Over a period of time I will show you the performance of money invested in two different ETF’s in two different Easy Equities investment accounts – TFSA and Taxed – to determine just how more desirable one is over the other.
All savvy investors preach a similar mantra:
- Invest early
- Invest regularly
- Re-invest any dividends
- Hold for the long term
With the introduction of Tax Free Savings Accounts in South Africa, investors have one more way to ‘massage’ and grow their portfolios.
BUT
Every investor should take a leaf from Doubting Thomas’ book and demand proof – sure we can provide models and projections but ultimately the ‘proof of the pudding is in the eating’.
So – to prove the effectiveness (or not) of the TFSA option when it comes to investing we have embarked on a simple experiment to invest the same amount of money every month in two chosen Exchange Traded Funds (ETF’s) that SHOULD NOT show volatility and temptation to sell to ‘get out of the market’.
Using our existing Easy Equities account we are charting the value of each ETF over a period of time as we invest small amounts in each chosen fund. Easy Equities is a good vehicle to choose as we can invest a set amount and be allocated Fractional Shares should we not have an exact amount to buy full shares.
The ETF’s Chosen are:
Satrix Top 40 Index Fund – This fund was established on 27 November 2000 and is billed as a one that is aggressively risk profiled and thus investors should be willing to tolerate potential volatility in the short-term.
Fund size:
- July 2025 – R5.9 Billion
- August 2025 – R6.1 Billion
- October 2025 – R20 Billion
- April 2026 – R21 Billion
Dividend Payouts – twice annually on 30 June and 31 December.
Satrix DIVI ETF – Satrix DIVI – established on 29 August 2007 – provides investors with the price performance of the FTSE/JSE Dividend Plus Index (J259) as well as pay outs, on a quarterly basis, all dividends received from companies comprising the index, net of cost.
Fund size:
- 21 July 2025 – R1.7 Billion
- August 2025 – R1.7 Billion
- October 2025 – R1.7 Billion
- May 2026 – R1.9 Billion
Dividend Payouts – Quarterly in March, June, September and December.
Cautionaries:
- The first month – July – I did a manual investment resulting in the timings being off which could affect the yield over time.
- For the rest of the time I have set up recurring investment instructions – basically 4 x R50.00 monthly investments on the 1st of each month – hopefully the recurring instruction will not have too much of an effect on pricing.
- The increase in investment is 10% per annum.
- Dividends are re-invested as they are received – the effect of the dividends and costs will become less ‘onerous’ over a longer period of time.
I am quite keen to see just how each perform based on 2 annual dividends vs 4 annual dividends.
As you will see – there is a difference in investment costs:
- 0.28% for the TFSA and
- 0.12% for the Taxable Investment
Your investment in shares on the stock market is also paying these fees:
- SETTLEMENT AND ADMINISTRATION: This fee is charged at flat rate of 0.075% of the value traded, ensuring the lowest possible cost to the investor. This fee includes the electronic settlement of your transactions through the electronic settlement authority for whole shares and the administration fee represents an upfront recovery on the fractional share rights (FSRs) portion.
- INVESTOR PROTECTION LEVY AND ADMINISTRATION (IPL): The investor protection levy is a mandatory charge levied by the regulator at 0.0002% on the value of whole shares traded for the regulation of the securities market and in dealing with issues such as insider trading and market manipulation which is ultimately for the benefit of investors. The administration fee represents an upfront recovery on the fractional share rights (FSRs) portion.
How to Invest in a TFSA Like a Pro: