I OPENED AN EASYEQUITIES ACCOUNT. NOW WHAT???

You need to know a few things after you have opened the account. It is a journey!!!

1. FUNDING YOUR ACCOUNT

You can fund your account with a credit card or via a normal EFT. The credit card method is immediate, but you pay 2.3% plus R1.60 for the convenience. This may not seem a lot, but adds up and is as much as R230 per R10,000 paid in. I do not recommend this method.

When you transfer using a normal EFT from your bank to EasyEquities, you pay zero fees. Make sure to choose the bank you bank with from the dropdown list. EasyEquities has accounts with all the major banks including ABSA, FNB, Standard Bank, Nedbank, Capitec, Investec and Bidvest. The money will be in your EasyEquities account the same day if you transfer within the same bank. Use this method. We hate fees.

2. HOW LONG ARE YOU INVESTING FOR?

You must know if you are investing for the short-term or long-term before you buy any assets. Short-term is generally anything under three years and long-term anything over three years. Why is this critical? Short-term investors are called Speculators and long-term investors are generally referred to as Investors.

If you are a Speculator, you are taxed at a higher tax rate than Investors. Speculators can pay as much as 45% tax while Investors tax is maxed at 18%. That is a massive difference. SARS will look at each investment individually.

Also see the Tax article I have written previously.

3.  HOW MUCH RISK ARE YOU WILLING TO TAKE?

The main reason people cannot tell you what shares to buy is because of RISK. Everyone has a different risk tolerance. I might be very happy investing in high-risk assets like Bitcoin, while someone else will have sleepless nights when the price goes down 80%. Be honest with yourself and choose assets you are comfortable holding, even if they are boring. Your money, your portfolio and that is okay.

4.  WHAT ASSET CLASSES DO YOU WANT TO INVEST IN?

Your risk appetite will determine how much you invest into each asset class.

1. Stocks part ownership in a business e.g., Shoprite or Apple
2. ETFs baskets of shares that trades on a stock exchange e.g., Satrix Top40
3. Baskets A basket is a collection of shares with assigned weightings which has been pre-selected by well-known personalities, brands, investment clubs or asset managers. Unlike ETFs, these are not fund managers and they do not give advice.
4. Unit trusts Investors pool their money into a trust. You do not own the shares. You simply hold units, and it does not trade on a stock exchange e.g., Allan Gray Equity
5. EasyProperties Investors pool their money to invest in properties. Watch the auctions on EasyProperties for new properties. You earn rental income and the value of the buildings go up.
6. Crypto digital assets. Highest risk asset class e.g., Bitcoin or Ethereum. EC10 is a basket of the top10 cryptocurrencies. Safer than owning individual coins.

5.  RESEARCH

This is by far the hardest part of investing, doing research. It is also what I am the most passionate about. When you do research, you need to focus on a few elements.

1. Understanding the businesses you are investing in watch this video https://youtu.be/M9Y-MVex1_E 
2. Does the company have strong financial statements watch this video https://youtu.be/w7axqznR7PA
3. Are you paying too much or too little for the company watch this video https://youtu.be/1kjmSkKm4BM
4. Study the leadership of the company and determine if those are the people you would trust with your money.
5. If you need a last bit of help with finding companies watch this video https://youtu.be/H_M7mFR54qA

6.  BUY

Buying on EasyEquities is very simple because there are no minimums. You can start buying from as little as R5. So even if a share is R1000, you can buy for R5, and you will get a fraction of a share. You will even start receiving dividends. You dont need to own a whole share to start getting dividends.

Dividends are a piece of the profits of a business that they share with the owners. In South Africa, most companies pay dividends twice a year. The above video under number 5(5) will show you how to find dividend paying stocks. Or just come find me on social media and I will help you.

7.  HOLD

Investing is sadly not supposed to be exciting and consume your entire life. I know when you start it is hard to close the app and thats okay. Once you get the hang of things, it will get boring, and you will only check when you want to buy or sell.

Try to hold your companies for at least three years. Give businesses a fair chance to increase the share price. Remember, you bought a business. Give them a chance to do what is needed to increase the share price. Ignore the day-to-day noise.

8.  WHEN TO SELL

This is a question I get a lot. How do you know when to sell a stock? I will do an article on when to sell but here are my main reasons I would consider selling a stock.

1. The reason why I bought the company is gone. Can you see how important research is? If you dont know why you bought the stock, you will feel paralyzed and not know when to sell. Do not copy stocks from others. They know when they will sell, and you will be left with losses.
2. I need the money. There is no shame in selling if you need the money and your emergency fund is empty. This should not happen more than on the odd occasion, but if I need cash for an emergency, I SELL and rebuild.
3. Fraud or they hire shady characters in senior positions, I SELL. If you cant trust the soft life people, walk away because they will run circles around auditors
4. The stock becomes too big a percentage in my portfolio, I would trim it down.
5. My company buys another company I believe will destroy value I SELL.