A novice-friendly investing platform
Tsamela looks at cost-effective trading options for beginners
One of the most difficult things about investing, when one finally decides to venture into the world of shares and market movements, is finding a platform that is beginner-friendly.
Often, eager investors give up when they are faced with a trading or investing platform that is difficult to navigate and isn’t intuitive – you feel like you need an instruction manual just to buy a handful of shares.
EasyEquities was my light at the end of the tunnel and when I first stumbled upon the platform (thank you, Twitter), and signing up and finding my way was pretty simple. Processing the paperwork was a breeze, the fee structure was easy to understand and the website’s layout is accessible.
The simplicity of the product offering – equity trading and tax-free exchange-traded funds (ETFs) – limits the number of products available to investors, which is beneficial for a newbie who wants to invest in their favourite brand’s shares without getting lost in deep technical strategies.
Beginner investors also have the option of opening a demo account and playing with fake money before committing to an investment strategy.
The EasyEquities platform is one of the cheapest platforms for investors. There is a 0.25% minimum brokerage commission fee and no monthly fees apply. You can invest as little as R5, but there are still applicable tax payments and transaction costs.
One thing that beginner investors will appreciate is the ability to own fractional shares if you are unable to afford the whole share. For instance, if you want to buy Naspers shares but don’t have R2 000 at your disposal, you can buy a fraction of the share. EasyEquities then issues you with what is called a contract for difference, which includes the benefits of share ownership even though you do not own the underlying share completely. This a fractional share right.
When it comes to tax-free saving, EasyEquities offers 47 different tax-free ETFs. The fee structure is still 0.25% brokerage commission fee and investors are exempt from securities transfer tax, capital gains tax, dividend withholding tax on dividend earned and tax on interest earned.
As with all tax-free savings products, the annual and lifetime contribution restrictions still apply, so you have to keep a close eye on your contributions.
For a novice investor who is looking for a cheap, easy-to-navigate and efficient investing platform, EasyEquities comes highly recommended. Parents can also open trading accounts for their children.
Other online trading platforms
When compared with other trading platforms such as PSG Stockbroking or Standard Bank Online Share Trading, EasyEquities falls short in that it doesn’t offer other types of products such as futures, offshore shares (offered by PSG) and warrants.
On cost, however, EasyEquities is a winner. Stockbroking and online trading platforms specifically geared for traders usually carry a monthly fee, or have a minimum trading fee.
For instance, Standard Bank’s monthly “account maintenance” cost is R70. FNB’s Share Investor platform comes at a lower rate of R49 a month, but options are limited to JSE shares and Krugerrands.
Standard Bank also offers phone trading (at an extra cost) and customers have to be aware of other costs such as settlement fees, share and portfolio transfers, and withdrawal fees.
PSG’s platform, like Standard Bank and GT247.com, offers a diverse product range. Investors can choose to invest in local and offshore shares, single stock and currency futures, and contracts for difference, among other options. It’s important to note that these platforms are geared towards the more experienced investor who has an in-depth understanding of technical analysis and can use different trading strategies to maximise profits.
Sanlam’s iTrade platform is also very popular with traders, and it is competitively priced. iTrade clients pay a monthly fee of R50, and the first month of trading is free. If the brokerage fee exceeds R300, the monthly fee is waived. Its brokerage fee is structured according to the value traded and is important to consider when comparing costs.
If you feel that you are at this level, you can check out these six local trading platforms:
1. Standard Bank Online Share Trading: securities.standardbank.co.za
2. PSG Stockbroking: psg.co.za/wealth/stockbroking 3. Sanlam iTrade: sanlamitrade.co.za 4. Absa Stockbrokers: absastockbrokers.co.za 5. FNB Share Investor: fnb.co.za/share-investing/ share-investor
6. GT247.com: gt247.com