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Online Share Trading

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Istalments versus Shares.

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Super Contributor
In my opinion only i've found that INTRALLMENTS are only suiutable for shorter runs i.e. say, when a share is rising rapidly towards its LDT date.Installments carry an intetrest rate that is added daily to the installment(for the part that u owe the issueras u only pay for about sixty percent of the share).So when the share is falling or flat one can loose money.Installments are geared as well so that they gain more than a share in a rising market,but loose more in a falling market ,losses that might not be made up over the longer term such a year.If you want accumulate a good share such as Grinrod over a say a five year period then there is nothing to beat buying the actual share.
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26 REPLIES 26
Super Contributor
I've just sold my installments in GRINROD.MADE A 53% CAPITAL GAIN OVER THE LAST TWO MONTHS as well.I've already started buying PSG and ILV installments with the proceeds, and intend taking their Final dividends .LDT dates due May and June....OMO.
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Super Contributor
Do isntallmints come with a spell check? ;)
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Super Contributor
I'M NO TYPIST ,wish there was a spell correction facility,second fault namely INSTRALLMENTS!.wHEN I TYPE FAST am likely to make mistakes.U might be interested to know that i translate from Afrikaans to English the occasional contracts for laywers about sectional titles,farm sales etc.Than i make no mistakes as i triple check everything!
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Valued Contributor
barry, in part the problem is the high interest rate enviroment we're in with rates some 40% up on 18 months ago.
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Super Contributor
Thank u Simon,I had not thought of that reason.Yes in a lower interest rate cycle then one could be keep installment longer.
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Super Contributor
I agree with you Barry. Instalments are not as benign now that the interest rate is up. They are still fabulous and in my oppimion the only geared product 90% of people should use. As they are so much more forgiving, both in time and gearing.
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Valued Contributor
in OZ they have self funding instalments where the div income covers the interest costs. Of course this requires low interest rates and high div yields, but it works very well for a longer term investment, essentially buying the share at discount and giving up income for the short term.
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Super Contributor
Sound a bit like a BEE deal
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Valued Contributor
lol, we have something closish locally, issued by investe with ten year strike date - called variable strike warrants. But only issued on property stocks as they requrie the higher yield and identified by 5th letter being a V.
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Super Contributor
Simon. do you know if they have somthing like the aussie product in the UK?
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Valued Contributor
to my knowledge not. Warrants (of which instalments is a type in that they both be options) only launched in in the UK in around 2004 and they never got off the ground. There is a very large option exchange (Liffe) in the UK, but that is writing options whereas what we have here is retail covered options.
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Super Contributor
Those brits don't like change much. If it ait broke don't fix it and if it is broke just blame someone else.
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Super Contributor
i've read the entire post,but Simon i'm drawn back to the OZ idea,now try to convince the warrant department to take it up.i'de be interested.Thanks.
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Valued Contributor
barry, problem is that with the current cost of borrowin you need a stock with a div yield of at least 8% (7% may squeak in).
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Regular Contributor
You previous posts on installments is what got me into them. I have also been topping up on PSGSIC every dip I hope this share is going to take off soon results coming in April plus div. Do you sell after LDT or plan to hold them longer?
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Super Contributor
i plan to sell at latest one working day after LDT so that i can collect the div as well.
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Super Contributor
The other very useful thing about instalments is( but don't tell SARS I said so) is you can "lose" all trading profits( taxable)and recieve dividends in return (non taxable) that is why 80% of traders lose money. only 20% are dumb enough to pay tax on their winnings.
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Super Contributor
yes sage advice indeed,i agree fully
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Super Contributor
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