Satrix, South Africa’s pioneering index-tracking business, has proudly partnered with Money Smart Week 2022 to explain what exchange-traded funds (ETFs) are and how to choose and use them in your portfolio to not only start investing, but to grow wealth over the longer term.
ETFs are a simple way to invest for the long term. Duma Mxenge – Business Development Manager at Satrix, explains that ETFs trade on the stock exchange exactly like any other share – the difference being that instead of only representing one company, an ETF holds all companies which form part of the index that the ETF is tracking.
ETFs are bought and sold on the stock exchange through a broking platform like SatrixNOW.
ETFs are high risk investments because they trade on the stock exchange – this means their value can rise or fall, but over time you should increase the value of your portfolio. ETFs also pay dividends to the investors who own them. Dividends are a portion of a company’s profit which are paid out periodically in cash.
It is important to note that ETF prices fluctuate from day to day as the index they are tracking rises and falls. The value of the ETFs may fall below the price which the investor initially paid for them, meaning shares are best suited to long term investors, who are comfortable withstanding these ups and downs.
Satrix Investments (Pty) Ltd is an approved FSP in term of the Financial Advisory and Intermediary Services Act (FAIS). The information does not constitute advice as contemplated in FAIS. Use or rely on this information at your own risk. Consult your Financial Adviser before making an investment decision.
While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSP’s, its shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaims all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information.