ETFSA vs EasyEquities: Where Should You Invest?
Taking the plunge and investing is the one thing holding many investors back.
The very thought of selecting individual stocks is enough for them to remain sitting on the fence.
Yet by doing this, they’re missing out on the great long-term potential gains of the stock market.
But do you know that you can invest without picking individual stocks?
Instead, you can opt to benefit from the performance of a basket of securities.
You can invest, sit back and let the stock market work its magic.
It all comes down to using exchange traded products (ETPs) instead, namely exchange traded funds (ETFs) and exchange traded notes (ETNs).
So what are these ETPs?
The Ins And Outs Of ETFs
The most popular ETPs are ETFs.
ETFs are essentially baskets of shares or securities, which track an underlying index or market benchmark.
When you buy shares in a specific ETF, you gain exposure to the performance of all of the securities making up the ETF.
The weighting of each security will mirror that of the index or benchmark the ETF is tracking.
For instance, you could invest in an ETF tracking the JSE’s Top 40 Index. With just one investment, you gain exposure to all the companies contained within the index.
Or you could opt for an ETF with a more global feel. From the comfort of your home, you can gain exposure to the likes of Apple and Microsoft without taking your money offshore.
Another bonus of investing in ETFs is you can do so through your tax-free savings account. So any profits will be tax-free.
Where Do ETNs Fit In?
These are different to ETFs as the provider of the ETN doesn’t have to own the underlying security.
ETNs tend to include securities such as currencies and commodities.
When you invest in ETNs, you benefit from the performance of the underlying security.
But unlike ETFs, there is a credit risk, which all comes down to the issuer’s credit risk. This is something you have to take into account.
How To Invest In Exchange Traded Products Like A Pro
You could invest in ETPs through your stockbroker, but this route can prove costly.
Stockbrokers tend to levy minimum charges per transaction and commission, plus you may have to pay an annual admin charge.
But there are cheaper options to consider.
There are two companies on the South African market that boast cheap and easy ETP investing.
They are etfSA and EasyEquities.
So how do they compare on:
- Availability of ETFs and ETNs
Let’s find out!
etfSA vs EasyEquities Factor #1: Cost
Let’s take a look at etfSA first…
There are two types of fees you need to pay with etfSA through their Investor Plan:
- Annual administration fee: For each ETP you invest in, you’ll pay 0.65% up to the value of R500,000, 0.50% for amounts between R500,000 and R1 million, and 0.35% for amounts over R1 million. etfSA work this out daily and you pay this fee quarterly.
- Transaction fees: Each time you buy and sell ETPs, you’ll pay a stockbroking fee of 0.08%, STRATE and Investor Protection Fees (IPF). You may have to pay VAT on these fees.
etfSA have a minimum investing amount for its Investor Plan of R300 a month or R1,000 once off.
So how does EasyEquities measure up?
They claim to be the most affordable option on the market.
EasyEquities don’t charge an administration charge on your account.
What you are liable for is brokerage commission. This transaction fee is 0.25% of the transaction, excluding VAT.
There is no minimum investment amount with Easy Equities.
So how do they compare?
Let’s say you invest R20,000 into one ETF for a year. We’ll exclude STRATE and IPL as this stands for both options.
With etfSA, this would cost you a total of R146. With EasyEquities, this would cost you R50. Both these totals exclude VAT.
EasyEquities appears to be the cheapest option to go with.
etfSA vs EasyEquities Factor #2: Availability of ETFs and ETNs
When it comes to ETFs, both companies offer the exact same offering, with one exception.
etfSA offers Standard Bank African Rhodium ETF. EasyEquities do not.
When it comes to ETNs, both companies offer the same.
But unless you’re desperate to invest in a rhodium ETF, there’s no difference between the two offerings.
etfSA vs EasyEquities Factor #3: Platform
In terms of navigating around both websites, there are some notable differences.
etfSA’s site has a more dated feel than EasyEquities, but despite this, I found it much easier to find the information I was looking for with their drop down menus.
etfSA doesn’t give information about the actual workings of their platform. You have to sign up to give this a go.
But you can easily view all the fact sheets for each ETF and ETN on the market.
On the other hand, EasyEquities lets you see how their platform works.
It appears very easy and straightforward to use. You have instant access to prices and it’s easy to enter how much you want to invest.
Also they offer the ability to filter through the ETFs and ETNs on offer according to their risk profile.
This would make selecting such ETFs much easier than having to read through individual fact sheets to find this out for yourself.
But I couldn’t find fact sheets for any of the ETFs or ETNs on their site.
etfSA vs EasyEquities Factor #4: Education
Both websites offer a plethora of information to help you to gain knowledge on ETPs.
Again, etfSA presents this in a standardised way, whereas EasyEquities is perhaps a bit easier on the eye.
etfSA have a number of YouTube videos aimed at educating you on ETPs along with other information.
EasyEquities also has a section on education. Again, they offer videos along with other tools to make the experience easier for you.
Which One Should You Pick?
Of course, deciding on which company to invest through is a very personal decision and one that you shouldn’t make lightly.
But I am going to share with you my preference.
First of all costs are a huge consideration when investing. You want your money working hard for you on the market, not wasting away in fees.
At nearly a third of the cost of etfSA’s offering, EasyEquities wins this battle hands down.
Plus I like the fact that EasyEquities have no minimum investment amount.
Despite having some problems navigating their website, I do like the way EasyEquities displays their information. It’s much more appealing to read.
I also really like the way I can filter out ETFs and ETNs to invest in according to my risk profile.
But I would use etfSA’s site if I wanted to read up on a specific ETP’s fact sheet. This facility makes it much easier than visiting individual sites of ETF providers looking for this information.
With all this in mind, EasyEquities is the one for me.
Until then, here's to profitable investing.
The Money Lab