By: Wendy Myers
Choosing aninvestmentplatformis an important and personal decision. It all depends on where you are inyourinvestmentjourney, and consequently what is right for one investor wont necessarily be right for another.
We recommend that investors trade through a JSE-registered stockbrokingplatform. These offer standard features, products and services, which include the ability to invest in local and international listed stocks, ETFs and unit trusts. Some can also offer you the options of investing in ETFs through a tax-free savings account and the ability to invest in cryptocurrencies.
Aplatformshould enable you to externalise (out of South Africa) or repatriate (into South Africa)yourfunds to or from the offshoreplatform, taking into account the South African Revenue Services (Sars) and the South African Reserve Bank (Sarb) approval necessary if you wish to externalise more than R1 000 000 per annum. An additional useful offering of some platforms is the ability to make use of theinvestmentplatforms asset swap facility, if you have excess funds to invest offshore but have fully utilisedyourannual single discretionary allowance.
For experienced investors, the ability to borrow money, use their equity portfolio as collateral, and invest this cash in the market is another attractive offering from aplatform.
Investors should also consider what type of returns they can earn on cash that they might have on theplatform. Offshore platforms tend to not offer interest on free cash, for example.
Other considerations to bear in mind when choosing aninvestmentplatform are the extent of research content provided, the functionality of theplatform, whether it has a mobile application in addition to web access, and whether tax certificates are provided to assist you in completingyourannual Sars reporting obligations. Bear in mind that you will earn income on theplatformthat will need to be included inyourIT3b (e.g. interest and foreign dividends) andyourIT3c (capital gains and losses).
If you are an investor with an existing share portfolio, and you have decided to switch to anotherplatform, ensure you understand the costs and features of the newplatformbefore transferringyourportfolio.
We recommend using a demo account to get a feel for the newplatforms features, ease of trade, and access to research. It is also important to consider the costs associated with the newplatform. Trading costs tend to be comparable, however, different platforms have other costs of service that youll need to understand to ensure you have no surprises post-transfer.
Remember that you do not need to sellyourshares on the oldplatformto facilitate the transfer, as theplatformyou are transferring from will be able to transferyourholdings to the newplatform(for both local and offshore positions) preventing you from having to sellyourassets and triggering an unnecessary CGT event. It is important to note that derivatives cannot be transferred between platforms, and you will need to close outyouropen derivative contracts should you wish to move to anotherplatform.
Once the above is understood by an investor, the type of account opened depends on their sophistication.
If you are relatively new to investing, you may want to have a non-discretionary or self-managed account, where you use theinvestmentplatformto execute trades inyourname. If you need to make use of retirement and tax wrappers, ensure that youchooseaplatformthat offers these products.
Alternatively, you may decide that, given the materiality ofyourinvestments, you require the services of a financial adviser to provide holistic advice in the context ofyourfinancial plan. In such an instance, you are looking for a discretionary account whereyourfinancial adviser has fullinvestmentdiscretion overyourportfolio.
All of the above-mentioned can be complicated, and it is recommended that youchooseaplatformwhere you can access a financial adviser.
Youradviser can assist you with ensuringyouroverall portfolio is diversified and balanced across asset classes, sectors and geographies. They will also review allyourassets, ensuring you consolidate across a singleplatform, thereby leveraging family pricing opportunities.
An adviser can provide invaluable guidance on the research available on aplatformthe different types of retirement wrappers, and how these products can be utilised toyouradvantage.Yourfinancial adviser is also there to guide you with elective corporate action events and the tax implications ofyourchoices.
