Get started with as little as R500 a month
And it doesn’t matter if you’ve never invested or have been investing for years.
This profitable way of succeeding on the stock market has been proven in South Africa yielding a 17.75% return over the past 10 years.
Your first investment made easy
When you’re investing in individual shares on the stock market you need to understand the underlying businesses, and what sends a share price up or down.
It’s not that complicated – and you’ll learn quickly.
But if you want to start investing immediately there’s an easy option for you.
It is called exchange traded funds (ETFs).
Here’s how they work:
An ETF is a selection of many different shares. Think of it this way:
Investing in individual shares is like going to the shop and buying a bag of onions, a bag of rice, some meat, some carrots, cabbage, ginger and oil. Each thing you buy is a ‘share’ in your portfolio. To buy this many shares individually you’d need a fair bit of cash – just like all these ingredients would cost you a couple hundred rand.
An ETF is more like going to the Chinese takeout and buying a stir-fry. It’s got all the same ingredients, but it is in a bite size portion for only you – and you don’t have to do all the work.
Similarly – an ETF tracks a JSE Index like the Top 40 Index (the 40 shares on the JSE with the highest market values), or the Nasdaq 100. That’s right – an ETF could even give you exposure to US, Japanese or European shares – without the need to take your money offshore and invest in individual shares in these countries.
If you bought just one share of each company in the JSE Top 40 you’d need a couple thousand rand. And your brokerage costs would be sky-high. But buying the Satrix 40 ETF gives you weighted exposure to all of the companies in the JSE Top 40 at only R60 a share. Over the past ten years the Satrix 40 ETF has provided investors with a total return of 170% including dividends. That’s much better than the 3% or so you’re getting in the bank right now.
How can you start investing in ETFs today?
These days most banks offer Tax Free Savings Accounts (TFSA) through which you can invest in ETFs.
That’s definitely an option.
But if you’re looking to move into investing in your own shares in the long run – you should rather open a brokerage account through which you can invest in both ETFs and individual shares.
Easy Equities doesn’t charge minimum brokerage rates – only a fixed percentage. So, it is a very cost-effective way to start investing if you have only R500 or R1,000 a month. Through the platform you can open a TFSA as well.
And you can buy your choice of more than 80 different ETFs on the platform.
WARNING: This is NOT for “regular” people
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Three ETFs I’d look at for my first investment
ETF #1 – Going offshore in emerging markets
The Sygnia Itrix MSCI Emerging Markets ETF invests in companies across the world – the bulk of it is invested in Hong Kong, Taiwan, South Korea, USA and UK (but with an emerging market focus).
Sygnia is known for the low management fees it charges on products – an only charge 0.4% on this ETF.
Investing in Asia, and other emerging market businesses is higher risk – so you shouldn’t put all your cash in only this one ETF. It is also newly launched – so there’s little long-term performance data available right now. But as emerging markets recover from the Covid pandemic this one should be a good performer.
ETF #2 – Invest in the world’s biggest companies
The 1nvest MSCI World Index Feeder Fund invests in some of the world’s largest businesses. Think names like Apple, Microsoft, Tesla, JP Morgan Chase, Johnson and Johnson and VISA Inc.
Since its launch in 2018 the MSCI World Index Feeder Fund has returned 68.54% - which is a stellar performance compared to interest-based investments.
The bulk of the fund is invested in US equities, with other countries being Japan, UK, France, Canada and Germany. Overall, this ETF invests in 23 different developed markets and more than 1,600 different shares.
ETF #3 – Invest locally in top performing shares
The NewFunds Equity Momentum ETF invests in the twenty South African companies that have shown the best growth in the past twelve months.
The logic being that these shares have the momentum to continue their performance.
Since its launch in 2014 the fund is up 62% compared to the JSE Top 40 index being up 32%.
Currently the ETF holds shares like BHP, Exxaro, Truworths, PSG, Glencore and Discovery.
The easiest way to start investing is to put away a monthly amount into your ETF investment portfolio. Once you have grown this, and you’ve built up your understanding of investing you can then start investing into individual shares that have much bigger profit potential – like the ones I research for Red Hot Penny Shares. In 2020 alone Red Hot Penny Shares
readers could’ve banked 519% on DRD Gold, 274% on Pan African Resources and 104% on Quantum Food Holdings.
Here’s to unleashing real value
Editor, Red Hot Penny Shares