Cheapest way to buy Satrix

Pam asks: I recently became a grandmother and want to buy into the Satrix 40 or Satrix Divi or Satrix Rafi for my grandchild each month.

I can spend between R250 and R300 per month. What is the cheapest way to do this? What Satrix investment did you buy for your child?

I trade a bit online through FNB but found buying Satrix through them expensive.

Maya replies: If you are looking to invest monthly then buying Satrix through the Satrix investment plan is the cheapest option and the minimum debit order is R300. (www.satrix.co.za

Cost-wise, buying Satrix through a stockbroker only makes sense if you are investing R3 000 or more because of the minimum trade costs, which are about R50, and there are also annual brokerage fees. Even FNB, which is one of the most cost-effective, charges R17 a month (R204 a year), which would work out at 6% in the first year.

Personally I initially invested in Satrix 40 for my children but once Satrix Rafi was launched I switched them across. I like the Rafi index because it can outperform the JSE All Share index as it invests based on valuation and not company size.

For readers who want to invest R500 or more a month in the Rafi index, the Old Mutual Rafi 40 tracker fund is actually slightly cheaper than Satrix as it has a lower annual fee. If you invest less than R500 then there is an upfront administration charge of 2,25%, which works out higher than Satrix’s debit order fee of R3,50.

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