How to invest your money without calling Jordan Belfort
words Yolisa Mkele
Stocks, bonds, investments? Allegedly if you put your money into them and do some clever witchcraft, you can get rich. Just ask members 1-300 of the Forbes richest people in the world. That said, if you have ever tried to figure out how they work, you may notice that it is a little like learning Mandarin with an English dictionary. Hence the advent of financial advisors and stock brokers. The problem is what happens when you can’t really afford either of those? How do you invest your money safely, easily and cheaply? As with many things, the internet has the answers.
If you tried to follow the whole Gamestop saga, then you will have noticed that deciphering the stock market is kind of like trying to tell the future by looking at chicken entrails. What on earth is short selling? No one except Jordan Belfort aficionados really knows, but that is kind of the point. Conspiracy theorists would suggest that the system does not want you to know certain things. That is what makes EasyEquities (EE) pretty brilliant. Selling itself as an accessible investment avenue, EasyEquities allows you to cheaply, relatively speaking, and easily invest in both South African and US stocks. You don’t even need thousands of rand to start. Just grab the R200 that you were going to spend on a round of tequila and throw it into your EE accounts. Speaking of which, there are so many different options. If you don’t know what you are doing, you can practice with a local and US demo account that allows you to invest fake money in stocks and make a “profit” or “loss” based on the real performance of those stocks. You can also start a tax-free savings account and invest almost any amount of money in South African stocks.
In terms of look and feel, Satrix is the serious older brother of EasyEquities. It requires a little more digital paperwork to register your account but the upshot of it is that it has very similar options. Using Satrix, you can invest in South African stocks, keep track of how much profit or loss you may have made and set up a tax-free savings account. You also do not need to set aside millions to do it. Satrix will allow you to create a debit order of whatever works for you. What is also useful is that you can set up an account for a dependent.
WTF is a tax-free savings account (TFSA)?
Back in 2015 the government decided that we all were not saving enough and needed some encouragement. So they created a tax-free savings instrument. The basic idea is that one can invest, to a certain point, without paying tax on that investment or its gains. TFSAs can be open with just about any bank, life insurer, asset managers or stockbrokers. There are some caveats though. Per year, you can only invest R36,000 and over the course of a lifetime you cannot exceed R500,000 — unless you want to incur heavy taxation. Basically, the point is to get people saving and investing on the lower end of the scale. This makes TFSAs, depending on what you are trying to achieve, a better option than your traditional savings account. They are also readily available just about everywhere.
Finally, before you go out in the world trying to be the Wolf of Vilakazi Street, remember that if you want approved financial advice then please consult a financial advisor. You wouldn’t ask Gordon Ramsey to give you neurological advice. So consult a professional.
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