\u201cPlus, I can\u2019t find the mail informing me of any of this.\u201d<\/p>\n
Several users echoed the complaint that they only learned about the change on social media.<\/p>\n
Customers also raised questions about whether Easy Equities would sell assets from people\u2019s Tax-Free Savings accounts to cover the fee.<\/p>\n
This would be a major problem, as the rules governing Tax-Free Savings accounts in South Africa essentially stipulate that you can\u2019t put money back after taking it out.<\/p>\n
However, Purple Group chief marketing officer Carel Nolte assured they wouldn\u2019t touch Tax-Free Savings accounts.<\/p>\n
Nolte explained that the purpose of the Thrive programme was to encourage healthy financial habits and education.<\/p>\n
\u201cThere are many ways to avoid the R25 Thrive fee, and the intention is that as few as possible people pay,\u201d he stated.<\/p>\n
\u201cPrior to any charges, users will be alerted to the possibilities and ways to prevent the fee.\u201d<\/p>\n
He also outlined the process Easy Equities will follow to collect the R25 per month fee:<\/p>\n
- \n
- If user is charged a fee, it will be collected from free cash<\/li>\n
- If no cash is available, every six months, it will collect the fee by selling user holdings<\/li>\n<\/ul>\n
\u201cThe first collection is February 2024, and we will have a system in place where users can change what gets sold,\u201d he explained.<\/p>\n
\u201cTo repeat, we will work hard with users for this to be the exception, not the rule.\u201d<\/p>\n
Looking at the Thrive Rewards page on Easy Equities\u2019 website, the easiest way to hit level 3 is to deposit more than you withdraw.<\/p>\n
Another option is to refer at least one person to the platform every month.<\/p>\n
Customers can also earn a rewards level each for investing on multiple Easy-branded platforms, using other Easy products, donating to charity while buying or selling stocks, and completing monthly lectures at the EasyEquities Academy.<\/p>\n
![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2023\/11\/Carel-Nolte.jpg\")
<\/a>Carel Nolte, Purple Group chief marketing officer<\/p><\/div>\n
Purple Group financial situation<\/h2>\n
The introduction of a monthly fee for EasyEquities users is unsurprising considering its parent company Purple Group\u2019s recent financial results.<\/p>\n
Its results for the six months ended 28 February 2023 revealed that its operating expenses increased significantly faster than its revenue.<\/p>\n
The standout figure was a net loss of R10.6 million over the reporting period, a negative swing from the previous net profit of R17.7 million.<\/p>\n
Purple Group\u2019s operating costs, including depreciation and amortization, increased by R64 million, while company revenue only increased by R9 million.<\/p>\n
Therefore, the company\u2019s incremental revenue increases were met by seven times higher operating expenses.<\/p>\n
The Purple Group share price has also been under pressure, losing 80% in value since its peak in January 2022.<\/p>\n
Despite the decline, Purple Group still trades at a price-to-earnings (P\/E) ratio of 58, much higher than other fintech and financial companies.<\/p>\n
Its price-to-sales (P\/S) and price-to-book (P\/B) values are also much higher than most of its peers.<\/p>\n
The R25 monthly fee will help the company to increase revenue and earnings, considering EasyEquities has 850,000 active account holders.<\/p>\n
With customer equity of R42 billion, many people speculated that it would have been easier to introduce a 0.5% platform fee.<\/p>\n
Such a platform fee, which is charged by many other investment platforms, would have generated an additional R210 million for the company.<\/p>\n
However, it is not clear what regulatory and consumer protection requirements are associated with introducing a platform fee when users did not initially agree to it.<\/p>\n
MyBroadband asked why Easy Equities elected to implement a flat R25 per month charge rather than a percentage-based platform fee.<\/p>\n
\u201cWe have always veered away from a platform fee (also no minimums) and do not want to charge the Thrive fee,\u201d Nolte stated.<\/p>\n
\u201cThe aim is to get more users to join the thousands who already exhibit great financial discipline; consistent deposits (any amount), education, etc.,\u201d he said<\/p>\n
\u201cIf users do not Thrive, the R25 is a nominal amount for the immense value users get for local and foreign equity, ETFs, crypto, property, etc.\u201d<\/p>\n
![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2023\/05\/Charles-Savage-EasyEquities-Purple-Group.jpg\")
<\/a>Charles Savage, EasyEquities founder and Purple Group CEO<\/p><\/div>\n
R25 per month can crush investment returns<\/h1>\n
Although R25 per month may not sound like much, it can have a tremendously detrimental effect on small investments over the long term.<\/p>\n
To illustrate the effect of a R25 monthly fee, Daily Investor compared<\/a><\/strong> two hypothetical R5,000 investments over ten years.<\/p>\n
The first investor used the previous EasyEquities service with no fees. The second investor is on the new system EasyEquities service with a mandatory Thrive subscription.<\/p>\n
This investment comparison simulates a buy-and-hold strategy over ten years with no additional investments. This strategy would trigger the R25 fee every month.<\/p>\n
We used the popular Satrix JSE Top 40 as an investment for the ten years \u2014 from 2013 to 2023.<\/p>\n
The investment on the original EasyEquities platform without fees would have grown to R8,971.25 \u2014 a 79% total return.<\/p>\n
The investment with the new Thrive membership would have decreased to R4,774.07 \u2014 a 4.5% loss over the ten-year investment period.<\/p>\n
The charts below show the growth of the Satrix JSE Top 40 investment on the old EasyEquities platform and the new Thrive model with a R25 monthly fee.<\/p>\n
![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2023\/11\/Easy-Equities-R5000-investment-old-vs-Thrive.jpg\")
<\/a><\/p>\n
\nNow read: Software company Threads threatens legal action against Instagram<\/a><\/h3>\n","protected":false},"excerpt":{"rendered":"
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