Investing made easy for growing DIY market

IF YOU are investing for the long term, Personal Finance has always advocated that you use a trusted financial adviser, preferably one with the Certified Financial Planner designation, and preferably one who is not tied to a specific product provider. There are many good reasons for going this route, one of them being that an adviser will guide you through times of market turbulence, another that an adviser should help you with your finances generally, not only your investments.

But there are those who, for one reason or another, are reluctant to use an adviser – and you may be one of them. Many people, especially younger folk, are keen on DIY investing, and industry players are actively targeting this market with easy-to-use web- or app-based platforms.

I won’t touch on highly speculative instruments such as contracts for difference (CFDs), forex, and cryptocurrencies. If you are a serious investor, you will gravitate towards reputable providers offering the types of investments that are well-regulated and that a financial adviser would recommend: unit trust funds, exchange traded products and, if you are interested in building your own share portfolio, local and offshore equities.

At a recent media presentation by Satrix, which pioneered exchange traded funds (ETFs) in South Africa, Duma Mxenge, the company’s business development manager, gave a few interesting statistics about its investment platform SatrixNOW. The platform, which is app-based, was launched only two years ago, in 2020. It has 138 000 investors, with an average age of 38.

There are more women investors than men (the split is 57%-43%) and the average investor has R140 000 invested, though this drops to R50 000 for new clients.

“We’ve seen the largest number of new registrations come from the 18 to 40 age group, which is exactly what we want to see. The largest retail assets under management remain in older groups, but seeing new entrants in the younger age groups means the message that investing can be both accessible and affordable is gaining traction,” Mxenge says.

A question of choice

How much choice you need will probably depend on your investment approach and how clued up you are on investments and financial markets.

If you want to invest over the long term, perhaps via debit order, but want minimum involvement in the investment process, a handful of well-selected unit trusts or ETFs, offering enough diversity across asset classes and local and global markets, will be all you’ll need. You can do this via a share trading platform offering ETFs (see below) or directly via the websites of unit trust management companies.

But if you want to be more involved, and particularly if you want to build a share portfolio, you will want wider choice, including access to shares on the JSE and on the global market.

The temptation, if you do want to be more involved, is to switch in and out of investments often, according to their performance. As we have emphasised time and time again in Personal Finance, this is a sure-fire way to a poor outcome.

If you are not using a financial adviser to help you ride out the dips, you need the self-discipline to do it yourself. There are also tax implications for switching in and out of investments that you might not be aware of (see box).

A selection of platforms

Here is a selection of share trading or investment platforms that offer shares and/or exchange traded products (ETFs and exchange traded notes, a form of debt instrument). They are mainly aimed at younger people who cannot afford high investment costs or high investment minimums. Some also offer educational material or tutorials on stock market investing. The list is far from comprehensive; it simply gives you an idea of what is out there. Brokerage and platform costs are given where possible (they exclude VAT), but there are also underlying investment costs on ETFs and unit trusts, which can be found on the fact sheets of the individual funds.

● EasyEquities: this popular appbased share-trading platform is used widely for speculating and short-term trading, but it can equally be used for long-term investing – in fact, this is encouraged by its founders. It offers the widest selection of shares, ETFs, unit trusts and share bundles of the five platforms highlighted here. (It also offers crypto, but I’ll ignore that.) There is no minimum investment amount, and no platform fee. Brokerage and administration fees are 0.325% of the value per transaction.

● etfSA: this web-based platform offers the entire range of locally available ETFs and ETNs (173 in all) as well as tax-free investments, life annuity and retirement annuity products. Minimum amounts are R1 000 for lump sums and R300 a month for debit orders. There is an annual management fee of 0.5% of the portfolio value and a 0.1% brokerage charge per transaction. ● FNB Shares Zero Account: available to FNB customers on the FNB app. No monthly charges and no minimum balance required. Access to the top 40 shares on the JSE, ETFs covering local and global equity, bond and commodity markets, and ETNs linked to large global companies such as Amazon, Berkshire Hathaway and Coca-Cola. (Note that with a single-stock ETN, you don’t actually own a part of the company, as you would buying a share.) There are no brokerage fees on FNB’s ETFs and ETNs.

SatrixNOW: an app-based investment platform that offers easy access to the full range of Satrix ETFs and unit trusts, as well as tax-free investments and retirement annuities. There is no minimum investment amount. There is a brokerage and administration fee of 0.175% on the value traded, and annual platform fee of 0.3%-0.5% on the total investment.

Standard Bank AutoShare Invest: available to the bank’s customers on the Standard Bank app. Access to more than 250 JSE shares, ETFs and ETNs covering local and global equity, bond and commodity markets. Minimum transaction of

R250. Brokerage is charged at 0.15% of the value invested, with no minimums. A 0.12% annual safe custody fee is levied at 0.01% per month.