It requires at least R25 000 to start directly buying equities – but the real obstacle to investing is that people simply never start.
You can begin investing with as little as R300 a month. While you’re building that molehill into a mountain, start educating yourself. It‘s typically only once people start their online trading education that they begin to understand how exciting it is to trade directly, as opposed to owning some collective investment scheme, though such a scheme is usually a necessary stepping stone.
The first step by a potential new online investor is typically to surf the online share trading websites of the major providers – all the major banks, and many others have one.
Brett Duncan, head of Standard Bank Online Share Trading, says the biggest investment you make at this stage is in time. You need to spend at least seven hours a week educating yourself – either studying newspapers or financial magazines, or tracking your portfolio.
Standard Bank has an Auto Share Invest (ASI) facility on its online banking platform where individuals can invest amounts from R500 a month into a selection of 100 stocks and exchange traded funds (ETFs). PSG Online starts at R300/month.
Duncan explains that the best way to begin is by following either companies you’re familiar with or the underlying stocks in an ETF (the easiest investment to start off with, he says). Once you’ve built up your portfolio to at least R25 000, and acquired knowledge, you can start by investing directly in some of these companies.
Online platforms such as Standard Bank and PSG Online offer a vast number of online courses ranging from elementary to advanced. Standard Bank Online offers 220 courses once one decides to advance beyond its entry level ASI offering, which comes at a monthly cost of a R60 subscription for the courses, a library of company information and access to its trading platform.
According to PSG Online, no one should trade shares unless they have instituted risk control measures such as putting ‘stop loss’ controls in place. Share trading requires a high appetite for risk, time to watch the markets and an expert knowledge of the markets and trading process.
Darren Cohen, head of marketing: PSG Wealth, explains: “Making an informed financial decision is key to mitigating risk where one has considered the options that would best suit their personal needs. It‘s for this reason that client education is imperative to PSG Online’s mission of creating wealth for our clients.”