Financial literacy and wealth creation is essential to the growth and development of South Africa, particularly against the backdrop of Covid-19 which has wreaked havoc on the economy.
However, the majority of South Africans do not have a good relationship with saving or investing. According to the South African Reserve Bank’s Full Quarterly Bulletin published in March 2021, the local national saving rate declined from 16.4% in the third quarter of 2020 to 14.4% in the fourth quarter which could be attributed to poor financial literacy coupled with the lack of accessibility.
With approximately 700 000 registrations since inception, EasyEquities seeks to address just this by making investment more accessible to everyday South Africans and in turn, fostering long-term gains.
Instead of purchasing a whole share on the Johannesburg Stock Exchange (JSE) or the New York Stock Exchange (NYSE), investors can purchase half or a quarter of a share through the EasyEquities platform – it all depends on the exact amount you want to invest. To ensure their investors’ profits are maximised, EasyEquities have kept their fees as low as possible (64c per R100) which places their platform as the most affordable option currently on the market.
Beginner investors with an interest in listed property stocks are not excluded and EasyEquities provides the exact platform for them.
Standwa Nongauza, Brand Manager for EasyEquities says that the traditional property investor looks at real estate on an individual basis whereas an investor interested in the listed property sector looks for individual property companies to invest in.
“The former is a more direct method of investing and the latter is a more indirect method of investing. If you choose to invest in listed property stocks, you are not just investing in these companies’ assets and how they perform but you are also investing in the way their businesses are managed” he says.
In July 2020, EasyEquities launched EasyProperties which provides investors with the opportunity to directly invest in and own shares in different properties.
EasyProperties creates a company for each property it buys and then gives users on the platform shares in that company, therefore giving investors the opportunity to invest directly in a property. Investors can choose to diversify their investment and purchase shares in a few different properties or just one. These properties are all managed by professional rental management companies.
With no minimum investment, the listed properties generate monthly income through rental collections from creditworthy tenants and based on an investor’s holdings, cash dividends are paid out from the profits each quarter. Investors also have the option to sell their shares on the platform to other community members.
Standwa says there is a balance that investors need to strike when they are introduced to both platforms.
“EasyProperties provides as much info as possible about the asset or building units such as the IRR yields, what is expected to happen in the neighbourhoods etc. versus EasyEquities, where a little more research about the shares you are buying is needed”.
An asset or building could do well in terms of its tenants, for example. With EasyProperties, rent is collected, paid out to investors and the cycle keeps going until the asset or building units are sold. Once the assets in the building are sold, the profit made is then shared back to the investors on the platform.
Listed property stocks are more difficult as they involve different elements in one share. Each listed company has a portfolio of assets and investors need to consider the company’s management and strategy.
“If you want to invest in a bigger picture, or in whole sectors, we suggest you look at EasyEquities but if you want to invest in a particular asset or building, then EasyProperties would be the route to go. Or do both, diversification is a good idea. Ultimately, it all depends on your investment appetite.”
If you choose to invest on the stock exchange, there are no registration costs or minimum fees to join EasyEquities and beginner investors receive a demo account when they register on the EasyEquities platform, a US Dollar demo account or a South African ZAR demo account, to invest in different companies and to see how markets move in real time.
With no material benefit, this is an interactive feature for beginner investors to navigate the platform and to understand how the different markets work.
“Play around with this to see how the different markets work, particularly sectors that you have an interest in” says Standwa.
“For someone like me who is interested in film and sports, I cannot invest in my favourite team Arsenal but there are other periphery things that tie into these different sectors like Warner Brothers, who are listed on the NYSE as well as Nike, for example. Let your interests drive your investments”.
Pick a sector that you are interested, such as property, and look at a company that may be performing well. With this info easily available, you can delve into the company by researching their debt-to-equity ratio for example. “This may sound quite formal but once you start to understand and to grasp what you should be looking out for, you can easily get into the cycle of investment”.
Exchange Traded Funds (ETFs) are a popular choice says Standwa. These are a collection of different shares in one kind of financial instrument or package. Based on a particular theme, index, or sector, there are different options available based on how large a company is such as the Satrix Property Portfolio ETF which includes the likes of Growthpoint Properties, Redefine, Resilient REIT and Vukile Property Fund.
But with all investments, there are associated risks. Countering property stock investments with tech stock investments for example, Standwa says they have noticed an obvious shift in investors jumping onto tech stocks like Tesla and Nvidia whereas property stocks have had a bad rap recently.
“With the pandemic, it seems that investors do not have as a clear picture of property stocks as they do with tech stocks, particularly where property stocks are headed during the pandemic”.
“I believe this could be due to the many different or divergent ideas about where the listed property sector should go with different companies going in different directions in terms of their individual performance. This is one of the ‘cons’ of investing in property as finding that particular stock to invest in that will ‘set you up for life’ is a lot harder than it is with tech stocks”.
However, trends in the South African markets within the past six months indicate that the listed property sector is recovering.
“Weigh the pros and cons against each other and make an informed decision. There are pros or cons with investing, but rather invest than not. I find that there are risks in not investing.
Both EasyEquities and EasyProperties are aligning to attract more younger investors.
Standwa says they would also like to see a younger, female base emerging through their platform too with their female to male ratio sitting at 60/40,
“This is not as equal as we would like it to be, and we would love to see this ratio level out to 50/50. Two years ago, the average age of our investors sat at thirty-two years old and now sits at twenty-six years old. This means we are making progress and we would like to see school kids investing too”.
Congrats to Lee Mngoma for winning a R500 EasyEquities voucher! (10th of May 2021)
(Competition closed) Not an EasyEquities user? Download and sign up to the Easy Equities platform (Play Store or the App Store), subscribe to Property Wheel’s bi-weekly newsletter and you stand the chance to win R500 EasyEquities voucher to kickstart your investment journey. More info on Twitter.
EasyProperties is a juristic representative of First World Trader (Pty) Ltd t/a EasyEquities which is an authorized Financial Services Provider (FSP number 22588).