BY GCWALISILE MHLABANE
MANZINI– At a time when many people are unsure where to safely invest their hard-earned money, while investment scams and promises of quick riches continue to leave some counting losses, prospective investors have been urged to take a step back and understand exactly what they are buying before investing in shares.
ALPHSZ Group Chief Executive Officer Thandile Nxumalo has advised EmaSwati interested in investing through the Eswatini Stock Exchange (ESE) to carefully assess their financial goals, risk appetite and investment horizon before committing their money to equity.
Nxumalo said buying a share should never simply be about following a trend or chasing quick returns, but should be an informed decision based on a clear understanding of the company, its sector, performance and the risks attached to the investment.
“Buy a share. I think it’s very important to always understand what you’re buying, and we need to make sure that you understand what you’re buying,” she said.
She explained that companies listed on the Eswatini Stock Exchange operate across a range of sectors, presenting investors with different opportunities depending on the type of business and industry they wish to support and invest in.
“If you look at the shares that are listed on the Eswatini Stock Exchange, they span a number of sectors. You’ve got shares in finance, shares in the construction sector and shares in the agricultural sector,” she said.
Nxumalo said the starting point for any investor should therefore be identifying what they want from their investment.
“We need to find out from you, what do you want? What sort of company do you want to invest in? What sort of sector do you want to invest in?” she said.
However, she stressed that choosing a company or sector was only one part of making a sound investment decision.
Before buying a share, Nxumalo said investors must have a clear understanding of the level of risk associated with the investment and whether that risk matches their personal financial circumstances and expectations.
“Are you clear that you understand the risk profile of what you’re buying?” she asked.
Explaining the different levels of investment risk, Nxumalo said cash is generally regarded as one of the least risky investment options, followed by bonds, while equity carries a higher level of risk.
She said this makes it essential for investors to understand that purchasing shares requires careful consideration and should be aligned with their ability to manage potential market fluctuations.
“We’re going to make sure that you understand the risks associated with your equity,” she said.
Nxumalo further urged investors to look closely at the company behind the share before making a commitment.
This includes understanding the company’s management, reviewing its historical performance and considering whether it has a record of paying dividends.
“We’re going to make sure that you understand the management of the company that you’re buying into, their historical performance. Are they paying dividends? Aren’t they paying dividends?” she said.
She also emphasised the importance of investing money that an individual can afford to commit for a meaningful period.
Unlike cash, which may be accessed more readily, equity investment should not be approached with the expectation of buying today and immediately selling tomorrow.
“When it comes to equity, unlike cash, we don’t want to put an investment today and sell tomorrow,” Nxumalo said.
“When you go with a share, you want to be able to keep it for a year, two years, three years. For us, it tends to be a more long-term investment horizon.”
The ALPHSZ Group CEO said understanding an investor’s time horizon was therefore critical in determining whether an equity investment was suitable.
“We need to understand your investment horizon. This money that you have, what do you want it to grow into?” she said.
Nxumalo explained that once an investor has identified their objectives and chosen a sector, the process can then focus on finding the appropriate share.
Using FNB Eswatini as an example, she said an investor who identifies a preference for financial services can then make a more deliberate decision based on their chosen sector.
“If you’ve told us that you want to invest in FNB Eswatini, then you’ve told us you want to invest in a financial services share. Then we are like, perfect. We now need to find a seller of that share,” she explained.
Her advice carries a timely message for aspiring investors: wealth creation through the stock market is not about chasing overnight success, but about making informed decisions and allowing investments time to grow.
For EmaSwati looking to take their first steps into investing, the key message is clear – know where your money is going, understand the risks, study the company and give your investment time to grow.
In an environment where uncertainty and misleading promises can easily influence financial decisions, knowledge remains one of the strongest tools an investor can carry.
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(Courtesy Pic)
