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Self-Service Banking > Internet banking > Overview > Functionality > Auto share invest
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1. What are Shares?
2. Why invest in the stock market
3. How Do I invest in the stock market
4. What is the difference between ASI and Unit Trust?
5. What is the difference between ASI and Online Share Trading?
6. Education
1. What are Shares?
The Johannesburg Securities Exchange (www.jse.co.za) is a controlled and regulated platform for the trading of shares in companies that have listed on the JSE. It enables ease of trade in the companies listed on the JSE and ensures that these companies operate within certain rules and regulations. In short it offers an easy route for trading the top companies within South Africa with protection for the investor.
When a company needs money to expand, pay off debt or the like they can list on the JSE (assuming they meet the requirements). Let's say company A sells bottled water and the company is assessed as worth R1million. They issue a pre-listing statement detailing all the required information saying that they will sell 2million shares at R1 each.
So when they list on the exchange they receive the R2million into the company and the buyers of the shares receive the 2million shares. Because the company was initially worth R1million the previous owners receive 1million shares to split up between them.
The end result is 3million shares to trade on the JSE, each worth R1 = R3million = the new value of the company (previous R1million value + R2million cash received for shares). Note that the previous owners no longer have the majority of shares in the company. The R2million paid by the new shareowners goes into the companies bank account enabling them to build a new bottling plant or any other use they may have for the cash.
So now the shares will trade on the JSE and anybody can buy and sell them. If investors believe that bottled water is the future and sales will increase they will be prepared to pay more then R1 per share and so over time the price will increase. Lets say after a year sales in company A have doubled and the share price is now R2.50.
Importantly the share price is not linked directly to the value of the company any more; rather the share price reflects the perceived future value of the company. This is the crux of the price of a share trading on the JSE, the value of that share is not directly related to the value of the company. Rather it is linked to perceptions about the value (and future value) of the company and even more importantly the price is set by what a person is prepared to pay.
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2. Why invest in the stock market
In a word, better returns.
It is also important to stress that many people who actively trade on the JSE lose money and there are many arguments that suggest a buy and hold strategy is the best route to future wealth, rather then regularly buying and selling.
What drives a share price?
In a word - psychology. For a share to trade we have an agreement on price and a disagreement on value. The seller thinks the share is expensive whilst the buyer thinks it is cheap.
The bottom line here is that if there are more buyers then sellers of a share the price will rise and the opposite is equally true. There will be more buyers if the company's future is perceived as rosy and more sellers if that future is deemed as gloomy.
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3. How Do I invest in the stock market
Shares are purchased and sold through a Stockbroker. There are two types of brokers, online (discount) and full service brokers:
Full Service stockbrokers:
- Give advice and trade over the phone
- Have high fees and minimum investment amounts (e.g.1.3%-1.75% and R300K- R1m)
Online Stockbrokers such as Online Share Trading:
- Trade via a website (like internet banking)
- Provide telephonic support
- Give buy and sell recommendations online
- Have low fees.
- Have many tools that help you to manage your share portfolio
Auto Share Invest (ASI)
Standard Bank Internet Banking, in partnership with Standard Financial Markets, an authorised member of the JSE Limited, is giving you the opportunity to invest directly in shares listed on the JSE by offering you a product called Auto Share Invest (ASI). The nature and structure of ASI allows Standard Financial Markets to reduce the cost of investing to as little as R25 including all costs (VAT, Strate, UST and Brokerage) on a R500 or more monthly investment.
The ASI Product provides the following:
A low cost platform for buying and selling shares on a monthly basis
- A choice of shares making up the JSE's TOPI index (Top 40 shares) as well other selected shares and investment instruments.
- Fact sheets that detail:
- The performance of each share
- Background information on each share
- The JSE's Stock Exchange News Service (SENS) (this is the service a company uses to communicate important company information to share holders)
Step-by-step guide
How it works
You select a share or shares you would like to invest in with a minimum of R500 per selected share(s) per month. You then set a monthly recurring purchase order and payment online. Once a month your share purchase instruction is given to Standard Financial Markets to buy the shares on the JSE. Standard Financial Markets will buy the required quantity and, based on the price it pays for the shares on the day of purchase, allocate the shares to your online ASI account.
You can view your portfolio daily online to check its value. The market value of your shares will be shown as per the close prices of the previous business day.
If you want to sell your shares you simply select the future date (all sales are done on a Friday or the day before if that Friday is a public holiday) on which you would like to sell and we will send your instructions to Standard Financial Markets who will sell the shares on that date. The proceeds of the sale will automatically be paid into your bank account after five business days. Note that shares are only sold on a Friday but you can enter a sell instruction any time. It is also important to stress that many people who actively trade on the JSE lose money and there are many arguments that suggest a long-term buy and hold strategy using ASI is the best route to future wealth, rather then regularly buying and selling.
Please note that all buy and sell instructions must be done before 23:00 the day before the purchase/sale of shares.
What Happens to my cash left over with ASI?
All cash that is left over or paid out from dividends or any corporate actions and so forth is used to grow your investment further by purchasing more shares with your next purchase.
Example:
Monthly debit order = R500.00 for share 1 and R1000.00 for Share 2
Remaining cash = R100.00
Cash is split into ratio as per order which means that with the above example 33.33% of the R100.00 cash remaining will go to purchase of share 1 and 66.67% to share 2.
Order placed = R500.00 + R33.33 - R25.33 (cost) = R508.00 for share 1
Order placed = R1000 +R 66.67 - R30.67 (cost) = R1036.00 for share 2
This therefore helps to grow your investment.
What Happens to my dividends with ASI?
Twice a year a JSE listed company may elect to pay a dividend (not all companies pay dividends) from the profits they have generated during the previous six months. The cash paid to you for dividends will be kept in your ASI account and used with your next purchase order to purchase more shares. So for example if you own 10 SBK shares and they pay a dividend of R2.00 per share you will receive R20.00 worth of dividends. In you next purchase order we will add this R20 to you purchase of shares.
Example:
Monthly debit order = R500.00
Share price = R80.00
Order placed = R500.00 + R20.00(dividends) - R25.20 (cost) = R494.80
Number of shares bought = 6 shares instead of 5 if you did not have the dividend.
This therefore helps to grow your investment
What does it cost?
Brokerage
ASI allows Standard Financial Markets to reduce the transaction costs on trades of R500 to levels that compare favourably with other monthly investments. Monthly investments greater than R500 are even more cost effective.
Below is an example of the costs on a monthly purchase transaction1:
| Monthly investment amount |
Fixed costs |
Variable costs 2 |
Total costs |
Cost % of amount invested |
| R500 |
R20 |
1% |
R25 |
5.0% |
| R1 000 |
R20 |
1% |
R30 |
3.0% |
| R1 500 |
R20 |
1% |
R35 |
2.3% |
1. Costs include: brokerage, STRATE, Investor Protection Levy, VAT and Uncertificated Securities Tax (UST) on purchase transactions
2. Sales transaction have a variable cost of 0.75%
Other charges
- Inactivity fee: R25 will be charged for every 60-day period where no share transaction has been conducted, whether a purchase or sale transaction
To register
To open an ASI account, you must be an individual (no companies, trusts or partnerships) and have been fully FICA'ed by the bank for all you accounts and those linked to your account. To start:
- Auto Share Invest
- Complete the online registration form
For more information call 0860 121 161
Please note that this product is provided by Standard Financial Markets Pty Ltd, Reg #: 1972/008305/07, an authorised user of the JSE Limited and a member of the Standard Bank Group.
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4. What is the difference between ASI and Unit Trust?
A unit trust is getting another company to manage your (and others) money trading in local and international markets, bonds, currencies etc. What happens is that by pooling all the many investors' monies together the unit trust is able to spread the risk across many stocks, sectors and countries. The attraction is that you can use unit trusts to invest directly in the JSE with smaller amounts of money. Monthly amounts from as little as R250 and lump sum amounts from R1,000.00.
The main difference between a unit trust and ASI is that with ASI you have the control of exactly which shares you wish to invest in. By giving you the full reward of the dividends and any cash left over in your ASI account to earn interest you have a better control of how you wish to invest for the long term future.
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5. What is the difference between ASI and Online Share Trading?
Online share trading allows you trade in any shares listed on the JSE stock exchange at any given time. The costs involved are lower and you get full control on the buying and selling of shares and the price you want.
Online share trading offers you the following amongst other benefits:
- Educational courses covering the basics of investing, fundamentals, trading skills, technical analysis, warrants, futures and share instalments.
- Trade Shares online starting at only 0.7%* or min R70* per trade.
- Trade warrants and share instalments online at only R50* per trade
- Buy and sell recommendations and share research
- Optional streaming live prices directly to your desktop at only R99 (incl. VAT) per month.
For more information on Online Share trading and what it can offer you go to www.standardbank.co.za and click on the Online Share trading link.
* -excludes VAT & statutory taxes
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6 Education
Online Share Trading is hosting free 1 hour educational seminars to the public. The seminars are designed to get you started on how to invest in shares.
Please contact us: South Africa 0860 121 161, International +27 11 378 7876 or email seminars@standardbank.co.za for details and venues.
By attending one of the seminars, you will learn about:
- Investing and returns
- Why invest in the share market
- How to develop an investment strategy
- Understanding the share market
- What determines the share price
- How to make money in the share market
- How to chose companies to invest in
- How do you buy shares
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