Entry-level investing made much easier
Online share trading has made investing on the JSE much easier than it was in the days when you had to hire a stockbroker to invest directly in stocks on your behalf.
Today, as a first-time investor you can access discounted services from online brokers without wasting time meeting stockbrokers face to face.
For entry - level investors, the challenge is to know which online share-trading services and platforms to trust, as there are many scams out there.
It is crucial that you always use a stockbroker who is a member of the JSE because this offers you some protection as an investor. The JSE’s website (www.jse.co.za) has a list of registered online brokers who can meet your needs and provide educational material on trading.
Platforms to use
On the right platform you can build a solid investing foundation using lower-risk investments such as exchange traded funds or ready-made portfolios. In SA, online trading is easily accessible through a number of the big-name banks and you don’t need to have an account with a bank to open an online trading account with them.
If you want to invest directly on the JSE but you have less than R5000 to invest on a regular basis, you could consider the FNB Share Builder with its minimum monthly investment of R300 or Standard Bank’s Auto Share Invest, which allows monthly investment of R500 or more.
The Intellidex annual survey of top stockbrokers can also give you some ideas of which online trading platforms to use.
The winner of the online broker of the year in this year’s survey is Easy Equities, which also received the top rating for value for money.
This online broker offers you low costs, no minimum investment amounts, a highly rated tax-free savings account, no monthly brokerage fee and online tools along with support and security.
Absa used to be one of the most expensive online broker but this year it scooped the entry - level savers award in the Intellidex survey. This online platform also offers a tax-free savings account, very competitive trading fees, advice and support when needed and investment security. The platform does not charge withdrawal fees and brokerage is charged at a minimum of R15.
Low costs are always top of everyone’s mind, however, as an entry - level investor you also don’t want to compromise on the quality of services or the platform you use. Apart from monthly account fees, brokers statutory charges and brokerage fees. The low-cost option covers only the monthly administration fee.
There are various trading strategies that you need to understand. The JSE hosts bi-annual consumer education seminars on investing and what to look for in a stock or share.