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How much do I need to invest in ETFs?
Key takeaways
- If you buy ETFs through either an online broker or a platform you will buy whole shares and any remaining money will stay in your stockbroking account.
- ETF platforms bulk transactions from all their investors and reduce the costs of buying the shares.
- ETF platforms also offer investment plans with affordable monthly contributions.
- If you buy ETFs through a platform that offers fractional share ownership, you can buy exposure to a portion of an ETF through a contract for difference.
The price of an exchange traded fund (ETF) is set in the market and depends on the price of the underlying securities in the index or commodity the ETF is tracking.
ETFs don’t have investment minimums like unit trust funds, but you need to pay the price of a full share or multiples of it.
Whatever you invest will be used to buy as many ETFs as you can afford and the balance will kept in your stockbroking account until you invest enough to buy more shares.
Investment plans on ETF platforms bulk transactions from many investors and buy and sell once a day through a single stockbroker to minimise the charges.
These platforms’ investment plans may have minimum such as a R1000 lump sum or a recurring investment of R150 a month.
There are two platforms, one from a provider and one that offers access to a range of ETFs that allow you to invest in fractions of ETF shares until you invest enough to buy the whole share.
This is achieved by way of a contract for difference – an over-the-counter or unlisted contract that gives you access to the same returns as an ETF – or a portion of it – without owning the ETF.
These platforms will allow you to invest any amount and have no minimum investments.
However, be aware that the costs of investing may make it not worth your while to invest very small amounts. See What are the costs of investing in ETFs.
