Guiding consumers since 2009

Brokers' fees compared

By Staff Writer

From Moneyweb, 10 January 2008

by Julius Cobbett

Reserve Bank governor Tito Mboweni is concerned about price increases of various goods and services. But he does not have to worry about the costs of online stock brokers, which have actually been in a declining trend over the past year.

This is good news, especially when one considers how empowering an online broking account can be. For a few thousand rand, you can become a part owner in any business listed on the JSE, or, if you prefer, a basket of businesses through an exchange-traded fund such as Satrix. Many of these businesses will pay you passive income in the form of tax-free dividends. These dividends are likely to grow over time, and so should the value of your shares.

Once you've made the decision to open an online broking account you will need to choose a broker. This is not a decision to be made lightly: opening an account requires a daunting array of documents, which could include certified copies of bank statements, identity books, water-and-lights accounts, tax
certificates, and the list goes on.

Furthermore, most stockbrokers will charge you a fee if you wish to transfer your account to a competitor. So choose your broker carefully.

To the benefit of investors, there are elements of a price war among online brokers. Two brokers - Nedbank and Standard Bank - have reduced their minimum brokerage to R70 per trade, making sub-R100 trades
possible, even when peripheral charges and tax are taken into account.

But price should not be the only consideration when choosing a broker. Additional services such as live prices, research, graphs, SMS notifications and handy documents for the taxman are usually well worth paying a bit extra for.

The cheapest broker will also depend on the type of investor you are.

For example, if you make infrequent, relatively large trades, then Absa Stockbrokers may be the best option because it offers a low flat brokerage of 0,4% and waives its administrative charge if four or more trades are made each year. 

However, if you make small, frequent trades, then you may be suited to a broker like Standard Bank, which has a lower minimum brokerage than Absa, but only waives its administration fee if you trade three or more times per month.

The table below summarises the costs of 11 prominent online brokers. Most of the information has been gleaned off the websites of the respective companies.

Recent Articles

Featured Debt counselling – the two sides of the coin

Being overindebted doesn’t just put a strain on your personal finances; it also puts a strain on your state of mind. The best solution is to start the process of debt counselling so that you can escape the debt cycle. But what are the ups and downs of joining this debt relief programme?

Travel ban – how to claim for the loss incurred

As with the recent Covid-19 pandemic, governments sometimes issue travel bans to prevent people from travelling to other countries. This becomes even more complicated if you’ve already planned and paid for your trip. Your flights will be cancelled, and you may lose money from cancelled accommodation arrangements. How do you claim for the financial losses incurred due to a travel ban?

How to finance and insure a second-hand vehicle

Buying a second-hand vehicle may suit your budget better than acquiring a new one. But what impact does an older model have on vehicle finance and car insurance? We reached out to specialists in the field to explain what the financial implications are of pursuing a second-hand vehicle.

Reading your loan agreement: look out for this

Many people don’t read their loan agreements. They just sign on the dotted line without realising that they could be signing their lives away. But it’s important to review your loan agreement before and after taking your loan to avoid future setbacks.

 

Deals

Udemy online course for R180

Price: R180
When: Until 27 March 2020
Where: Online

Educate your kids for free with Skills Share

Price: Free
When: Daily
Where: Online

Take advantage of payment holidays from Standard Bank and Nedbank

Price: Free
When: From 1 April to 30 June 2020
Where: Nationwide