‘We think that fractional investing represents the future’, says EasyEquities CEO Charles Savage

Charles Savage, CEO of Purple Group and EasyEquities joined the BizNews Power Hour to explain how easy it is to start investing on the EasyEquities platform. ‘It really makes it easy for the man on the street – whether he’s got R100 or R100,000 – to buy the stocks or ETFs that they love, essentially eliminating the barriers to market that were so prevalent in the market six years ago’. Charles Savage will be one of the speakers at the inaugural BizNews Investment Conference taking place between 16-19 March. – Jarryd Neves

Charles Savage on EasyEquities:

Six years ago, we set out on a journey to eliminate all the friction points in getting retail investors investing – not just in local stocks, but international stocks. Essentially, we created a platform that lives up to its name, EasyEquities. It really makes it easy for the man on the street – whether he’s got R100 or R100,000 – to buy the stocks or the ETFs that they love and move money from South Africa to America to invest in US stocks, essentially eliminating all of the barriers to entry that were prevalent in the market six years ago.

On these barriers to entry that EasyEquities has eliminated for investors:

To start with, the industry was shrouded with minimum – minimum investment value, minimum brokerage values everywhere you looked. When you stacked up the minimums, you excluded about 95% of the retail opportunity – i.e., 95% of South Africans wouldn’t have been able to afford those minimums. So there are no minimums on our platform. I guess with hindsight, the thing that really disrupted our business model was that we fractionalised access. Not only was it expensive to get access to these stocks, but the stocks themselves are expensive.

So if we use the case of Amazon, it’s a $3,000 stock and who’s got $3,000 to invest in Amazon? So what we did, is we fractionalized access. You can buy $1 or $5 of Amazon. In a South African context, if we take Naspers – which is about a R3,000 stock – the same applies. You can buy R1 or R50 of Naspers. We eliminated all of these minimums and then fractionalised access so that someone who’s got R100 can go in and buy R1 of 100 stocks or R10 of the 10 stocks that they want to own.

On the costs of EasyEquities:

They are lower than everyone else’s. We are the cheapest from South Africa by some measure. For every R100 that you invest, it costs you R0,25 in brokerage. Your investment goes to where it should go – which is the stock that you want to invest in. That adage comes out of the fact that no one had radically disrupted equity investing. So all of the business models that came before us were built around a business that had 10,000 or 20,000 customers.

We’ve got 350,000 active customers and that’s growing at about 2,000 a day. There’s massive scale in our platform. That scale allows us to give – or to democratise access – and give low-cost investing to everyone.

On investments within Purple Group:

So we have GT247.com that’s been around 20 years. That’s what brought me to the group. It’s an online derivatives day trading platform for speculative traders. It’s much closer to Robinhood than EasyEquities, in that it provides leverage and access to derivative contracts – things like options and warrants. Then we have Emperor Asset Management – which is a little-known business – but won a Raging Bull award for the best investment manager last year, best global fund, against all the heavyweights. So we expect to see more of that in the year ahead.

Then we’ve got EasyEquities. Under EasyEquities, you’ve got a few companies. We’ve got EasyProperties, which is fractional access to large scale residential development. That is only six months old and going great guns. 30,000 customers and about R100,000,000 in assets already. Then we’ve got RISE, which is a retirement savings administration platform.

We’ve set up to see if we can disrupt the old asset administration space – which is currently sort of controlled by guys like Alexander Forbes and others. We think that marrying our technology with the operational know-how of somebody who understands administration, we think we can create the same outcomes in that space as we have in EasyEquities.

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