Over the past few years, investing in the stock market has become more and more accessible for novice investors.

In this podcast, I speak to Moroko Modiba, managing director of Fatima Capital and author of The Wise Investor: The Beginner’s Guide to making money on the stock market, about the so-called “democratisation” of share trading.

“Many people see the stock market as an exclusive club or that only professionals understand it well enough to succeed, but really investing is more accessible than ever,” says Modiba.

We look at the implications of this growing democratisation of investing, and the importance for novice investors to have an investment strategy.

I was involved in setting up a trading desk for retail clients many years ago when I worked for a stockbroking firm. Private individuals were starting to invest for themselves and since then the democratisation has developed further, with the introduction of stockbroking platforms like EasyEquities, and even banks like FNB and Standard Bank offering low-cost, accessible ways to buy shares.

But in my experience, there is also a danger when people buy shares because they heard about some hot tip, but then they lose money and this puts them off investing.

Novice investors need to have a plan

It is important for all investors – experienced or inexperienced – to have a plan: make sure you know your reasons for investing in the market, and understand that this is not a get-rich-quick scheme.

There is no guarantee that you will be investing in the “next Capitec” – and in fact, early shareholders of Capitec had to sit out five years of poor share price performance before they saw the returns materialise.

We unpack how to create a core portfolio for just R150 a month and why buying into the market on a monthly basis is one of the best ways to invest.

And for those who want to do the extra homework and start buying individual shares, Modiba explains how to begin and how to analyse different companies. We also discuss the benefits of working with a stockbroker.

You can read more about investing for beginners by purchasing a copy of Modiba’s book.