Buying your first ETF (Exchange-Traded Fund) is a big milestone in your investment journey—and South African investors are fortunate to have excellent local and global ETF options. But before diving in, it’s essential to understand what you’re buying and why.
An ETF is a basket of shares or other assets that tracks an index (like the Top 40 or S&P 500). It gives you broad market exposure, usually with low fees and built-in diversification. For first-timers, this makes ETFs a lower-risk, high-efficiency investment vehicle.
When selecting your first ETF, consider:
- Underlying assets: Are you investing in local equities, global stocks, property, or bonds?
- Fees (TER): Total expense ratio affects your net return. Look for ETFs with TERs under 1%.
- Currency exposure: Some ETFs track offshore indices and are influenced by rand exchange rates.
- Reinvestment: Some ETFs automatically reinvest dividends, which helps compound your returns.
Start with well-known funds like the Satrix Top 40 or the Sygnia Itrix MSCI World. Use platforms such as EasyEquities or SatrixNow to buy with as little as R50.
Most importantly, invest with a long-term view. The true power of ETFs lies in time and consistency—not timing.