Be accompanied by an approved intermediary
The function of financial intermediary is regulated on the stock market of the West African Economic and Monetary Union (UEMOA). It is carried out by Management and Intermediation Companies (SGI) which are the only ones authorized to trade in transferable securities listed on the BRVM (UEMOA Regional Stock Exchange). They are approved by the CREPMF and must provide proof of an approval number granted by the latter. Make sure you conduct your stock market transactions with such intermediaries.
FGI is a licensed management and intermediation company.
Invest only part of your capital
Given the risk incurred, individuals should invest in the stock market only the portion of their savings which they can do without and which, in the event of a loss, will not lower their standard of living. It is important that he does not invest the income that he should have available for his day-to-day needs.
Inform yourself before investing
It is strongly advised to be well informed about financial products before investing. This involves learning firstly about the type of product (share, bond, etc.), the risks it entails, and secondly about the issuer, its financial health and its prospects; which can have an influence on the price.
The investor who decides to choose alone the securities in which he invests can find general information on financial products from financial intermediaries and directly from the issuer.
Issuers are required to regularly communicate financial information concerning them to the public: quarterly, half-yearly, annual figures, announcements in the event of a specific transaction, etc. Information is in principle more complete, frequent and accessible on the securities which are listed on a regulated market.
It is also advisable to regularly monitor economic and stock market information.
Risks are associated with all forms of investment. Usually, an investment with a high return potential carries greater risks. Some investments may result in a total loss of invested capital, or even, for riskier investments, a loss greater than invested capital.
We generally distinguish 4 types of profile among investors:
Cautious: you do not want to take any risk and you are looking above all for a secure investment; performance is not your first concern. Your investment will mainly be in fixed income products (bonds);
Balanced: you are looking for a balance between the performance of your investments and their risks. Your investment will be a balance between stocks and bonds;
Dynamic: you are ready to take certain risks to achieve returns that seem attractive to you. You will invest mostly in equities;
Offensive: your main goal is maximum performance. You will invest exclusively in stocks.
Horizon and your investment goals
Investments are also based on your investment horizon. So depending on the chosen investment horizon, you can invest as follows:
Short term: investments not exceeding two years. These investments can be made with Assimilable Treasury Bonds for example;
Medium term: investments between two years and 5 years;
Long term: investments beyond 5 years such as stocks for example.
Note that this investment horizon is also closely linked to your investment objectives: do you want to invest to prepare for your retirement (long term) or just to make money from your cash flow (short term)? Do you want to save for a vehicle (medium term)? etc. It is therefore important to define this period from the start and not to deviate from it except in exceptional circumstances.
Defining the duration of the placement also makes it possible to better organize your interventions. In the stock market, the investment can be long, so it is advisable to start as early as possible and to fund your account regularly in order to better manage the fluctuations inherent in the market.
Precautions to take
Markets are fluctuating, which is why it is important to regularly monitor your portfolio. This will allow you to arbitrate, as needed, on the choices available such as deciding to cash in on capital gains, monitoring new IPOs, deciding to strengthen your portfolio to reduce costs, etc.
Complete the customer information sheet
The market requires the identification of investors; an identification form must be completed. A securities account opening agreement will be signed and accompanied by certain administrative documents such as:
- A photocopy of both sides of the identity document;
- Proof of address of less than three months (invoices in your name, certificate of residence, etc.);
- Bank details.
How the account is managed
You can decide how your account will be managed, free management or delegated management?
Free management allows you to make your investment decisions on your own.
In delegated management, you are accompanied by a professional account manager such as FGI, via a management mandate.
Funding of the securities account
You need to have a provision in order to be able to make your purchases of securities on the market. You can do this by check, wire transfer, etc. for the benefit of your account opened with FGI.
Place a stock market order
To place a stock market order, all you have to do is complete a buy or sell form, specifying the terms below:
- The first and last names of the account holder;
- The title ;
- The amount ;
- The price ;
- Validity: valid for the day or on a specific date (depending on the date you have defined without exceeding 3 months).
The rules of operation of the market require that the provision be available at the time of placing the purchase order; short transactions are not permitted.
The price can be indicated according to the following methods:
The limit order is one by which the investor fixes the maximum price he is willing to pay for the purchase of the securities or the minimum price at which he is willing to sell his securities. In the absence of any indication concerning the limit, the order is considered to be on the market.
The best order is not accompanied by any price indication. The buyer sets no maximum price and the seller no minimum price for his transaction.
If all the information is valid, FGI transmits the order to the Stock Exchange for execution.
When the transaction is executed, a transaction notice specifying the terms of the transaction will be sent to you. It will tell you the quantity purchased, the price and the charges. The settlement of transactions is made within three days on the BRVM.