Should you be planning to invest wisely, it is always recommended that you work with a reliable financial consultant, ideally one who holds the Certified Financial Planner certification, and typically one who isn’t attached to a particular product provider. This is especially important if you are making investments in an IRA or other tax-deferred retirement plan. There are several compelling arguments in favor of taking this path, and one of them is that a financial consultant will help you navigate turbulent times in the market. Another argument is that a financial consultant should assist you with your financial affairs overall, not just your investment opportunities.
However, there are some people who, for one reason or another, are hesitant to use the services of a financial consultant, and you may be one of those people. Many people, particularly younger folks, are interested in doing their own investing, and industry leaders are specifically targeting this market with convenient platforms that are based online or on mobile apps.
Are You a Serious Investor?
Agreements for different (CFDs), forex, and cryptocurrencies are examples of highly speculative tools that we won’t be discussing here. If you are a genuine investor, you will tend to be drawn toward credible providers who offer varieties of investments that are well-regulated and that a financial planner would suggest. These types of investments include unit trust funds, exchange-traded products, and if you are seeking to establish your share portfolio, local and offshore equities.
At a recent press presentation given by Satrix, the corporation that spearheaded exchange-traded funds (ETFs) in South Africa, the corporate development manager of the company, Duma Mxenge, provided a few intriguing statistics about the firm’s investment platform, SatrixNOW.
This app-based platform has only been available to users since the year 2020 when it first went live. It has 138 000 shareholders, and the average age of these investors is 38. There are more female investors than male investors (the ratio is 57% to 43%), and the average investor has an investment portfolio worth R140 000; however, the average investment portfolio size for potential clients is only R50 000.
“The age range of 18 to 40 years old has been responsible for the highest number of new sign-ups, which is precisely what we had hoped to see happen. “The idea that investing can be both affordable and accessible is gaining momentum, and the leading retail assets under management remain in the older age groups, but seeing newcomers in the younger demographics means that the message is getting through,” says Mxenge.
A Matter of Personal Preference
Your investment strategy and how knowledgeable you are about investments and financial industries will likely determine how much variety you require in your investment options.
If you intend to invest over the long term, perhaps through a debit order, but you want to have as little involvement as possible in the investment process, you will only need a few carefully chosen unit trusts or exchange-traded funds that offer sufficient diversification across asset classes and local and international markets. You can do this by using a share trading platform that provides ETFs, or you can do it directly through the websites of businesses that manage unit trusts.
But if you want to be more engaged, and especially if you want to establish a share portfolio, you will want a broader range, including direct connections to shares on the JSE and the international market. This is because you will want to build your portfolio of shares.
You will face the urge to make frequent changes to your investment strategy in response to the performance of your assets. This is a surefire way to end up in a bad situation, which is something that we have emphasized over and over again in the section. You need to have the self-discipline to do it yourself if you are not going to use a financial planner to help you get through the rough patches in the market. You may not be aware of the tax repercussions of swapping in and out of investments, but there are several potential consequences.
Several Different Platforms
The following is a list of online stock investment and trading platforms that provide access to shares and/or other exchange-traded products. They are primarily geared toward younger individuals who do not have the financial means to cover high capital costs or meet high investment minimums. Additionally, some of them provide educational materials or tutorials on investing in the stock market. The list is by no means exhaustive; rather, it merely provides an overview of the available options. There are also underlying asset costs on ETFs and unit trusts, which can be obtained on the fact sheets of the specific funds. These costs are not included in the brokerage and platform costs, which are provided where possible (they exclude VAT).
This prominent app-based share-trading platform, known as EasyEquities, is extensively used for speculating and short-term trading; however, it is also capable of being used for long-term investing and, in fact, the founders of the company actively encourage users to do so. Of the 5 platforms that are outlined in this article, it offers the most diverse selection of individual shares, ETFs, unit trusts, and share bundles. There is no requirement for a minimum amount invested, and there is no charge for using the platform. The brokerage and administration costs for each transaction amount to 0.325 percent of the value.
ETFSA is a web-based platform that provides a wide selection of tax-free investments, life annuity products, and retirement annuity options. In total, there are 173 locally available exchange-traded funds (ETFs) and exchange-traded notes (ETNs). The minimum amount for one-time payments is R1,000, and the minimum amount for recurring debit orders is R300 per month. The yearly management fee is equal to 0.5% of the portfolio value, and the brokerage fee per transaction is 0.1% of the total portfolio.
SatrixNOW is an investment platform that is based on mobile apps and provides users with simple access to the complete range of Satrix ETFs and unit trusts, in addition to tax-free investments and retirement plans. There is no minimum amount that must be invested. A brokerage and admin fee of 0.175 percent of the value traded and an annual platform cost ranging from 0.3 percent to 0.5 percent of the total investment are both applicable.
Standard Bank AutoShare Invest
Standard Bank AutoShare Invest is a feature that is accessible to customers of the bank through the Standard Bank mobile app. Access to over 250 different stocks, exchange-traded funds (ETFs), and exchange-traded notes (ETNs) trading on the JSE, covering local and international equity, bond, and commodity markets. A minimum transaction amount of R250 is required. There are no set minimums for the brokerage fee, which is equal to 0.15% of the value invested. A safe custody fee of 0.01% per month is added up to a total of 0.12% per year.
Your Income is Subject to Taxation
SARS will expect you to pay either taxable income (if it considers you to be a trader) or capital gains tax on profits made, subject to yearly thresholds and exclusions, depending on how frequently you transfer or trade investments. The Securities and Exchange Commission (SEC) states that “shares held as trading stock are ones that you purchased with the primary goal of reselling them for a profit.” When you sell a share that you have been holding as trading stock, any profit or loss that you experience will be considered revenue. If, on the other hand, you retain a proportion as a capital asset (that is, as a long-term investment that produces dividends), any profit or loss upon the sale of that share will be of a capital nature. If you are considered a trader, any losses you incur can be subtracted from any profits you make, and the same goes for any operational costs you have.
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