Equity investments are high risk and should be viewed as long term. Picture: 123RF/MAKSYM YEMELYANOV
Equity investments are high risk and should be viewed as long term. Picture: 123RF/MAKSYM YEMELYANOV

Q: I want to invest directly in Satrix through an investment plan. I see on Satrix’s website that all fees are exclusive of VAT. If I invest R500 a month, what would the total costs be, including VAT? I also see your annual administration fees are as follows: on investments of between R0 to R500,000, the fee is 0.6%, on R500,000 to R1m it is 0.45% and on R1m or more it is 0.35%. What does this mean? Also, will the initial capital I invest stay guaranteed? Shaads Arief via e-mail

A: Jenny Albrecht, COO of investments at Satrix, responds:

If you invest R500 a month using the SatrixNOW platform (www.satrixnow.co.za) you can set up recurring investments monthly, quarterly or annually.

The SatrixNOW platform fee for investments up to R500,000 is 0.5% + VAT. There is no minimum investment amount. This means that of the R6,000 you invest for the year, your costs will be R46.55.

This fee is made up of an investment cost of 0.1%, or R12.12 a year. This works out to R1.01 monthly, of which 50c is the brokerage cost, 37c is for settlement costs, 0.01c is for an investor protection levy and 13c for VAT. The fee to invest on the platform for the year is R34.43. This is calculated daily and deducted quarterly as follows: R5,987.88 invested (R500 — R1.01 = R498.99 x 12 months) x platform fee at 0.575% (0.5% + VAT) = R34.43.

We have used the Satrix 40 ETF in this example, but the cost of investing and the platform cost will be the same regardless of which Satrix ETF you invest in.

However, you must also look at the product cost of the particular fund you invest in – in this example the Satrix 40 ETF has a Total Expense Ratio of 10 basis points per annum (0.10%).

On the guarantee of capital, investors should be aware that equity investments are high risk and should be viewed as long term. Those looking specifically for capital preservation should probably look at more cautious money market type funds.