Buying Stocks in Jamaica
What are Shares / Stock?
Before someone even thinks of buying stocks in Jamaica (or any country), an understanding of what exactly are stocks/shares and the stock market (eg. the Jamaica Stock exchange) is critical to investing successfully. Owning shares, gives the stockholder a claim on its assets and profit. When a business grows, if all other factors are equal (ceteris paribus) a stockholder can sell the stock for a higher price and receive a profit. However, the converse is also true in that if a business is not doing very well the value of the stock can plummet and cause the shareholder to lose if the shares are sold.
How can money be earned from Stock investing?
Money is earned from stocks in two ways
- Stock Price Appreciation
Stock Price appreciation
Of the two ways to earn money from stocks, earning from this method depends on the operating environment, and this can be very subjective and therefore more volatile because the stock price is primarily based on other investors’ perception of the stock. Regardless, this is the method that is common to all stock on an established stock exchange. Stock appreciation is basically standard economics, when you have a large number of buyers (and few sellers) the stock price goes up and when you have a large number of sellers and few buyers the price goes down (generally). Stock exchanges such as the Jamaica Stock Exchange are different in that sometimes when the general investor sentiment is low (e.g. the recently concluded debt swap; the recent depreciation of the Jamaican currency) stocks that should perform (based on proven profitability in their financial statements) are sold at lower prices as investors seek to ‘flee’ the stock market.
Dividends are generally more stable in that you can normally get an idea of how much money you will be earning periodically as firms normally declare when they are giving out dividend payments to shareholders so a shareholder can analyse a firm’s previous pay-outs to determine what they can expect in the future.
What are the costs for buying stocks in Jamaica?
Buying stocks in Jamaica (and selling) incurs the following costs
- Commission to the Stock Broker: – which is normally about ~2%
- JSE Cess: – 0.20% on the Principal (gross amount to be invested)
- JCSD: – paid based on the size of the transaction
- GCT: – 16.5% paid on all fees
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Just respond via email if your still available
please give me some info about buying stock in jamaica
Good morning Shane i would like to do some investment in jamaica stock market. i am new to the business can you guide me
hi shane, i recently purchased some stocks at vmbs but i dont quite understand how would i know if its time to sell etc i would love to converse with you if possible.
Good afternoon Kyle, As I stated in my linked-in message it really depends how long you intend to hold the shares for. If you intend to hold when for the long term, then you will likely sell it in a few years time if the price has appreciated sufficiently. In instances where the price of the stock is overvalued (e.g. [Simplified example] An instance where the company is significantly less profitable year-over-year) but the price continues to rise you may want to consider selling. Also bear in mind that each time you buy and sell you have to pay fees so you may not want to do any unnecessary trades. Hope this helps.
Hi Mr Miller…. As a Patriotic Jamaican I’d like to invest in my country. However, separate and apart from reading about JSE I’d love some more information. Is it possible to communicate via email? Thanks in advance.
Hello, yes please check your email.
Can you do day trades(penny Stocks) on the jse successfully ?
You can do multiple daily trades on the JSE but you have to be mindful that each transaction you do which incur fees for both buying and selling.
?l had bought$2,000 worght of c shares in the vmbs from 2001,i have never sold my shares at anytime, it now 2017 what are my shares worth if any
I’m quite sure as VMBS is not currently listed on the JSE or has ever been listed.
Hi, I am interesting in buying stocks but need further advice. Is it possible to converse via email?
Check your email.
Good morning Shane i would like to do some investment in jamaica stock market. am new to the business
Please refer to reply to Tajera below.
Good morning Shane i would like to do some investment in jamaica stock market
Please refer to reply to Tajera below.
i am interested in buying shares but i dont know much about the stock market and the performances of the businesses listed. could you please give me some well needed advice and gudance as to how to gom about this
I recommend (FAQ):
1. Read up on investing in the stock market and investing in general [most important] – I recommend Security Analysis – David Dodd
2. Consider doing the stock market game before investing
3. Remember to factor in fees, remember to diversify sufficiently and keep in mind that we are in a bull market now (stock prices are rising) so stocks may/may not be overvalued.
4. Consider all your investment options (e.g. Managed funds such as unit trusts or packaged investment products, these are generally relatively diversified and have varying degrees of risk.)
All the best.
Hello Mr. Miller! I have a question that I would like to ask, the thing is I was hoping to communicate with you via email. Please let me know if this is possible. Thanks in advance.
Good morning Tadesha, I sent you an email.
How are you doing Mr Shane Miller? I would like to start invest in my country (Jamaica) stock market but I notice there are more companies Delisted, than there are actually listed.. what advice do you have for me, invest in the US or in Jamaica stock market??
Are what other investment are there in jamaica bonds, fix income, bank of Jamaica CD….. etc
I have $2000.00us to start…
I await your reply… thank you
Hello Kevin, I’m good. Well it depends on how much time you have to monitor your investments and your experience. The stock market is doing good now so conventional wisdom normally would push you not to invest since most stocks could be overpriced. If you don’t have time to monitor then unit trusts are generally a good investment. Re US/Jam stocks generally its easier to see the impact of an entity when you are in the same country so you can see the impact of polities, general consumer perception of the brand and other subtle things that’s not as easy for a foreigner to see.
Hey am Jevon, could you direct me to where would be the ideal place to see how companies are performing in the Stock Market? Am thinking of buying 10,000 units in Proven Investments Limited. Is this viable?
Good morning Jevon,
Unfortunately I’m unable to speak to that particular investment for legal reasons, however:
The places that can help you research are:
or various brokers
Maberry has a good daily recommendation
Good morning Shane,
I have purchased shares in two companies (NCB & Caribbean Cement Company), I have requested a summary of earnings from dividends from the representatives at the Stock exchange and have not been successful in obtaining the summary.
What are my other options for getting the information in an effort to use the dividends to purchase additional shares or options in other better performing companies?
Good morning Patrick,
This information can be best obtained by contacting the companies directly, looking at information from the JSE website or contacting your broker.
I actually looked on the JSE to obtain this information for you:
1. NCB – JSE Dividend Information
2. Carib Cement – JSE Dividend Information
As you will notice, Carib Cement hasn’t paid any dividends since 2004 which is likely due to the losses it incurred around that period. Additionally NCB has been paying dividends consistently.
Note, perhaps you should consider obtaining this information before you purchase stocks in the future.
All the best.
hello mr miller my name is keallia, i would like to know the best way or institution to invest in gold or oil.i was about to buy gold online oversea but if i do that i would not have a ligetimate company in jamaica to sell it to after while .i am not comfortable with the idea to go to a shop on the coner to sell my gold bars.i would like to do this investment for my children college and university years .what is right amount of money to start with .i really need some good advise
Sorry for the extremely late reply. Normally to invest in gold you would to invest in a ETF fund (” is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund”), you’d have to speak to an adviser to get the specifics on that. Also consider getting a specific university saving product (e.g. some companies such as NCB or JMMB have savings plan with the goal of saving for your children). Buying and selling gold directly is as you indicated is very risky, however buying this way would be less riskly.
Looking to invest in the stock market; not sure how to decide on a broker. I was advised to avoid banks in particular, whats your advice?
Good morning Kashaine,
Recently (2015) the Jamaica Stock Exchange launched its online trading platform that allowed customers from most institutions to trade on the stock exchange (previously only institutions like JMMB had this facility).
As a result of this, choosing a broker is not as critical as it used to be as you have full control over which securities you buy/sell.
So simply choose an institution that has the online trading (most of them do) then tell them that you want no broker assistance in choosing trades (most fees are the same but I believe commission for some institutions differ).
If I’m to use $20,000 about how much money would would I make within a 10 year period??
Good afternoon Orlando,
It really depends on what stock(s) you are buying and the price movement over that period. It can’t really be known how the stock exchange will do in the future.
Looking at the past however, the stock exchange has been largely flat with the exception of brief periods of extremely high growth (for example now).
To illustrate my point, look at this site (Trading Economics)
then click on either “10 year” or “MAX” you will notice that while it has been trending up in 2000 and 2015, holding stock from 2005 to 2015 would have given you a huge loss (Note: This is the index as a whole, individual stocks may/will perform better or worse than the index).
I’m thinking of investing in stocks and bonds but i didn’t realize that there was so much fee and in particular the GCT is 16.5%. I’m doing a rough calculation of an overall 20% in terms of associated fees when buying or selling stocks?
I’m askking can this investment ve profitable?
Hey Kevin, it depends on how long it takes for the investment to grow past that the initial cost.
Here is a ruff stock calculator that I had made a couple years back, the fees are not up-to-date but it should give you a ruff estimate on profits. (http://shanemiller.com.jm/wp-content/uploads/Portfolio-Analysis-MACRO-14-11-2016-ShaneAndreMiller-1.xlsm) I’m hoping to update it in the future.
Thanks. I am trader and I was clueless of how they calculated the gct. I thought trading had a different gct based on the value of your purchase, now I know it is 16.5% of the JSE, JCSD and Commission fee add together.
You are most welcome, next year I’m going to try and try to setup a online stock calculator on the site, after I hopefully finish the CPA exams.
All the best with your trading though Darneillia!
hi my name is akeem. And i would like to know, what is the least amount of money I need to start an investment in the JSE.
Good afternoon Akeem,
Generally you have two points at which you are limited in terms of starting an investment in the JSE.
1. Start up Account Cost (JMMB is $10,000 JMD or $500 USD according to JMMB’s website and my personal experience (I have a JMMB account), NCB is $25,000
2. Minimum number of units allowed per transaction (100 units per transaction)
Bear in mind also that when you buy stocks you also have various fees that you have to pay various fees:
Note that the JSE now has an easy sign up page where you can see all your transactions and portfolio online (in fact for some of the institutions that is how you will get online access to your portfolio), previously only certain institutions (such as JMMB) had such a feature.
I had no idea there was so many Associated fees involved with purchasing stocks I pretty much knew that would be a commission what are the GDs fees and all those other things about and how much are they