Investing in Stock Market is a great way to earn extra cash. You can do stock market trade as a self employment, or, if you are a student, then you can do this while studying for higher education to save for future or to cover your education expenses.
If you think you're too young to invest, or that you don't have enough money, think again. Because online investing has made the process so simple and accessible that almost anyone can do it starting with small amount of funds. However, you should be responsible and disciplined, because sometimes the potential risk involved is generally greater than the returns.
Step 1 - Study the Basics:
First learn basics of stock market trading. There are various online guides on investing. Basic information on Colombo Stock Exchange can be gathered from CSE web site. http://www.cse.lk/. You can also follow a course conducted by CSE or participate in open days conduced by them.
Read the Investor Guide book by CSE online: https://cse.edu.lk/publication/view/investor_guide
School Brochure https://cse.edu.lk/publication/view/school_brochure
Learn to invest in stock market by playing Colombo Virtual Stock Exchange (VstoX) stock market simulation game. The VstoX provides a platform for players to engage in buying and selling of shares of publicly listed companies listed with the use of virtual cash for free.
Step 2 - Select great businesses to invest and learn when to buy and when to sell
Selecting best stocks for investment is not a simple procedure. We will have to study and analyse few facts before we invest in stocks.
The Colombo Stock Exchange (CSE) has 296 companies representing 20 business sectors as at 04th April 2017, with a Market Capitalization of Rs. 2,703.8 Bn.
In my other post you can read on listed companies in CSE based on Market Capitalization, and what are S&P 20 companies, and Whether you should invest in large company or small business.
Selecting a best available stocks (Company) to invest, involves analysis of data. Following criteria will help you in selecting stocks.
* Earnings Per Share (EPS) and PE Ratio
* Book Value Per Share (BVPS)
* Profit Margin (Divide the Net Profit with Revenue)
* Return on Capital Employed and Return on Equity (ROE)
* Dividend History
* Profit Growth
* Cash Flow Details
* Business Segment and Growth Potential
* Size of the Company
* Competitive Advantage In the Market
* Brand Value and Product Differentiation
* Economic Atmosphere of the Place of Main Operation of the Company
* Political Influential Factors of the Country
These data are available on company web sites, your stock brokers site
or financial website such as Bloomberg, Financial sites such as Google Finance, Yahoo Finance and MSN Money are great sites to get financial data, however they do not have data on Colombo Stock Exchange.
UPDATE 2017 March: Many of those sites do not support CSE now. You can check CSE website for Market Data:
DAILY SHARE TRADING STATISTICS (DETAILED) OF COLOMBO STOCK EXCHANGE
Bloomberg, an excellent authoritative site on global financial data, provides price, stock chart, company news, key statistics, company profile and other data on Sri Lankan companines. You can type company symbol followed by :SL to check data on a Sri Lankan listed company. For example if you type COMB:SL in the search box of Bloomberg site you will get details of Commercial Bank of Ceylon http://www.bloomberg.com/quote/COMB:SL.Bloomberg does not support CSE now (2017 April).
Step 3 - Start Brokerage Account and start trading stocks
When you have studied the basics, now it is the time to set up an online brokers account with one of the Sri Lankan stock brokers. Then you can start buying stocks. Focus on trading activities daily, it has lot of action, and changes throughout the day. The stock market will go up and down. So invest wisely.
How to start investing?
To start trading in Colombo Stock Exchange, you need to open a CDS (Central Depository System) account by filling necessary forms with one of the Stock Brokers we have listed below. Once you have setup your account, you can then place share trades with your investment advisor who will execute it on your behalf or you can directly place orders thorough your online trading platform.
If you are a resident individual, you need to fill following forms
CDS Form 01 CDS-1 CDS-26 CDS-27-A
CDS Form 01(A) CDS-1(A)
LSL KYC Form LSL KYC form
Joint Application (optional)
and submit along with
Proof of identity: A clear photo copy of National Identity Card or A copy of a valid Passport
Proof of residence: A latest copy within 3 months of proof of address is required.
Copy of the NIC could be used as a proof only if you are still residing in the address appearing in the NIC.
If you are first time Investor then consider following factors in selecting your first broker.
Minimum amount - Most brokers have minimum balances for starting a brokerage account.
Withdrawal - Check whether you can withdraw you money easilty. That's because brokers sometimes charge fees to make a withdrawal.
Fee Structures - While most brokers have similar fee schedules, some brokers have complex fee structures that make it harder to sort out hidden fees.
Online Account – While some brokers may not change a minimum fee some Sri Lankan Brokers need you to maintain at least Rs 500,000.00 start an online brokerage account. It is better to check and select a broker who does not charge your for online trading account.
Investment Adviser – Your broker will provide you an investment advisor.
Please comment below on your experiences on Trading Brokers.
List of Stock Brokers in Sri Lanka and their websites
|Acuity Stockbrokers (Pvt) Ltd.||http://www.acuity.lk|
|Asha Phillip Securities Ltd.||http://www.ashaphillip.net|
|Asia Securities (Pvt) Ltd.||http://www.asiasecurities.net|
|Bartleet Religare Securities (Pvt) Ltd||http://www.bartleetstock.com|
|Capital Alliance Securities (Pvt) Ltd.||http://www.capitalalliance.lk|
|CT CLSA Securities (Pvt) Ltd||http://www.ctsmith.lk|
|Assetline Securities (Pvt) Ltd.||http://www.assetline.lk/stock_brokering.html|
|First Guardian Equities (Pvt) Ltd.||http://www.firstguardianequities.com|
|Claridge Stockbrokers (Pvt) Ltd||http://claridgestockbrokers.com/csb/Home.aspx|
|LOLC Securities Ltd||https://online.lolcsecurities.com/atsweb/login|
|J B Securities (Pvt) Ltd.||http://www.jbs.lk|
|John Keells Stock Brokers (Pvt) Ltd.||http://www.jksbonline.com|
|Capital Trust Securities (Pvt) Ltd.||http://www.capitaltrust.lk|
|Lanka Securities (Pvt) Ltd.||http://www.lsl.lk/onlinetrading.php|
|S C Securities (Pvt) Ltd.||https://itrade.sampathsecurities.lk/atsweb|
|SMB Securities (Pvt) Ltd.||http://www.smbsecurities.lk|
|NDB Securities (Private) Ltd.||http://online.ndbs.lk|
|First Capital Equities (Pvt) Ltd.||http://184.108.40.206/TradeWeb/|
|Taprobane Securities (Pvt) Ltd.||http://220.127.116.11/atsweb|
|Navara Securities (Pvt) Ltd.||https://trading.navarasecurities.lk/atsweb/login|
|TKS Securities (Pvt) Ltd.||http://www.tks.lk|
|Candor Equities Ltd.||https://online.candor-holdings.com/atsweb/login|
|Enterprise Ceylon Capital (Pvt) Ltd.||https://onlinetrading.ecc.lk/|
|Nation Lanka Equities (Pvt) Ltd.||www.nlequities.com|
|Softlogic Stockbrokers (Pvt) Ltd.||www.softlogicequity.lk|
How to Invest in Colombo Stock Exchange - In Sinhala
You can read key points in this article by watching this video in Sihala.
How Mr. Dhammika Perera started investing in CSE Stocks
Mr. Dhammika Perera is a billionaire businessman who controls the Vallibel One Group, one of the most successful Stock Investor in Sri Lanka.
Download and use CSE Colombo Stock Exchange Mobile App
Colombo Stock Exchange Education also contains more learning resources
Download Basic Guide to Investing in Shares published by CSE http://www.cse.lk/pdf/CSE_Guide_Book_English.pdf
Now its your turn to start investing in Colombo Stock Exchange, Start investing even if you have a limited funds. You do not need Rs 50,000 or more to start an CDS account. Contact one of the Stock Broker company and start investing NOW. Go to one of the websites above and give a Telephone Call.
Please share your experiences below in our comments section below.