EasyEquities is a platform or broker that allows you to invest in company shares and other securities. This is a guide on how to make money with EasyEquities.
The purpose of investing
The primary reason why we invest is so that our money can appreciate so that we exit with more money. When you invest R100 in a company; you are betting that the value of the company will go up and you might sell your shares for R150 – R200, or way more if you hold for the long term. Let’s explore some primary ways to invest and make money.
Day trading
With day trading; you are basically buying shares from certain companies and selling them off, usually within a day. This means that you have to buy multiple shares from different companies in order to make money. You can buy shares from MTN, ABSA, Vodacom, MTN and sell them off when they make some profit.
The main disadvantage of this is that you will pay a lot in charges and 90% of day traders are not successful in the long term. Short term gains may be a lot, you might be able to make over 30% in a day in some days but there are days where you might lose as much money.
It’s not a good strategy to use if you want to make sustainable returns from the stock market. The same goes for a lot of short-term trading; buying and selling shares in the short term doesn’t yield positive returns over 90% of traders.
Long term trading
Long term trading is by far the best way to make money on EasyEquities, instead of actively tying to time and beat the market; invest your money and watch it grow. ETFs are the best way to do this, find an ETF and invest in it. The best thing about EasyEquities is that you can also invest in ETFs from USA.
An ETF is more like a basket of shares, it may contain the top 50, 100 or 500 companies. Sometimes it contains companies that are from a specific niche like banking, tech, emerging markets and so on. It’s much better to buy an EFT because even if a few companies don’t perform well; the rest of the companies will perform relatively well.
Personally; I prefer into US ETFs, investing in the S&P 500 using Vanguard, which has yielded very good returns the past few years. Returns are usually north of 20% per year, this may sound like nothing but it’s a lot in the investing world.
Investing in dividend yielding stocks
There are stocks and ETFs that are likely to pay dividends, which you can automatically set to reinvest. This will grow your portfolio a lot quicker, you can also invest in REITs, these are companies that own real estate like malls and rental properties.
Investing in penny stocks
Penny stocks and undervalued stocks have the best potential for lucrative returns, your returns may be more than 200% per year. These are stocks that are worth cents; usually from companies who have just been listed on the stock exchange; they have the greatest chance to grow and be worth a few rands or even hundreds of rands. Capitec has made returns of over 700% since 2014, which averages just over 100% per year.
EasyEquities allows you to view all the companies that are currently listed on its platform; you can see all of them and find the penny stocks. The problem with penny stocks is that they’re incredibly risk and the price fluctuates a lot in a given day; you might wake up to see your money 30% down, only for it to bounce back up within 2 days. It’s an emotional roller-coaster for conservative investors.
Conclusion
This was a guide on how to make money on EasyEquities, do you have any thoughts or questions? Comment below.
