Drawbacks are that there can be confusion as to what instalment you are buying. Some products - like the hoteds and turbo's have barriers (you lose most of your cash if it hits it). They have better gearing than ordinary instalments, but the inherant risk. To a beginner, there's a risk you end up buying a barriered instalment without knowing it. ALWAYS phone the issuer to check, until you understand the different instruments. Another disadvantage is that the rollovers and dividend payments are in the hands of the issuer, like Standard and Investec. Sometimes they botch this and its up to you to catch the mistake. Trader Vic wrote a piece about this a few weeks back. But. They offer exposure to shares, and the full dividend, for half the money. They are low geared, so your risk is far, far less than with warrants and ssfs. They are a good trading instrument and also a good way to learn market techniques. Barry, a regular poster on this forum, is the master instalment trader. Read his previous and current posts. He's the most experienced trader on the site.
