The young Saver
Jabulani has recently landed his first decently paying job after completing his articles at a law firm. With his increased salary he’s decided he is going to invest in the stock market.
He thinks he can make some money by reading research and making a few trades every month of a few thousand rand each. He enjoys attending courses and learning more about how to trade but wants to work in the online world without having to use old school telephones.
Jabulani does one or two trades a month of R5 000 each. Based on the cost, his research and education needs, trading behaviour and preferred tools, Standard OST comes out tops.
Lump-sum investor
Suzie recently received a lump sum from a trust fund left to her by her parents. She has no need for the cash any time soon and has decided to invest it directly on the stock market. She knows the stock market provides the best avenue for long-term wealth creation but is somewhat wary of the risks.
She wants someone to give her advice, but still wants to be in control of the ultimate investment decision. She is going to sell some of her portfolio every year to fund a holiday for her family and will want advice on which shares to sell.
Suzie’s needs will best be met by a stockbroker able to give substantial advice and guidance. This is the specialisation of “old school” brokers who mostly operate over the telephone and in person. BJM comes out tops, but is closely followed by BoE.
Active day trader
Gerhard recently sold his insurance broking business and has decided to actively trade the market to make a profit. He wants to speculate on indices and certain shares he knows well, but close out his exposures every day. He will risk only a small portion of his capital but wants leverage to maximise his exposure. He needs direct market access to execute rapid trades.
Gerhard is directly in the target market of CFD providers with his need for short-term, low-cost quick trading. IG Markets, Saxo Capital Markets and Global Trader could service him well, but we’ve also given credence to PSG and Standard OST, which provide a wider range of instruments and good CFD services.
Sophisticated Exec
Judy is a senior executive at a listed company. She has accumulated significant wealth through shares and share options she holds in the company. When she is allowed to in terms of JSE rules, she likes to limit her concentration risk by using derivatives such as zero-cost collars and puts.
She is financially sophisticated but does not have the time to pay attention to her portfolio and wants a reputable broker who will advise her.
Judy needs a broker that can provide sophisticated over-the counter equity structures and always be available to provide advice. In our view, Investec remains the best positioned broker for this service, with SPI and BJM also very capable.
Source: BD Live *This article was first published in Investors Monthly
