Your Guide to People, Places & Happenings in NMB

By Delon le Roux, EMBA

Learn how to start investing in the JSE with ETFs, diversify your portfolio, and grow your wealth. Step-by-step tips for beginners (and 50 bucks to get you started!).

Entering the Market

Imagine walking into a vast library with thousands of books, each promising to teach you the secrets of wealth. Without a guide, it’s easy to feel overwhelmed. Investing in the Johannesburg Stock Exchange (JSE) is much the same: thousands of companies, ETFs, and funds vying for your attention.
The good news? You don’t need to read every book or own every share to start building wealth.
Investing is a skill, not a gamble. Like any skill, it starts with understanding the basics, making small, consistent moves, and learning as you go. By the end of this column, you’ll know how to select a few reliable ETFs, understand small-, medium-, and large-cap equities, and identify the types of stocks that fit your goals.

Step 1: The Basics – What You’re Buying

Equities (Shares): Buying a share means owning a slice of a company. Your returns come from:

• Dividends: Cash payouts from company profits.
• Capital appreciation: The rise in the share price over time.

ETFs (Exchange-Traded Funds): Think of ETFs as baskets of shares. Instead of buying individual companies, you buy a single product that holds many shares, offering instant diversification.

Examples in South Africa:

• Satrix Top 40 ETF: Tracks the 40 largest companies on the JSE.
• Satrix FINI ETF: Tracks the financial sector.
• Satrix RESI ETF: Focused on resources, i.e., oil, gas, and mining (as of Q3 2025, trading near record highs).
• Satrix Divi Plus: Tracks the 30 FTSE/JSE firms forecasted to pay the highest normal dividends (as of October 2025, at a 52-week high).
• Satrix MSCI World ETF: Offers global exposure and helps hedge rand risk.

Why ETFs are ideal for beginners:

• Low-cost and low-effort diversification
• Exposure to multiple sectors or markets with one purchase
• Less emotional decision-making than picking individual shares
• Global diversification: feeder ETFs tracking the S&P 500 or NASDAQ can hedge currency exposure—but remember, forex movements can enhance or erode returns

TFSA (Tax-Free Savings Account):
A powerful tool for long-term investors. All dividends, interest, and capital gains within a TFSA are exempt from tax—provided you stay within SARS limits: R36,000 per year, R500,000 lifetime. Only ETFs approved under FSCA collective-investment rules qualify. On EasyEquities, these are marked with a purple TFSA tag. Exceeding the limit triggers a 40% penalty on the excess.

Step 2: Small, Medium, and Large-Cap Companies

Your portfolio’s growth potential depends partly on the size of the companies you invest in:

Market Cap	Typical Companies	Risk	Potential Growth	Suitable For
Large Cap (Blue Chip)	Naspers, Shoprite, Standard Bank	Low to Medium	Steady growth, reliable dividends	Conservative, long-term investors
Medium Cap	Aspen, Woolworths Holdings, Pick n Pay	Medium	Moderate growth and dividends	Balanced growth + moderate risk
Small Cap	Newly listed companies	High	High growth potential, volatile	High-risk, high-reward investors

Key takeaway: Diversify across market caps to balance risk and reward. Blue chips provide stability; small caps offer growth potential.

Step 3: Growth vs. Value vs. Defensive Stocks

Understanding a company’s investment style helps align choices with your goals:

• Growth stocks: Companies expected to expand faster than the market, often reinvesting profits rather than paying dividends. Ideal for long-term compounding.
• Value stocks: Established companies trading below intrinsic value, often offering dividends.
• Defensive stocks: Resistant to economic downturns, paying steady dividends. Example: food retailers, utilities.

Strategy for beginners: A balanced combination of growth and defensive stocks in ETFs can offer both upside and protection.

Step 4: Step-by-Step – How to Start Investing in the JSE

1. Open a brokerage account: Standard online brokers include EasyEquities, Standard Bank Online Trading, etc. Compare fees and usability.
2. Start with ETFs: Pick 1–3 diversified ETFs. Consider sector or broad-market ETFs. Keep it simple.
3. Set a monthly investment amount: Even R500–R1,000 per month compounds significantly over time.
4. Use rand-cost averaging: Regular monthly contributions reduce the impact of market volatility.
5. Review periodically: Every 3–6 months is enough for beginners. Avoid daily market-check anxiety.
6. Educate as you grow: Once comfortable, explore individual equities and small-cap opportunities.

Step 5: Applying What You’ve Learned So Far

Your budgeting, saving, and compounding strategies (from previous columns) now feed directly into your investment plan:

• 50/30/20 Rule: Use 20% of your income for investments, ideally split between ETFs and low-risk instruments.
• Emergency Fund First: Never invest funds needed for short-term goals. Keep liquidity in cash (money market) or bonds.
• Compound Your Contributions: Automate monthly deposits into ETFs to grow your wealth steadily.

Mini Case Study: Starting Small
Thabo, 25:

• R500/month into Satrix Top 40 ETF
• R250/month into Satrix MSCI World ETF
• After 10 years: ~R100,000 (excluding dividends)
• After 20 years: ~R400,000+ (assuming 8–10% p.a. growth, fees excluded)

Even small, consistent steps lead to meaningful wealth. Historical equity returns vary, and future returns are not guaranteed.

Pro Tips for Beginners

1. Keep it simple: One or two ETFs are enough to start.
2. Focus on what you can control: Contribution consistency, fees, and time in the market.
3. Don’t chase hype: Avoid trendy stocks or “hot tips” from influencers masquerading as TikTok traders.
4. Start now: The earlier you begin, the more compounding works in your favor. Time in the market beats timing the market.

Did You Know?

• The South African stock market represents less than 1% of global listed market capitalization (World Bank, 2024). This means global diversification through ETFs is crucial for growth.
• ETFs on the JSE can include 40–200 companies per fund, spreading risk instantly.
• Investing R1,000 per month in a diversified ETF portfolio for 30 years can exceed R1.5 million, assuming an 8–10% annualised return.

Checklist for Beginners

• Open a brokerage account
• Check fees / total expense ratios (TERs) of ETFs, and any broker/trading costs (high fees erode returns over decades)
• Pick 1–3 ETFs, preferably listed within a TFSA
• Automate monthly contributions
• Apply the 50/30/20 rule to investments
• Review progress every 3–6 months
• Keep learning, but don’t overcomplicate

You don’t need to be a financial whizzkid to start investing. With a clear, simple structure and some discipline, even first-time investors can enter the JSE confidently, build a diversified ETF portfolio, and let compounding quietly do its work. Next month, we’ll dive deeper into constructing a model portfolio that balances growth and risk—the blueprint for turning small investments into life-changing wealth.

Ready to put your learning into practice?
Open your EasyEquities account using Referral Code: EE2266121 and receive R50 in EasyMoney to explore the platform. You can even start in demo mode—a safe way to practice trading before investing real funds.

➡️ Sign up here: https://bit.ly/3QBO08O