform, using the same fair and open process

2. What are shares, and what do they represent?

Shares are like small pieces of a company. When you buy a share, you become a part-owner of that company. This means:

• You have a right to a portion of the company’s profits (or losses), depending on how many shares you own. The more shares you have, the bigger your share of the profits.
• You also get the right to vote in important company decisions. The more shares you have, the more say you get.

So, when you own shares, you’re not just a customer anymore, you’re an owner.

3. Who can buy these shares in the Stock Market?

Anyone can invest, not just the rich! That’s a common myth.

If you have some extra money, instead of spending it on more clothes, fancy phones, or even more livestock, you can use it to buy shares. It’s another way to grow your money and build wealth over time.

4. How much can I buy?

What’s important to understand is that everyone’s situation is different. Some people will be able to invest more money and buy more shares, and others less, and that’s okay. What matters is starting with what you have.

You can invest any amount you can afford, as long as you buy at least 100 shares in a company. That’s the minimum.

5.    How can I buy the shares of companies on the Stock Exchange (BSE)?

You can’t buy or sell shares on the stock exchange by yourself. You need to use someone called a stockbroker, who is a trained and registered agent who is allowed to trade shares for people.

The stockbroker helps you buy or sell shares at the Botswana Stock Exchange (BSE) and gives you advice if you need it.

6.    Who is this stockbroker?

In Botswana, there are two main stockbrokers you can use:

• Motswedi Securities
• Imara Capital Securities

7.    What are the costs of buying or selling shares?

When you buy or sell shares, there are some fees you need to pay:

• Broker’s commission: This is a fee you pay the stockbroker for helping you. It can be different, but it won’t be more than 1.85% of the value of your trade.
• Handling fees: You pay P15 when buying shares and P10 when selling shares.Other fees collected for the stock exchange:BSE transaction fee:
• 0.15% on trades up to P5 million
• 0.12% on trades above P5 million
• CSD transaction fee: 0.1% of the trade value
• VAT: 14%

These fees cover the costs of running the stock market and making sure everything works smoothly.

8.    What are the benefits of investing in shares?

When you buy shares, you are making an investment. This means you give up spending your money now so you can hopefully earn more money later.

There are two main benefits:

• Capital growth: The value of your shares might go up over time, so if you sell them later, you could make a profit. You can sell your shares anytime you need cash.
• Dividends: Some companies pay you part of their profits regularly while you own the shares. This is called a dividend, it’s like getting extra income just for owning the shares.

9.    What are dividends?

Dividends are a share of a company’s profits paid to its shareholders.

• How much you get depends on how many shares you own.
• Dividends are usually paid twice a year, but some companies pay four times a year.

Sometimes, a company may decide not to pay dividends, for example:

• If the company lost money during that period.
• If the company wants to keep the money to grow the business instead.

10. What happens to the price of the shares I have?

Price can go up or down.

Generally, the hope is that prices increase over time. People invest in shares hoping that their value will go up. If you sell your shares for more than you paid, you make a profit. This increase in share price is one of the main reasons why people invest in the stock market.

11. What if the share price goes down?

Just like any investment, buying shares comes with risks.

The price of shares can go down after you buy them. This means if you sell when the price is lower than what you paid, you could lose money.

Before you panic and sell your shares quickly, it’s important to understand why the price dropped. Sometimes, selling in a hurry can make prices fall even more, causing bigger losses.

*Source of information: Motswedi Securities