How to invest in JSE shares

Question: I’d like to invest into JSE shares monthly, across all sectors. What are the tax implications? How do I minimise fees in buying these shares? I aim to have an eight- to 10-year investment with at least R500 000 by 2028.

First, do you have the capacity or time to invest in shares? It requires your active, daily involvement.

If not, consider the help of a good stock broker, but do basic research on any broker you intend on using.

If commissions and fees become the main focal point, be concerned, as not all brokers have your best interest at heart. Brokers can be found on the JSE or the FSB websites.

For a more passive approach, consider investing in ETFs and index trackers: they allow you to purchase and forget about the investment until you reach your investment horizon.

Unit trusts allow you to buy units in a portfolio which will already have shares or equity. The risk involved is much less than investing directly in shares as the funds in these portfolios are spread, so if one investment isn’t doing well all your savings won’t be lost.

There are a vast number of portfolios in which units can be bought and they’re looked after by professional fund managers.

Choosing low-cost funds, going with passive investments like an ETF or an index fund, and being aware of how much you’re paying in fees can go a long way toward reducing the amount you pay to invest. On average, you shouldn’t pay more than 0.5% in fees.

Compare trading platforms before deciding. The expense ratio which includes admin expenses, management fees and other costs can average at 1%. Shop around.

Income gains are subject to income tax at your marginal tax rate, which may vary between 18% and 45%, depending on the level of your taxable income.

If shares are held as a capital asset for the longer term, any capital gain upon its disposal is subject to capital gains tax (CGT) at an inclusion rate of 40%. Capital gains also have an annual exclusion of R40 000.

A maturity value of R500 000 would depend on the amount you’re wanting to initially invest, the frequency of contribution, the investment return or increase in share price and tax payable.

Income gains are subject to income tax at your marginal tax rate, between 18% and 45%. Reece Morrison Masthead Financial Planning