Owning the JSE at a FRACTION of the cost
Arecently launched trading platform, easyequities.co.za, allows you to invest in shares via fractional ownership.
This means that instead of having to pay the full share price, you are able to invest the money you have available and buy fractions of shares, making investing in shares more accessible to investors with lower amounts to invest.
For example, Naspers is trading at about R1 330, which means with R2 000, you could not even buy two shares in Naspers.
By buying fractions of shares, you can still have exposure to large South African corporates, and you are able to diversify your investment portfolio with smaller investment amounts.
A fractional share is a share of equity that is less than one full share and usually comes about as a result of corporate actions.
Fractional shares still earn dividends, but do not carry voting rights.
Because fractional shares cannot be bought and sold on the stock market, they are usually rounded up to a full share or settled in cash.
Financial services company GT247.com identified the barrier to entry this presented to investors looking to build a portfolio of stocks with a small amount of capital and created the EasyEquities online platform, through which investors can buy and sell full and fractional shares.
The costs are also lower than other trading platforms, with a flat brokerage fee of 0.25%. So, for a R2 000 online investment, you would pay a broker fee of R5, in addition to regulatory charges including Strate (R10.92), VAT (R2.23) and securities transfer tax (R5).
The total cost for a R2 000 trade would be R23 – well below the R75 to R100 minimum charged by most brokerages.