If you’re based in South Africa and want to buy shares online, the end-to-end process can be completed in minutes. You will need to choose a regulated online stock broker, deposit some funds with your local debit/credit card or bank account, and then choose which shares you want to buy.
In this guide, we explain the ins and outs of how to buy shares in South Africa. We explore key steps that you will need to take before getting started – such as choosing a suitable share dealing site, learning how capital gains and dividends work, and the steps required to place your first stock trade.
Looking to buy shares or invest in stocks and start your investment journey?
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- 1 Learn the Basics of Buying Shares in South Africa
- 2 How do you Make Money From Shares?
- 3 How to Buy Shares in South Africa – Step by Step Guide 2021
- 4 What to Consider Before You Buy Shares in a Company
- 5 How to Select a Stock Broker
- 6 Best South Africa Share Dealing Platforms of 2021 – Our Picks
- 7 What are the Pros and Cons of Investing in Shares?
- 8 How to Buy Shares Online South Africa – The Verdict
- 9 eToro – Buy Shares with No Commission
- 10 FAQs
Before you can learn how to actually buy shares in South Africa, it is wise to buildup your stock dealing knowledge before taking the plunge. This will ensure that you do not open a broker account and deposit funds without having a firm grasp of how the financial markets work.
With this in mind, below we discuss the basics of buying shares in South Africa as a first-time buyer.
What are Shares?
In its most basic form, shares are issued by companies as a means to raise capital. In return, by purchasing shares from the company in question, you will own a percentage of the firm.
For example, if you purchased 1% of Company ABC, you would subsequently own 1% of the organization. This would entitle you to dividends as and when they are distributed, as well as the legal remit to vote in shareholder meetings.
In order to issue shares, the company must be listed on a public stock exchange. This includes the likes of the London Stock Exchange in the UK and the NASDAQ in the US. This means that sellers can offload their shares to new buyers.
The specific price of the shares will go up and down on a second-by-second basis, which is determined by market forces. In other words, if demand for the shares outpaces supply, then in theory the price of the stocks will go up. Similarly, if there are more people selling the shares than those that wish to buy, then price of the stocks will naturally go down.
What Shares Can you Buy in South Africa?
If you want to buy shares in South African companies (or international firms that have a presence in the country), you will need to use a share dealing platform that gives you access to the Johannesburg Stock Exchange. Some of the most valuable companies on the exchange includes Prosus, Anheuser-Busch InBev, Naspers, Anglo American, Glencore, and BHP Group.
With that said, it is also worth expanding the horizons of your stock portfolio by considering international marketplaces. For example, some of the largest companies in the world – namely Apple, Google, Facebook, Amazon, Nike, and Disney are listed across the New York Stock Exchange and NASDAQ. Then you have the London Stock Exchange which hosts companies like British American Tobacco, HSBC, Royal Mail, and GlaxoSmithKline.
Outside of the UK/US markets, a number of South Africa share dealing platforms also give you access to the:
- Tokyo Stock Exchange
- Shanghai Stock Exchange
- Hong Kong Stock Exchange
- Shenzhen Stock Exchange
- Toronto Stock Exchange
- Alternative Investment Market (UK)
- Frankfurt Stock Exchange
- And many others!
As we briefly covered earlier, you can actually check to see what stock exchanges your chosen broker offers before signing up.
Indexes and ETFs
If you don’t feel comfortable investing on a Do-It-Yourself basis, it might be worth considering a stock market index or ETF. Regarding the former, you will be investing in the wider stock markets, as opposed to picking and choosing individual companies.
- For example, let’s suppose that you invested in the London Stock Exchange.
- The best way to do this would be to invest in a stock market index like the FTSE 100.
- This particular index will track the 100 largest companies that are listed on the London Stock Exchange.
- Through a single stock market index investment, you are essentially buying shares in the 100 largest UK firms via a single trade.
Alternatively, you might want to consider an ETF (exchange-traded fund). This operates in a similar nature to a stock market index, insofar that you will be investing in dozens or hundreds of companies via a single trade. An ETF might track a particular stock market index like the Dow Jones or S&P 500, or a specific industry like tech stocks, retail stocks, or real estate stocks. Some ETFs even track dividend stocks – which is ideal if you are looking for a diversified portfolio of income-generating shares.
The overarching objective of buying shares is to make a profit. This can actually come in two different forms – capital gains and dividends.
When you buy shares in a company, the long-term aim to sell them at a higher price than you originally paid. If you are able to do this, then the profits are known as ‘capital gains’.
- Let’s suppose that you buy 10 shares in Microsoft at $180 per stock
- This means that your total investment amounts to $1,800
- Three years later, Microsoft shares are now priced at $230 per stock
- You are happy with your gains so you decide to sell the shares
- You made £50 per share ($230-$180), and at 10 shares – this amounts to a profit of $500
The $500 profit that you made from selling your shares at a higher price is your capital gains. You will need to pay capital gains tax on these gains if you are a South African resident for tax purposes. This varies from 18% to 45% depending on your income tax band.
Some, but not all, publicly-listed companies pay out regular dividend payments to their stockholders. In its most basic form, this simply means that the company in question is sharing its profits out to those that hold stocks. If this is the case, dividend stocks typically distribute payments every 3 or 6 months. When they do, the funds will be deposited into the brokerage account that the stocks are held at.
Here’s how dividends stocks work:
- Let’s say that you hold 1,000 shares in Ford Motors
- The firm pays dividends every three months
- This time around, Ford Motors announces a dividend yield of 4%
- This amounts to $0.27 per share
- You hold 1,000 shares in Ford, so you will receive a total of $270 ($0.27 x 1,000 shares)
Some South African investors will look to focus exclusively on dividend stocks, as this allows them to earn passive income. You then have the prospect that the shares will increase in value, which means you can earn dividends and capital gains collectively!
So now that you know the ins and outs of how share trading works in South Africa, we are now going to show you what you need to do to get your hands on some stocks today. In fact, by following the guidelines below to the ‘t’, you could make a share purchase in less than 10 minutes.
Take note, our step-by-step walkthrough is based on popular stock broker eToro. You can, however, use any platform of your choosing, as the steps remain constant!
Open an Account with eToro Today – Pay 0% Commission on Stocks
Visit the eToro website and look out for the ‘CREATE ACCOUNT’ button. Upon clicking it, you will be asked to enter some personal information.
This includes your:
- Full Name
- Home Address
- Date of Birth
- National Tax Identification Number
- Contact Details
You will also need to choose a username and a strong password.
Upload Some ID
eToro is regulated by three tier-one licensing bodies – so it must ensure that it complies with all laws surrounding anti-money laundering. As such, you will now be asked to upload a couple of verification documents.
- A copy of your South African passport or driver’s license
- A recent copy of a bank account statement or utility bill
Once you have uploaded the aforementioned documents, you will be asked to make a deposit.
Supported payment methods include:
- Debit Cards
- Credit Cards
- South African Bank Account
eToro has a minimum deposit policy of $200 – which is about 3,300 rands. The deposit will then be converted to US dollars, as this is the in-house currency used by eToro. Although this will attract a 0.5% conversion fee, you will then have the freedom to buy shares in over 800 companies from several international exchanges.
As soon as your deposit has been processed (which is instant apart from a bank transfer), you can then buy some shares. If you want to browse the many different markets offered by eToro, click on the ‘TRADE MARKETS’ button followed by ‘STOCKS’. Alternatively, if you have a particular company in mind, enter it into the search box and click on the corresponding result.
In our example, we are buying shares in Microsoft.
Once you click on the ‘TRADE’ button, you will then be shown an order box. To get your share investment placed, you will need to enter the amount that you wish to buy. As you can see from the example below, we are buying $50 worth of shares in Microsoft. Finally, click on the ‘OPEN TRADE’ button to complete the investment.
And that’s it – you’ve just bought shares without paying a single rand in commission!
Making money in the stock market isn’t as simple as buying a few shares and guaranteeing yourself unprecedented profits. On the contrary, there is every chance that you will lose money. In fact, there are countless examples of companies that have not only failed to regain their former glory (Western Union, MoneyGram, HSBC, and many others), but some no longer cease to exist.
As such, we would suggest reading through the following five tips before parting with your money.
Tip 1: Create a diversified portfolio of shares
Diversification is one of the most important strategies that you can take when investing in the stock markets. In its most basic form, it means that you will be diversifying your risk by investing in heaps of different companies. In doing so, you stand the best chance possible of avoiding being overly-exposed to a company that goes down in value.
For example, let’s say that you have 40,000 rands to invest in the stock markets.
- An inexperienced investor might decide to buy 40,000 rands worth of shares in Company ABC. If the company ran into financial problems and subsequently saw its shares go down in value, they would likely lose a lot of money.
- An experienced investor might invest 400 rands into Company ABC, which is just 1% of their investment pool. They would then purchase shares in 99 other companies – each at an investment of 400 rands. This means that the investor will have shares in 100 different companies from a range of different sectors. This is a prime example of a diversified portfolio.
In truth, buying shares in 100 different companies can be a time-consuming and costly exercise. This is because you will need to place 100 different trades – each of which will encounter a share dealing charge. The good news is that by opting for a stock market index or ETF, you can invest in dozens, if not hundreds of different firms via a single trade.
- The S&P 500 is a stock market index that tracks the 500 largest companies in the US
- These companies are listed on the New York Stock Exchange of NASDAQ
- Firms making up the S&P 500 will come from a wide variety of sectors and industries (tech, retail, banking, food and beverage, oil, etc.)
- By placing a single trade via the S&P 500 – you will personally own shares in 500 different companies
- Best of all, you will still be entitled to dividends as and when they are paid!
Tip 2: Build your stake sizes up slowly
Some market commentators will suggest starting off with a demo account. In doing so, you will be buying and selling shares with ‘paper money’. Although this will allow you to test the respective trading platform out and learn the ropes of market orders and pricing trends, it won’t prepare you for the emotional side of trading.
As a result, you might be best to start off with a real-money brokerage account, albeit, with small stakes. This gives you the best of both worlds, insofar that you will be able to experience what it is like to pick a losing trade, while at the same time mitigate your risks by investing with smaller amounts.
Tip 3: Consider a Copy Trading portfolio
If you have virtually no idea how to choose which companies to invest in – it might be worth considering the merits of a Copy Trading portfolio. In a nutshell, platforms like eToro allow you to mirror the trades of other investors.
That is to say, not only will you be copying their current stock portfolio – but all future buy and sell orders. This means that you will be able to buy and trade shares without needing to have any experience of how things work.
Best of all, you get to explore the merits of each Copy Trading investor before parting with your money. For example, eToro allows you to check the historical trading results of the investor, and each trader will be assigned with a risk rating.
Tip 4: Make sure you factor in fees and commissions
South African share dealing platforms will always charge a fee of some sort. Not only will the size of the fee vary from broker-to-broker, but as will the pricing model. For example, while some brokers charge a flat fee every time you trade, others charge a variable commission.
Here are the main stock trading fees that you need to look out for before signing up:
- Share Dealing Fee: Otherwise referred to as a ‘trading fee’ or ‘trading commission’, a share dealing fee is charged every time you place a trade. That is to say, you will be charged when you buy shares, and then again when you sell them. For example, let’s suppose that the broker charges 150 rands per order. Regardless of how many shares you buy, you will pay 150 rands when you first invest, and then 150 rands again when you offload the stocks. In other cases, the broker might charge a variable commission against the total size of your investment. Brokers like eToro charge no share dealing fees at all.
- Annual Fees: A number of South Africa stock brokers will charge you an annual fee. If they do, this will be charged against the amount you have invested at the platform. For example, if the broker charges 1% per year and you have 50,000 rands invested, you will pay 500 rands.
- Spread: The spread is an indirect trading fee that you need to take into account. It is the difference between the ‘bid’ and ‘ask’ price – so the wider the gap, the more you are paying. This is why we suggest sticking with South Africa share dealing platforms that offer tight spreads.
- Non-Trading Fees: Other fees to look out for include a charge to deposit and/or withdraw funds, and a fee charged when your account remains inactive for a certain number of months.
Tip 5: Keep tabs on key market developments
On the one hand, stock investors are less concerned about short-term pricing trends. Instead, they are happy to play the long-term game by riding out market waves. On the other hand, it is still vital that you keep tabs on key news developments that can impact your stocks and shares investment. In doing so, you will avoid losing more than you would have done had you not sold the shares earlier.
- For example, let’s suppose that you have 60,000 rands invested in Facebook shares.
- When Facebook was involved in a major data breach and subsequently required to meet with a regulatory committee in both the US and Europe – its share price took a major hit
- A shrewd investor would have cashed out their Facebook shares the moment the negative news was announced
- In doing so, they avoided a loss that would have been substantially bigger had they not acted. In fact, the shrewd investor likely would have re-purchased the shares once the mass sell-off began to cool-off!
If you have a portfolio that consists of heaps of different stocks, it might be worth using an automated news tracker. The likes of Yahoo Finance have a dedicated fundamental news service that will notify you when an important new story centres on your stocks. You can add as many companies as you wish without needing to pay a fee!
How to Select a Stock Broker
If you want to buy stocks and shares in South Africa, you will need to use an online share dealing platform. Such platforms sit between you and the stocks that you wish to buy. On the one hand, there are dozens, if not hundreds of regulated brokers that now accept traders from South Africa.
On the other hand, this can make it difficult to know which platform to sign up with. For example, while some platforms are known for offering low fees and commissions, others are popular for supporting e-wallets like Paypal and Skrill.
With this in mind, below you will find a range of considerations that you need to make before opening a new brokerage account.
You will be depositing and entrusting your hard-earned money with your chosen share dealing platform – so it is imperative that the provider is regulated by a tier-one licensing body.
This will include the likes of:
- The Financial Conduct Authority (FCA) – United Kingdom
- The Australian Securities and Investments Commission (ASIC) – Australia
- The Cyprus Securities and Exchange Commission (CySEC) – Cyprus
By choosing an online broker that is regulated by at least one of the above licensing bodies, you can ensure you are able to buy and sell shares in a safe environment. For example, the broker will need to ensure that it stores client funds in separate bank accounts from its own. It will also need to verify the identity of each and every trader that opens an account. Furthermore, the share dealing site in question will have its books audited by its respective license issuers.
South Africa Payment Methods
The next metric that you need to look out for before opening a new brokerage account is that of payment methods. After all, you will need to deposit and withdraw funds into and from the share dealing site, so make sure that your preferred payment option is supported.
This typically includes:
- Debit Cards
- Credit Cards
- Bank Transfer
Most online brokers support South African-issued payment cards, which means that you will be able to deposit funds instantly.
Listed Stock Markets
It is also important for you to assess what stock markets you will be able to access at your chosen South Africa stock broker. Some platforms in the space list thousands of companies from dozens of stock exchanges.
As we briefly noted earlier, this is likely to include the New York Stock Exchange (US), NASDAQ (US), London Stock Exchange (UK), and the Tokyo Stock Exchange (Japan).
If you have a slightly higher appetite for risk, it might be worth seeing if the broker gives you access to less liquid markets. This might include exchanges in Singapore, Hong Kong, Saudi Arabia, Sweden, or Spain.
You can check what markets the broker offers before opening an account by browsing through its website. It is also worth seeing if the broker offers stock market index funds and ETFs. This will be ideal if you have little to no experience of buying shares, or you simply want to diversify in a seamless manner.
Fees and Commissions
You also need to make some considerations regarding fees. This includes both trading fees and non-trading fees. Regarding the former, you will likely need to pay a trading commission or share dealing charge every time you buy and sell a stock. This might come in the form of a flat fee or a variable commission.
A select number of brokers – such as eToro, do not charge any dealing charges when you buy shares without leverage. You also need to look at the size of the spread when buying shares, which is the difference between the bid and ask price of the stock. Finally, check to see what non-trading fees are applicable – such as deposit/withdraw fees and inactivity fees.
Although we would suggest performing in-depth research on your chosen broker before signing up, we understand that this can be a time-consuming process. As a result, below you will find a number of share dealing platforms that are popular with South Africans. Each broker accepts South African debit/credit cards, is regulated by at least one reputable licensing body, offers top-notch customer support, and gives you access to a highly extensive library of shares.
1. eToro – Best All-Round South Africa Stock Broker (Commission-Free)
eToro is now one of the most popular online stock brokers active in the space, with more than 12 million traders under its belt. One of the main reasons for this is that the broker is tailored to newbies. For example, you can open an account in a matter of minutes, and easily deposit funds with a South African debit/credit card, bank account, or e-wallet.
Buying and selling shares is also super-easy, with eToro building its user-friendly trading arena from the ground-up. eToro is also popular with South African traders as it allows you to buy and sell shares without paying any commissions – nor will you be charged an annual fee. Instead, you will only be charged if you apply leverage or attempt to short-sell a company.
In terms of what shares you can buy, eToro lists over a dozen international stock exchanges. Across more than 800 companies, you’ll have access to markets in the US, UK, Germany, Canada, Saudi Arabia, France, and more. If you don’t feel comfortable choosing your own investments, eToro also offers ETFs – all of which can be invested in without paying any commissions. An additional option to consider as a newbie is that of the eToro CopyTrading feature.
As the name suggests, this allows you to mirror the trades of experienced investors. If you do like the sound of eToro, you will need to meet a minimum deposit of $200 – or 3,300 rands. You will incur a small conversion fee of 0.5%, as all deposits are converted to US dollars. Finally, you should have no concerns about safety at eToro, as the broker holds three tier-one licenses – which includes the FCA, CySEC, and Australia.
- Super user-friendly online stock broker
- Buy stocks without paying any commission or share dealing charges
- 800+ stocks listed on multiple international markets
- Deposit funds with a debit/credit card, e-wallet, or South Africa bank account
- Ability to copy the trades of other users
- Not suitable for advanced traders that like to perform technical analysis
75% of retail investors lose money trading CFDs at this site
2. Plus500 – Commission-Free CFD Provider
Plus500 is a specialist CFD broker that lists over 2,800 instruments. This means that you will not be buying shares in the traditional sense, as the underlying asset is a CFD. Contracts for Differences (“CFDs”) products were developed to allow customers to enjoy all the benefits of holding a Stock, Index, ETF, Forex, Option or Commodity position without having to physically own the underlying instrument. A customer enters into a CFD at a quoted price, the difference between that price and the price of the CFD when the position is closed is settled in cash, hence the term “Contract for Difference” or CFD.
By using Plus500 to trade stock CFDs, you will benefit from tight spreads and commission-free orders. You will also have the option of short-selling your chosen company. For example, if you feel that the price of Apple stocks is overvalued, a sell-order will allow you to profit from this. It is also important to note that stock CFDs at Plus500 can be traded with leverage.
This is capped at 1:5 at the broker, meaning a 3,000 rands account balance would permit a maximum trade of 15,000 rands. If stock CFD trading is of interest to you, Plus500 requires a minimum deposit of £100 – or just over 1,500 rands. You can get money into and out of the broker with a South African debit/credit card, bank account, or e-wallet. Plus500 may charge for exceeding the maximum number of monthly withdrawals.
Finally, Plus500 takes its regulatory responsibilities very seriously. It holds licenses with the Plus500AU Pty Ltd (ACN 153301681), licensed by ASIC in Australia, AFSL #417727, FMA in New Zealand, FSP #486026; Authorised Financial Services Provider in South Africa, FSP #47546.
- Commission-free CFD broker – only pay the spread
- Thousands of financial instruments across heaps of markets
- Ability to trade stocks with leverage of 1:5
- You can buy or sell a position share CFDs if you think its value will go up or down
- Demo account can be opened in 5 mins
- Regulated by several licensing bodies – including the FCA and ASIC
- Only suitable for experienced traders
CFD Service. Your capital is at risk.
3. IG – Trusted Share Dealing Platform With Competitive-Fees
Launched in 1974, IG is a trusted brokerage firm that offers a range of asset classes. In fact, not only can you buy and sell shares in the traditional sense, but the platform also offers stock CFDs and spread betting services. This means that you can apply leverage of up to 5:1 when trading shares, as well as short-sell companies.
If you are simply looking to invest in shares, you will pay a flat fee of just £8 – which is about 170 rands. If you manage to trade three or more times in the previous month, you will get your share dealing charge down to £3 – or about 64 rands. This is very competitive for an old-school broker like IG.
The online broker lists more than 10,000 companies, so you can easily create a diversified portfolio. This includes stock exchanges in the US, UK, Japan, Canada, and many others. You will also have access to ETFs and stock market index funds. Fees on these products will vary depending on the instrument you wish to invest in.
In terms of regulation, IG is licensed by the FCA and ASIC, as well as bodies in a number of other jurisdictions. You will need to deposit at least £250 to open an account at IG – which is about 5,300 rands. You can use your local debit or credit card for an instant deposit, or a South African bank account. The latter takes around 3-5 days to process.
- Trusted broker with a long-standing reputation
- Good value share dealing services
- Leverage and short-selling also available
- Spread betting and CFD products
- Access to dozens of international markets
- Great research department
- Minimum deposit of £250 – or 5,300 rands
- US stocks have a $15 minimum commission
- You could lose money
- No guarantee that your shares will increase in value
If you have spent the time reading through our guide from start to finish – you should now have a firm understanding of how the stocks and shares space works in South Africa. Crucially, the actual process of buying shares is super easy – as you can now do this from the comfort of your home.
As we have discussed, you simply need to choose a South Africa share dealing site, deposit some funds, and then pick which stocks you want to purchase. With that said, it hoped that you have a good understanding of the risks involved in buying shares.
Ultimately, although the stock markets have historically done well, there is no guarantee that you will make money. This is why we suggest creating a highly diversified portfolio of stocks from several industries!
Disclaimer: Investing in shares involves significant risk of loss and is not suitable for all investors. You should carefully consider your investment objectives, level of experience, and risk appetite before making a decision to buy shares. Most importantly, do not invest money you cannot afford to lose.
How do I buy shares in South African companies?
If you want to buy shares in South African companies, it is likely that they are listed on the Johannesburg Stock Exchange (JSE). As such, you will need to sign up with a trusted share dealing platform that gives you access to the JSE!
Who regulates share dealing sites in South Africa?
This depends on the broker in question. For example, the most reputable stock brokers will ensure they are regulated by tier-one licensing bodies. This includes the UK's FCA, Australia's ASIC, and Cyprus's CySEC.
What South Africa payment methods can I use to buy shares online?
If you possess an everyday debit or credit card issued by Visa or MasterCard, you will find that the vast majority of South African brokers will support it. You will also find support for your local bank account. In other examples, the likes of eToro and Plus500 offer support for e-wallets.
What fees will I pay when buying shares in South Africa?
This can vary quite considerably depending on the broker you sign up with and the type of account you open. In most cases, the broker will charge a share dealing fee. This can either be a flat fee or a variable commission, and it will be charged at both ends of the trade. At the other end of the spectrum, eToro does not charge South Africans to buy shares! Instead, it's only the spread that you need to take into account.
Is it possible to buy a stock market index that covers South African companies?
Yes, the JSE All Share Index tracks the 40 largest companies listed on the Johannesburg Stock Exchange.