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How to buy shares in South Africa (2022)

Start investing in the stock market today using our 6 step guide.

How to buy shares (2022)

  1. Choose a stockbroker: Find a stockbroker that matches your criteria
  2. Sign up for an account: You’ll need to be over the age of 18 and a South African resident to sign up
  3. Plan before you buy: Work out how much you can afford to invest and how long you’ll be holding the shares for
  4. Choose the shares you want to buy: Do you want to buy South African shares, global shares, dividend-paying or penny stocks?
  5. Order your stocks: Search for the company name or ticker code and set a market or limit order to buy
  6. Pay for your shares: Ensure you have enough funds in your account ahead of the settlement date

To buy shares in South Africa you need to be over the age of 18 and signed up to a stock brokerage account, but there’s a lot more to it than that. Luckily, with stock market activity surging in 2020, it’s never been cheaper or easier for South Africans to start investing.

This guide will take you through the basics, including how to buy shares online, how much it costs and whether it’s a safe option for you. If you’re ready to start buying shares, you can select an online broker in the comparison table below.

How share trading works

As the name suggests, shares or stocks represent a “share” of a company. When you buy a share, you own a small part of a company. The price of your stock rises if the company is doing well and falls if it underperforms.

Just as you’d trade goods over Amazon or eBay, share trading takes place over a digital marketplace known as the stock market or stock exchange. In South Africa, we have the Johannesburg Stock Exchange (JSE), and in the United States, there’s the New York Stock Exchange (NYSE) and the NASDAQ.

How do you make money from shares?

You make money from stocks the same as you would any other product – by selling for a higher price than what you initially paid. The difference between the buy and sell price will be your profit or loss.

The other way to earn money is through dividends. A dividend is a percentage of a company’s annual profit which some companies choose to pay to their shareholders. These are typically paid twice a year and you can either bank these or reinvest them to compound profits.

Step 1: Find a stockbroker

To buy and sell shares, you’ll need to sign up with a stockbroker. You have two main options here – you can buy shares online using a share trading platform or use a full-service broker.

A full-service broker is a traditional brokerage firm or investment bank such as Goldman Sachs and Morgan Stanley. The main benefit is they do all the trading for you based on your instructions and they may offer advice. The downside is they charge a premium fee for their service, starting from R0 to R400 per trade with some going as high as R800 per trade.

The cheaper option is to use an online broker and place the trades yourself. There are dozens of platforms available to South Africans and they can charge as low as 0.25% per trade.

Take a look at South African online trading platforms in the table below. Depending on what you’re after, it may save money to use more than one platform, for example, one for South African shares and the other for another market such as US or UK stocks.

Compare online brokers in South Africa

1 - 10 of 10
Name Product Price per trade Inactivity fee Markets International
IG Share Trading
$8
$0
ASX shares, Global shares, US shares, UK shares
Yes
$0 brokerage for US and global shares plus get an active trader discount of $5 commission on Australian shares.
Enjoy some of the lowest brokerage fees on the market when trading Australian shares, international shares, plus get access to 24-hour customer support.
CMC Markets Invest
$0
$0
ASX shares, Global shares, Options trading, US shares, mFunds
Yes
$0 brokerage on global shares including US, UK and Japan markets.
Trade up to 35,000 products, including shares, ETFs and managed funds, plus access up to 15 major global and Australian stock exchanges. Plus, buy Aussie shares for $0 brokerage up to $1,000. (Limited to one buy order per stock per trading day).
Tiger Brokers
$6.49
$0
ASX shares, Global shares, US shares, ETFs
Yes
Exclusive to Finder: Sign up to Tiger Brokers and receive a $60 stock voucher and an ANZ share once you deposit 1 cent or more. T&Cs apply.
Get started with $0 brokerage on ASX and US stocks for the first 3 months upon account opening
Monex Share Trading
$19.95
$0
ASX shares, Global shares, US shares, ETFs
Yes
Exclusive to Finder: Sign up to Monex Securities via Finder using the code FINDER01 and receive up to $220 in rebates. T&Cs apply.
Sign up to Monex securities and trade up to 70% of the world, with over 50,000 listed securities in 12 international markets.
eToro (global stocks)
US$0
US$10 per month if there’s been no log in for 12 months
Global shares, US shares, ETFs
Yes
Zero brokerage share trading on US, Hong Kong and European stocks with trades as low as $50.
CFD service. Capital at risk.
Join the world’s biggest social trading network when you trade stocks, commodities and currencies from the one account.
Selfwealth (Basic account)
$9.50
$0
ASX shares, Global shares, US shares, ETFs
Yes
Trade ASX and US shares for a flat fee of $9.50, regardless of the trade size.
New customers receive free access to Community Insights with Selfwealth Premium for the first 90 days. Follow other investors and benchmark your portfolio performance.
Moomoo Share Trading
$8.80
$0
ASX shares, Global shares, US shares, ETFs
Yes

Trade shares on the ASX, the US markets and buy ETFs with Moomoo. Plus join a community over 18 million investors.
Syfe
Exclusive
Syfe
US$0*
$0
US shares, ETFs
Yes
Exclusive to Finder: Sign up with Syfe + deposit a minimum $1,000 and claim $60 in cash credit. T&Cs apply.
*Pay zero brokerage on the first 2 trades each month and then US$1.49 per trade after. Plus, new clients enjoy 5 free trades (US$0.99 per trade after) for the first 3 months of joining (T&Cs apply).
Superhero share trading
$5
$0
ASX shares, US shares, ETFs
Yes
Sign up and earn up to 36,000 Bonus Qantas Points on eligible trades and transfers. T&Cs apply.
Enjoy $0 brokerage on US stocks and buying ETFs as well as a flat $5 fee to trade Australian shares.
Saxo Markets (Classic account)
$8
$0
ASX shares, Global shares, Options trading, US shares
Yes
Access 22,000+ stocks on 50+ exchanges worldwide
Low fees for Australian and global share trading, no inactivity fees, low currency conversion fee and optimised for mobile.
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Compare up to 4 providers

Important: Share trading can be financially risky and the value of your investment can go down as well as up. Standard brokerage is the cost to purchase $1,000 or less of equities without any qualifications or special eligibility. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.

There are plenty of factors you’ll need to take into account when choosing a broker, so check out our guide to choosing the best online share trading platform for more details.

How to buy shares without a broker

Just to clear up any confusion, share trading platforms are technically brokers – only without the personal interaction. If you’re looking to buy shares online, you can use the table above to compare apps.

However, there are also a few ways you can buy shares without a broker at all:

  • Managed funds. You access shares without a broker by investing in a managed fund or your superannuation. These funds typically hold multiple company stocks which are selected by a fund manager.
  • IPOs. Some crowd-funding platforms allow you to buy shares when a company first lists on a stock exchange, called an Initial Public Offering (IPO).
  • Your company. Some firms offer their staff company shares as part of their employment contract. These are called employee share schemes.
  • Off-market transfer. It’s possible to inherit shares or be given shares by someone else without a broker. This is called an off-market share transfer.
  • Share purchase plan (SPP). Sometimes companies raise extra capital by selling new shares via an off-market share purchase plan. Typically, you invest in an SPP directly through the company itself.

Step 2: Sign up for an account

To sign up to a broker in South Africa, you’ll need to be at least 18 years old and an South African resident.

Registering for an account with a broker is usually free, however there are sometimes subscription costs or fees to transfer funds to your account. If you’re a new customer, you’ll need to provide the following information:

  • Your name, address, date of birth and contact details
  • Your tax file number (TFN)
  • Proof of ID
  • Bank account details

Depending on the broker you choose, it can take as little as a few minutes for your account to be approved or it can take up to a fortnight.

You may be asked to deposit a specific minimum amount in order to open an account although this isn’t always the case. In most cases, you’ll have the option of funding your account through bank transfer, credit card or debit card.

Step 3: Plan before you buy

Stocks can be a great investment, but they’re also pretty risky. The more companies you hold and the longer you can afford to have money locked into stocks, the less risky your investment is. So it’s important to have a timeline and some actions in mind if things change.

To build a plan, you’ll need to ask yourself the following key questions:

  1. How much can I afford to invest in stocks?
  2. How much can I afford to lose?
  3. How long can my money stay in the stock market?
  4. What will I do if prices start to fall?
  5. What about if prices rise?

Once you can answer these questions, you can start mapping out the types of stocks you want to invest in. As a rule of thumb, the riskier the investment, the bigger your potential profit. Work out if you can afford to buy high-risk stocks (such as penny stocks) or if you should stick to safer long-term investments like blue chip stocks or index funds.

Step 4: Pick your stocks

With thousands of stocks to choose from, you’ll need to do some research around which ones match your investment goals. Bear in mind that it’s safer to have a diversified portfolio of stocks from different sectors and even countries to avoid major losses if one market falls.

You’ll often have access to market research, analysis and even stock recommendations through your platform, so use this info to help make an informed decision. The other option is to follow the buy, hold or sell ratings of top brokers such as Morgan Stanley, Goldman Sachs, Morgans, UBS and Morningstar. Just keep in mind that even the experts get it wrong a lot of the time.

Here are a few tips to help you decide:

  • Do you trust the company? The best company to invest in is one that you both understand and trust. Pick a company that you believe will continue growing and can be trusted to use its profits wisely.
  • Do you use its products? Are you a fan of Apple or do you use Facebook every day? These could be good options because you’ll also be among the first to notice if the company starts underdelivering to customers.
  • Debt + profit levels. Are debt levels under control and is profit growth meeting exceptions?
  • Expansion. Does the company have plans to expand into new global markets or sectors? A growing company usually means a rising share price.
  • Dividends. Does the company pay a dividend? If not, are you expecting the company’s share price to rise?
  • Stock price. Is the stock overvalued? An expensive stock is where the share price has risen beyond its perceived value, which could mean it’s going to fall in the near future.

Ask an expert: How do you pick the right stocks?

Roger Montgomery

Roger Montgomery
CIO, Montgomery Investment Management

Only invest in quality companies. To identify a quality company search for a sustainably high rate of return on equity. High rates of returns on equity drive better long term returns for investors in those companies. A company that can sustain such returns usually has a sustainable competitive advantage.

Look for sustainable competitive advantages from a great reputation, geographic location, benefits from scale, technology, Patents, innovation or IP, the Network Effect or barriers to entry. Always remember the most valuable competitive advantage is the ability to raise prices without a detrimental impact on unit sales value.

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Ask an expert: How do you pick the right stocks?

Eleanor Creagh

Eleanor Creagh
Senior Market Strategist, Saxo Markets Australia

Do your own research (financial health, earnings, quality, potential growth etc.), believe in the business yourself and don’t buy a stock because someone gave you a hot tip.

Stick to your investment plan and risk manage – cut losers and allocate that capital elsewhere and let winners run.

Lastly, focus on building a balanced, diversified portfolio that can weather the economic cycle, over picking the next winning stock. No one is right all of the time! The power of consistency and compounding returns (compound interest – the 8th wonder of the world according to Einstein) over a long period of time is far greater than a get rich quick stock pick.

.

Step 5: Order the stocks

Once you’ve decided which stocks you want to buy and how much you want to spend, the next step is to order them. If you have a full-service broker, you’ll need to call or email them to place your trade. If you’re using an online broker, this part’s up to you.

Keep in mind that larger purchases may incur higher fees. For example, your platform may charge R300 brokerage to buy a smaller number of shares but will change the fee structure to 0.1% of the trade value when larger amounts are purchased.

  1. Select your stocks by entering the company name or stock code
  2. Enter the number of stocks you’d like to buy or the amount you’d like to invest
  3. Choose your order type – you can usually opt to buy at the current price or use a limit order to pick a better price
  4. Preview and confirm purchase

There are a few different ways that you can order your stocks, ranging from simple to quite complex instructions. The names tend to differ between brokers and not all offer the full range of options, but these are some of the more common types:

Market order. This is the most basic order type, where you buy or sell shares as soon as possible at the most current available price.

Limit and stop orders. This allows you to buy or sell stocks depending on a specific price. For example, if MTN’s share price is R988 but you want to buy at R750, you can set a limit order to execute once its price falls to R750 or lower. You can also set a “stop loss” to minimise losses by selling if a stock price falls below your buying price.

Trailing order. This is a type of limit order where the limit is based on a percentage change or a price difference from the market price. For example, Sasol (SOL) has a price of R500 and you’d like to buy it for around R400, but only if it’s price dips temporarily rather than indefinitely. You could set a trailing price trigger of R400 with a stop value of 5%. This means your order would be triggered once SOL falls to R400 and then placed only once it rises by 5% to $420.

Once you’ve entered all the specifics of your transaction, you’ll then get a chance to review the details before placing your buy order. If you place a conditional order (a non-market order), you’ll typically receive a notification by email or text message once the order has been carried out.

What are bid, offer and last prices?

Some brokers display the “bid”, “offer” (or ask) and “last” price of stocks. Think of these as similar to auction prices, where buyers and sellers are offering their best prices.

A bid price is the highest price any trader is offering to buy a company’s stock at that moment and the ask or offer price is the lowest price any seller is willing to accept. The last price is the most current price – and also the last price bidders agreed upon.

Although the last price is the stock’s most recent price, it’s not necessarily what you can expect to pay if you make a market order. Instead, you’ll be paying the latest bid price and you’ll get the ask price when you sell.

Step 6: Pay for your shares

The funds needed to pay for your shares will automatically be charged from the linked cash account that you selected in step 2. In most cases, you can fund your account using a bank transfer, credit card or debit card.

If you’re using an online broker, you’ll need to have sufficient funds to cover the cost of any trade transactions you make, including fees that apply. The trade settlement period on the JSE is five business days (commonly referred to as T+5), which means your account will be charged five days after you’ve bought the shares.

Next steps – Monitor the performance of your shares

Congratulations, you’ve bought some shares!

Keeping your investment plan in mind, the next step will be to monitor the performance of your stocks. How often you do this will depend on your plan. For example, if you have a long-term investment strategy, you may only need to check in every few months. If you have a short or medium-term strategy, it may be a good idea to check each night or each week.

Pay taxes on profits

Yes, you do need to pay tax on any profits you make from shares, including dividends. Any income you make from dividends is automatically recorded by the Reserve Bank and a rate of 20% will be withheld by the entities paying the dividends at tax time which will then be paid to SARS on your behalf.

Profits that you make on capital gains – i.e. when you buy low and sell high – are only counted in the financial year that you’ve sold your shares. Your broker will usually send you a tax invoice with any profits that you’ve earned from stocks each financial year.

Tip: You can read more about share trading and taxes in our tax guide.

How much does it cost to buy stocks?

Share prices range from less than one cent to thousands of rands per stock; however, there are some rules around how much you need to invest.

Minimum investment

In South Africa, there is no minimum investment amount for every new JSE company you invest in. The rules also change depending on the company as well as which country a stock is from.

For example, some brokers also allow fractional investing where you can buy in fractions rather than whole stocks. So say Facebook is priced at R2000 a share, instead of investing R2000, you could buy one-tenth of a share for R200.

Broker fees

The other main cost you need to think about is the brokerage or commission fee. This is the fee charged by your broker or share trading platform every time you buy or sell stocks. Brokerage fees can be anywhere around R10-R300 on most share trading platforms – sometimes called “discount brokers” – and anywhere from 10% of your investment for full-service brokers.

Other fees charged by brokers include the currency conversion fee (for foreign stocks), account fees, custody fees (for US stocks) and inactivity fees. These are important considerations since any fees you pay your broker will reduce your earnings and impact how much you invest per trade.

Will your profits cover the fees?

Say you invest $100 in Netflix stock on NASDAQ with a broker fee of $10 a trade, a custody fee of 0.1% and an annual account fee of $50. If you bought no other stocks, you would need Netflix’s stock price to rise by at least 71% in order to cover the fees you paid ($20 to buy and sell + $1 custody fee + $50 account fee). But if you’d invested $5,000, you’d only need its price to rise by 1.42%.

Risks of share trading

Before you start buying and selling stocks, be aware of the risks:

  • You can lose money. A company’s stock can plummet to zero in the worst case scenario. If you’ve invested in such a company, you could lose your entire investment.
  • Bankruptcy. Shareholders are usually the last to be paid when a company goes broke. When this happens, there’s a good chance that you won’t get your money back.
  • Emotional toll. Daily share market fluctuations can cause plenty of stress for investors. If you can’t handle the ups and downs, you may be better off looking for a safer and steadier investment option.
  • Unexpected problems. Even if you do a lot of research into a company, it’s simply not possible to predict the future. Natural disasters, terrorist attacks, bad company news and even changes in government policy can all occur unexpectedly and adversely affect the price of shares.
  • Lack of expertise. While investing in the share market sounds quite easy in theory, it can get quite complicated if you don’t know what you’re doing. First-time investors should be wary of getting ahead of themselves.
  • Getting in over your head. A final word of warning if you’re thinking of investing in shares: don’t bite off more than you can chew. Make sure to use your common sense and take a cautious approach – good advice no matter whether you’re planning on investing in shares, property or anything else.

Frequently asked questions about buying shares in South Africa

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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