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Margin on long term positions

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Super Contributor
Does anyone know if standard bank offers margin on long term positions if one speaks to the right people? OST used to have this service before 2008 but then it ended... I don't mean to buy instalments or the likes, but simple margin where one gets 20-30% of the value of qualifying shares?
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11 REPLIES 11
Valued Contributor
it got shut down when the NCA became law, so no longer offered
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Super Contributor
Yes, but is there any other type of deal one can make with some other Standard Bank division to get a similar effect perhaps?
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Super Contributor
I am thinking that if the market corrects, say 30%, it would be nice to leverage a bit, maybe 20-30% of the long term holdings and acquire shares at discount once the correction/crash is over... just some thoughts...
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Super Contributor
this based on the assumption that you know that here is the top and there is the bottom, all in advance...why then not sell at the top and buy at the bottom at a cheaper price...
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Valued Contributor
you can borrow against shares, and yes they only lend about 20% maybe 25% .. but speak to who ever your bank is, short version is they don't understand as a rule
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Super Contributor
the thing is you don;t know where the top and bottom is.. and if you sell at the top you need to pay capital gains, and this can be a significant amount of money if your position is very large and did well over many years... and once ones calculations show a decent discount to intrinsic value one can be comfortable to acquire additional shares, and this is what it would be used for... this model works well for me, I bought WHL in 2008 like this and made a very decent profit from it!
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Super Contributor
what about accessing HomeLoans
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Super Contributor
That's an option, but would be cool to have a proper margin agreement rather.
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Frequent Contributor
Rams has a good suggestion. But there is always a caveat for all investors going this route. I know you can use such funds responsibly, but one should only buy good quality shares. No pennistocks and alsi's! I used money from an investment property to buy shares in 2009 after the crash. Earlier this year I sold off some stock to reclaimed the money I put in to use fot another property project. Can only recommend it if done correctly
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Super Contributor
I worked out the system quite well... I would prefer to not use the home loan but want to negotiate a 'margin' agreement with the bank, this way it can grow proportionally to the portfolio, and yes, only on long term, very good quality stocks that are purchased at a discount... i did this before with the margin facility on OST, worked very well!
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antoniog
Occasional Contributor
Hi Werner Have you modelled a system using CFD's. By my calculations, one can "borrow" at effectively about 12% if one puts down 50% ie. say R50000 equity and R50000 gearing = R100 000 total exposure. A healthy dose of risk management will be paramount. Regards louisg NB: NOT FOR BEGINNERS!!!
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