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phatphil

Advice needed for starting out with ETFs

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Hi all, I recently graduated from uni and have R10K in savings that I want to park and leave for a short term (about 3 - 5 years) 

 

I have been reading up a bit and have seen many advice on putting the money into ETFs rather than leaving it in savings account with the bank (I am with Capitec).

 

What would be a good way to get started (I have 0 knowledge about stock markets whatsoever) for ETF trading and what products should I be looking at? (I am willing to have a little bit of risk).

 

Thanks all.

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Hey welcome to the Forum.

 

Personaly I would suggest that you open a account with EasyEquities, not only are they the most affordable, but they also have a company representative on this forum so that really gives me a feeling of trust knowing we can get answers here about easyequities.co.za

 

Once you have your account I would suggest you look at a ETF that would atleast be able to provide you with an above inflation return since your time horizon is still short concidering ETFs are boring slow growing funds and won't necessarily give you a Capitec like return in the shorter term.

 

I would suggest either mapss growth or NFEMOM which is a interesting etf imo and has potential in the 3 - 5 year span. DBXWD is also a favorite, but it's been doing pretty badly the last 2 years so I'm not too sure.

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EasyEquities account as mentioned.

 

I would NOT use a TFSA since you want to withdraw/use the money in 5 year's time.

 

R10k is probably not worth splitting. NFEMOM is more volatile than MAPPSG so you're like to make more but also lose more.

 

Whilst NFEMOM give you 100% equity (shares) exposure, MAPPSG only give 75% and a further 20% exposure to bonds and 5% cash so really more diversified (not that I think it matters all that much for you right now). It is NOT worth getting both of these so don't 50/50 split them.

 

Both are total return ETFs so you don't need to worry about reinvesting dividends yourself.

 

If you want to use this money to learn about investing and how different ETFs work I'd suggest getting something like PTXTEN (R2500 worth maybe?) - which pays out dividends on a quarterly basis - in addition to one of the above.

 

All that said, you recently graduated and starting to work I assume. You'll probably be able to save a lot more in the coming years so if it was me I'd follow the classic advice of first getting an emergency/cash fund going, getting income protections and then investing - whether it be ETFs or unit trusts. So if I was in your shoes right now I push that R10k into a 32-day call account and let it grow to a point where you can survive on it without a job for a good couple of months.

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Thanks @Hamster and @Outlook I think I am going to put 7K into a 32 day notice account, I think Capitec has some short term savings option I will just go read a bit more and have a look, then the R3k I will use to buy the property ETF that way I can get a start on the market as it would be the end destination once I start working.

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