Buying low and selling high! The world of trading can be pretty exciting and there are many reasons to want to start investing. Many South Africans are looking for a way to supplement their salary or increase their savings accounts.
Additionally, it’s possible to get a better return on investment from trading compared to investment accounts. As the risk increases, so does the return! But trading can seem overwhelmingly complicated, especially if you are new to investing. This makes online brokers and digital trading platforms so much more appealing.
Researching trading platforms and comparing fees and brokers can be time-consuming. Not to mention that it can be difficult to make an accurate comparison if you don't know what you're looking for.
Luckily, BudgetGist is here to help! That’s why we pride ourselves on being South Africa’s information hub for all things related to finance and money. We’ve compiled a handy guide on everything you need to know about investing using online brokers.
As we’ve mentioned, online brokers and digital trading platforms can be less overwhelming for beginner investors. Most online brokers will offer some guidance on how to make trades, as well as background information you may need before getting started. Additionally, it’s easier to set up an account and keep track of your investment at any given time.
Online brokers offer more control over your investment compared to using traditional trading methods. There's no need to make telephonic trades or get in touch with a stockbroker. This makes trading accessible to the general public who can manage a wider portfolio of stocks and investments.
There are many reputable online brokers and digital trading platforms in South Africa. These include major banks and other trading platforms. Let’s look at some of your options for online brokers:
Absa Bank offers special online trading accounts as well as the services of their stockbrokers. This means that you have the option of managing your investments or having a qualified professional manage your portfolio for you. Absa also offers plenty of information and guidance on how to get started with trading and make the most of your money.
Nedbank offers personalised online trading services which also include access to research and advice from their financial experts. There are several options for trading including shares, warrants, exchange-traded assets, and more.
A reputable digital trading platform that serves global traders, Binomo is one of the top choices for South African investors. Binomo is a member of the International Finance Commission which makes the platform a safe choice. The platform also boosts online support and free training opportunities. Additionally, there is an option to open a demo account to learn how the platform works and get used to making smart trading decisions.
Another globally recognised trading company, FXTM is more accessible as it includes both mobile and desktop trading platforms. A key benefit of FXTM is the low trading costs. There are no commission fees and very low trading fees. There are three account options for people who are in different income brackets or have different investment needs. Most importantly, FXTM is registered with several financial regulatory bodies including the Financial Sector Conduct Authority (FSCA) of South Africa.
Another great option for South African traders and investors is NordFX. This company also offers three different types of trading accounts and an easy to navigate mobile trading platform. It is relatively easy to open an account and begin trading; you are given access to tons of information and a demo account to practice trading. NordFX is regulated by the Vanuatu Financial Services Commission.
If you’re simply not comfortable with online trading, you can always go the more traditional route. The Johannesburg Stock Exchange (JSE) website has a consolidated list of brokers and their contact information. It’s advisable to research a broker before you contact them to determine if they’re a good fit for you.
When it comes to investing, there is no shortage of scammers hoping to swindle you out of your hard-earned money! Let’s talk about how you can spot signs of fraudulent activity.
Online brokers and trading platforms should always ask you to verify your identity or banking information before you are allowed to make transactions. If an online broker or trading platform seems to skip these steps in favour of having "quicker, easier transactions" then it may be a fraudulent platform.
Reputable online brokers and trading platforms should be registered with their respective local financial regulatory authorities. In South Africa, you can check if an online broker is registered with the Financial Sector Conduct Authority (FSCA).
Unfortunately, if you are approached by an individual on social media such as Facebook or Instagram, they are likely involved in a scam. About half of all online trading scams originate on social media platforms such as Instagram, Facebook, and Twitter.
Like many other scams, they promise extremely high returns and heartwarming testimonials. However, it can be easy to spot a social media scammer as they often use fake profiles to advertise their platform and contact people. Fake social media profiles may spam posts or have mismatched profile and content photos.
Finding the perfect online broker involves some introspection. Before you begin to look at brokers, it’s important to know what you’re looking for. This can mean taking your time to thoroughly research trading and assess your current financial situation. Additionally, it’s important to define your investment goals. Are you hoping to create a second income stream? Are you trying to save for retirement or a vacation?
From your research, you should have an idea of what you're aiming to achieve and how much you are willing to spend. If you're new to online trading and brokers, it's best to start small. Don't invest large amounts of money until you've gained some experience and are more confident in trading. Certain platforms, such as Absa Bank and Nedbank, allow you to open a trial account and spend some time learning the ropes before you invest any real money.
When you know what you’re looking for in an online broker, you can begin to compare online platforms. It’s always helpful to search online for independent reviews and media reports about your prospective online broker. Additionally, look at the fee structure and check reviews if there are any hidden fees or issues with withdrawing money.
You can also speak to friends and family members about whether they have used the platform or heard any negative reviews. The right broker should be considerate of your financial situation, your goals, and the amount of risk you are willing to take.
Finally, whether you're using an online broker or a traditional broker, it's important to learn how trading works. Take some time to learn trading specific terms, popular trading techniques, and companies whose stocks you might be interested in.
When it comes to investments, there’s always risk involved. Luckily, BudgetGist is here to keep you informed. We are South Africa’s information hub for all things related to finance and money.
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