Investing in shares has become increasingly popular in recent years as people look for ways to grow their money. Share investing offers the potential for high returns but also comes with risks. If you’re thinking of buying shares, it’s important to understand how the process works and what you need to do to get started.
In this article, we’ll cover everything you need to know about buying shares in South Africa, including:
- Ways to buy shares in South Africa
- Why buy shares in South Africa
- Payment methods for buying shares
- How and where to buy shares
We’ll also provide some top tips to help you get started in share investing.
Ways To Buy Shares In South Africa
There are two main ways to buy shares in South Africa:
- Online trading platforms
- Stockbrokers
Online Trading Platforms
There are a number of online trading platforms available in South Africa that allow you to buy and sell shares quickly and easily. These platforms typically offer low charges, and some even allow you to trade for free.
To use an online trading platform, you’ll need to open an account and deposit funds into it. When your account is funded, you can start buying and selling shares. Most platforms will allow you to place limit orders, which means you can set the price at which you’re willing to buy or sell shares.
Some of the popular online trading platforms in South Africa include EasyEquities, CoreShares, SatrixNOW, and Nedbank Online Share Trading.
Stockbrokers
If you’re looking for more guidance when buying shares, you may want to use a stockbroker. Stockbrokers are qualified professionals who can provide advice on what shares to buy and sell. They can also help you with the technical aspects of share trading, such as placing orders and settling trades.
However, using a stockbroker usually comes at a cost. Most stockbrokers will charge commissions on each trade, as well as an annual fee. So, it’s important to compare the fees charged by different stockbrokers before choosing one to work with.
Some of the leading stockbrokers in South Africa include Absa Stockbrokers and Portfolio Management, Sanlam Private Investments, and Momentum Securities.
Why Buy Shares In South Africa
There are many reasons why you might want to buy shares in South Africa:
- To grow your wealth: Over the long term, shares have been shown to outperform other asset classes such as cash and bonds. This means that investing in shares could help you build up your wealth over time.
- To generate income: Unlike most other investments, shares offer the potential for both capital growth and dividend income. Companies pay dividends to their shareholders based on their profits. So, if you invest in shares that pay dividends, you could receive regular payments that can help boost your income.
- To diversify your portfolio: Shares tend to be less volatile than other investments such as property and collectibles. This means they can help smooth out the ups and downs of your overall investment portfolio.
Payment Methods For Buying Shares
Most brokers in South Africa will accept electronic payments from your bank account. Some brokers may also take cash deposits, but this is usually not advisable due to the potential for fraud.
It may, however, cost a little extra to use a stockbroker. Each trade is usually charged a commission, along with an annual fee. You should therefore research and compare the fees charged by each broker before committing to one.
How To Buy – Step By Step
If you’re ready to start buying shares in South Africa, there are a few things you need to do:
- Choose a broker
- Open an account
- Deposit funds
- Place an order
- Settle your trade
Let’s take a closer look at each of these steps in more detail.
Choose A Broker
First, you need to select a broker. As we mentioned earlier, there are two main types of brokers in South Africa: online trading platforms and stockbrokers. Consider carefully which type of broker is right for you before making your decision.
Once you’ve chosen a broker, you’ll need to open an account with them. This process is usually pretty straightforward and can be done online.
Open An Account
When you open an account with a broker, you’ll need to provide some personal information and documents, such as your ID number, proof of residence, and bank statements. Once your account is opened, you’ll need to deposit funds into it before you can start trading.
Deposit Funds
The majority of brokers allow you to deposit funds into your account via electronic transfer from your bank account. Once the funds have cleared, you’ll be able to start buying shares.
Place An Order
To buy shares, you’ll need to place an order with your broker. You can place limit orders with most brokers, which means you can set the price at which you’re willing to buy or sell shares.
When placing an order to buy shares, you’ll need to specify the following:
- The name of the company whose shares you want to buy
- The ticker symbol of the shares (this is how they’re traded on the stock exchange)
- The number of shares you want to buy
- The price you’re willing to pay
Settle Your Trade
Once your trade has been executed, it will need to be settled. This usually takes two working days. The shares will then be transferred into your account, and you’ll be able to hold onto them for as long as you like.
Where To Buy Shares
| Number of Cryptos | Fee Structure | Fee to Buy Bitcoin | Minimum Deposit |
|---|---|---|---|
| 250 | Maker/taker model | 0.4% per slide (maximum) | $20 |
1. AvaTrade
AvaTrade allows you to buy shares for the lowest possible price. It is perhaps South Africa’s cheapest share trading platform. Thousands of pleased clients from all around the world have put their faith in AvaTrade.
Based on its many accolades, AvaTrade has created a solid name as one of the best online trading brokers in SA. AvaTrade is a well-regulated online broker that can meet all of your trading demands. Even for beginners with no prior experience with trading, anyone can use the robust, quick platform on all devices, which is a big plus.
Additionally, AvaTrade offers AvaSocial, a social trading software. You may use this software to locate and mimic the actions of other share traders all over the world. This is a fantastic technique to automate your trades while also learning from more seasoned traders.
AvaTrade has a straightforward cost structure for creating and operating a free trading account that requires only a $100 minimum investment. In addition, this platform does not take a premium or hold the shares in an unlimited value account, which is unusual in the market.
Access a top trading platform as well as Account Manager support at no additional cost. A free sample account is also available, allowing South African investors to practice stock trading without putting any money. And if you encounter any issues, technical help is accessible round the clock.
Trading with AvaTrade is completely free of charge. Every deal is subject to a spread, which is usually in line with or somewhat lower than the average fees. However, while adding funds and withdrawals are both free, keep an eye on the inactivity charge. It’s one of the more expensive fees we’ve seen, at $50 every quarter after three months of inactivity.
Key Features:
- AvaSocial: This is great for beginners and experts alike; you can copy or follow the top traders within its platform to make money and learn at the same time.
- Robust online trading platform: This is available on all devices, perfect for those always on the go.
- No fees: Unlike other brokers, AvaTrade does not charge any fees for trading or withdrawals, making it very affordable.
Fees:
- Commission: Zero
- Deposit Fee: Zero
- Withdrawal Fee: Zero
- Minimum Deposit: $100
- Inactivity: $50 every quarter after three months of inactivity
2. Capital.com
Capital.com is our top recommendation for South African investors looking to enter the stock market. This CFD broker provides over 3,000 worldwide stocks from the United States, the United Kingdom, and Europe.
In addition, Capital.com’s trading platform supports currencies, commodities, bitcoin, ETFs, and other asset classes. As a result, it’s a one-stop shop for trading the hottest shares on the planet.
The trading platform at Capital.com is custom-built, and it offers a few features that we love. It incorporates AI software, for example, to analyze your trades and enhance your win rate. The program analyzes your trading habits and looks for common themes in your successful and failed deals. The AI will then recommend strategies to alter your trading habits.
A news feed, economic calendar, and price alerts are all available on Capital.com’s site. Also, its user-friendly mobile application will allow you to trade on the go.
Capital.com offers commission-free stock trading, with spreads that are often significantly below the industry average. And what’s more impressive is that there are no fees for deposits, withdrawals, or inactivity to eat into your trading winnings.
Customer service is available 24 hours a day, seven days a week via phone, email, and live chat. Best of all, you may start a new account for as little as $20 and pay using a credit or debit card or wire transfer.
Key Features:
- CFD Trading: CFD means “Contract for Difference” which is a contract between two parties: the buyer and the seller. CFDs allow investors to trade on margin, giving them access to larger sums of capital than they would otherwise have.
- Worldwide Stocks: Capital.com offers over 3,000 stocks from some of the world’s biggest exchanges, including the NYSE, NASDAQ, and London Stock Exchange.
- Trading Platform: Capital.com’s trading platform is custom-built and incorporates AI software to help you trade more effectively.
- Commission-Free Trading: Trade stocks without paying commissions — Capital.com’s spreads are often much lower than the industry average.
Fees:
- Commission: Zero
- Deposit Fee: Zero
- Withdrawal Fee: Zero
- Minimum Deposit: $20
3. XTB
XTB is well-regulated and registered on the stock exchange, making it a reliable broker. XTB allows investors and traders to trade shares, commodities, equities, metals, FX, indices, crypto, and CFDs. It is also regulated by the FCA, CySEC, IFSEC, and KNF in top-tier jurisdictions.
Traders may easily create an account online and pick between a commission-free basic account or a pro account with narrower spreads, but a commission must accompany all transactions.
Your region determines your choice of trading platform; in most countries, MT4 or the proprietary platform xStation are accessible (although MT4 is not available to UK customers).
XTB is an excellent alternative for novices because of its extensive teaching resources, which are divided into three levels (beginning, intermediate, and advanced), as well as its limited customer assistance choices (accessible only on weekdays).
Beginners can practice methods and get acclimated to utilizing the platforms with a fully working demo account.
The more experienced trader will benefit from a wide range of research tools, such as trading signals, technical analysis, information on various charting tools, and even a calendar and market sentiments.
While ancillary expenses were in line with industry averages, XTB’s continuously smaller spreads stood out as a distinct advantage over the competition. When assessing XTB’s attractiveness to cost-conscious traders, Investopedia’s rating system took this into account.
Key Features:
- FCA Regulated: UK’s Financial Conduct Authority regulates XTB, ensuring traders are protected with strict rules and regulations.
- Negative Balance Protection: This guarantees that you can never lose more than you deposited, preventing you from incurring any additional losses.
- xStation: This flagship platform has powerful tools and features for all traders, regardless of experience level.
- Wide Range of Assets: Trade a variety of assets, including shares, commodities, indices, FX, crypto, and CFDs.
Fees:
- Commission: Zero on stocks CFD
- Deposit Fee: Zero
- Withdrawal Fee: Zero
- Minimum Deposit: None
4. VantageFX
VantageFX is a South African share trading platform that is both versatile and very reliable. Although it is known for its wide selection of currency pairs, you can also trade over 50 US equities, 50 Australian companies, and 70 Euro stocks with this broker (including the UK).
Because all stocks are traded as CFDs, you may leverage your trades up to 1:30. VantageFX is therefore perfect for securing key roles in leading corporations.
MT4 and MT5 are two of the trading platforms offered by VantageFX. These platforms can be challenging to learn, but they allow you to create fully customized technical analysis, backtesting, and automation.
VantageFX also offers its own online trading platform as well as mobile apps. Because they include technical research, the platform can be complicated for beginner traders. Nevertheless, it also offers social and copy trading through Duplitrade and ZuluTrade.
Trading with VantageFX has one significant disadvantage: it is expensive, charging fixed fees of $6 per trade for US equities and €10 per trade for UK stocks. However, there is no additional spread to worry about, and there are no inactivity penalties since these fees are already rather high.
VantageFX is licensed in Australia and the United Kingdom. A $200 minimum deposit is required to start an account.
Key Features:
- Leverage Options: Trade up to 1:1 to 1:30. This means that for every $1 you have in your account, you can trade up to $30 of stock.
- Variety of Assets: Trade stocks from over 50 countries, including the US, UK, and Australia.
- Social Trading and Copy Trading: Connect with other traders and copy their trades automatically or manually.
- MT4 and MT5 Trading Platforms: Customize your trading experience with two of the most popular trading platforms in the world.
Fees:
- Commission: $6
- Deposit Fee: Zero
- Withdrawal Fee: Zero
- Minimum Deposit: None
5. Plus500
With Plus500, you can trade CFDs on stocks, indices, bonds, commodities, and cryptocurrencies, among other things. This includes over 2,000 stock CFD options in the share section. As a result, you’ll have access to a variety of foreign stock markets, including those in the United States, Australia, the United Kingdom, and New Zealand.
Plus500 also provides stock CFDs that monitor South African companies. This is a wonderful option if you want to obtain access to the Johannesburg Stock Exchange (JSE). Plus500 doesn’t charge commissions, regardless of the market you choose to trade on. You simply need to consider the spread and overnight funding fees, just as with other famous platforms like eToro.
In the case of the latter, you may avoid this by closing all your positions before the conclusion of the trading day. This is, in fact, a widespread technique among stock day traders.
On all of Plus500’s financial products, you have the choice of trading long or short. You may gain from the increases and decreases of your selected share CFD in this way. In addition, the trading platform enables leverage options. As a South African, this may go as much as 1:300, which is enormous.
Plus500 does not impose any fees for deposits or withdrawals. However, when purchasing non-South African securities, you will be charged a 0.5 percent currency translation fee. This refers to everything not related to the JSE.
Key Features:
- Social Trading: Plus500 offers a social trading feature that allows traders to follow and copy the trades of other successful traders on the platform.
- No Commission Fees: Plus500 does not charge commission fees on any of its products, regardless of the market you choose to trade on.
- Stop-Loss Order Guarantee: Plus500 guarantees that any stop-loss orders you place will be executed at the best possible price.
- Leverage: Plus500 offers leverage of up to 1:300 on its products, giving users the ability to trade with higher exposure to the markets.
Fees:
- Commission: Zero
- Deposit Fee: Zero
- Withdrawal Fee: Zero
- Minimum Deposit: $100
Frequently Asked Questions
1. How do I buy shares in South Africa?
The process of buying shares in South Africa is relatively straightforward. The first step is to open a brokerage account with a reputable online broker. Once you have done this, you will need to fund your account with money that you can use to purchase shares.
2. What are the fees associated with buying shares in South Africa?
The fees associated with buying shares in South Africa will vary depending on the broker you use. Most brokers will charge a commission for each trade that you make, as well as a small fee for each share that you buy or sell.
3. What is the best online broker for buying shares in South Africa?
The best online broker for buying shares in South Africa will depend on your individual needs and preferences. Some factors that you may want to consider are the fees charged by the broker, the selection of stocks available, and the ease of use of the platform.
4. What are the risks associated with buying shares in South Africa?
The risks associated with buying shares in South Africa are similar to those associated with any other type of investment. The value of shares can go up or down, and you may not get back the money you invested. It is also important to remember that shares are a long-term investment, and it may take many years for them to reach their full potential.
5. What are the benefits of buying shares in South Africa?
The benefits of buying shares in South Africa include the potential for long-term growth and the ability to diversify your investment portfolio. In addition, shares can provide stability during periods of economic turbulence and can offer the opportunity to make a profit if they are sold for more than you paid for them.