Investing in the share market is one of the best ways to invest in big companies of Sri Lanka, have you ever thought of investing in big companies such as John Keels Holdings, LOLC, Carson’s etc., do you think it is not possible? You are wrong If your answer is yes, investing in all big companies is possible with share market, thanks to the Colombo stock exchange, investing in all major players in the country is possible and investing in share market literally makes you one of the owners of the company you invest in.
As most of us think, investing in share market is not a big deal, you just need to open two accounts and have some excess money to start on, share market is a place where lots of millionaires born and also it’s a place where people lose a lot. It is always better to test and master the art of trading before you invest big. This article will guide you through the process of entering the stock market and help you to start investing in the share market.
The Colombo Stock Exchange (CSE) has 295 companies representing 20 business sectors as at 31st January 2017, with a Market Capitalization of Rs. 2,701.6 Bn. This first chapter guides you through opening the CDS (Central depository system) and stock broker account.
Step one – Find a Stock Broker
You should have a stock broker to buy and sell shares in the Colombo stock exchange, there is approx. 25 registered stock broker firms available and find a stock broker who will provide you valuable insights about the share market movement. A stock broker will play the intermediary role between you and the stock exchange. Make sure to do a small research about the stock broker, online trading and daily, weekly research insights are much required to start as a new bee.
To find information about stock brokers: http://www.cse.lk/home/tradingMembers
Step Two – Open your CDS Account and Stock broker account
Opening a CDS account is not a big deal, you just need to submit relevant application forms to the stock broker of your preference and your stock broker will do the needful. You can start buying and sell shares through your stock broker once the CDS account is open. CDS shall forward a monthly statement to the account holder if such account was active during a particular month (monthly statement). An Active account shall be an account with at least one transaction (purchase/sale/ deposit/withdrawal/transfer) during the particular month.
Step Three – Start investing with small amount
You are all set to start buying and selling shares Once your accounts are active, don’t be in a hurry to buy and sell shares, select few companies and invest a small amount and observe, most of the stock brokers will advise you to use the online trading, or you can call your stock broker and ask them to buy or sell your preferred share.
Remember, your stock broker will never hold the liability for your profit or lose, they will receive their broker fee irrespective of your loss or gain, therefore make sure to use your own analysis, you should check share prices and observe market activity regularly. You can do it by calling the stockbroker, going through daily newspapers, by accessing the website of the Colombo Stock Exchange (CSE) www. cse.lk or by accessing your stock broker’s website., the investment advisor shall not buy/sell shares without your instructions. If there is a query, please contact the Compliance Officer of the stock broking company immediately.
Share market investment is high risk associated and you should not invest all your savings or emergency funds as you may end up losing. I must quickly remind you that this is a simple guide to start investing in share market and you have to learn a lot to master the art of investing in stocks. You have to learn about different type of boards, different types of indices and different types of stocks. We will look at more advanced learning on share market investment in upcoming chapters.
Disclaimer: The information contained in this article is for informational purposes only, should not be considered as an investment advice. Always make sure to do your own research, talk to your financial advisor and/or seek independent advice where appropriate & necessary.