What are share instalments?
Share instalments are instruments that allow investors to gain exposure to some of the JSE’s leading companies. The holder of the share instalment enjoys many of the benefits (capital growth and dividends) of directly owning some of the country’s leading stocks without having to pay the full purchase price on day one.
Since investors only pay a portion of the cost of the underlying stock upfront, they gain geared exposure through the share instalment, allowing them to magnify their potential gains arising from movements in the underlying share price.
When buying a share instalment, you are purchasing the underlying share in two easy steps. There is an initial upfront payment, which provides exposure to the share over which the share instalment is issued. Then, there is an optional second payment (the exercise price). This can be paid at any time up to the expiry of the share instalment. At this point, full ownership of the underlying instrument is taken.
You can elect to rather sell the share instalment in the open market rather than make the second payment and take delivery of the underlying share. For the term of the share instalment, you will receive all the ordinary dividends paid by the underlying share.
Why trade share instalments?
There are several key benefits to adding share instalments to your portfolio:
- Geared share exposure: As only a partial payment is made upfront, you receive gearing on share price movements in comparison to holding the underlying share itself.
- Enhanced dividend yield: As the holder of the share instalment you receive the full ordinary dividends payable on the underlying share.
- No margin calls: Unlike futures, you are not obligated to take up the underlying share at expiry and there are no margin requirements that need to be maintained during the term of the investment.
- Partial share price protection: Share instalments are not subject to a margin call no matter what the performance of the underlying share is. Your maximum loss is limited to the initial amount invested.
- Flexibility to restructure existing share portfolios: Share instalments offer you the potential to accelerate your capital growth by leveraging an existing share holding without having to invest additional capital.
- Quoted on the JSE Limited: Share instalments can be bought and sold just like your shares.
Interactive online tutorials
Click here (link to relevant content) to participate in a free interactive flash tutorial on share instalments and how they work.
We offer an intermediate level course on understanding share instalments.
Existing clients can log into the platform to check course topics and details, upcoming dates in your city, and to make a booking.
New clients please phone our call centre for further information.
New clients: Click here to register now with Standard Online Share Trading.
Existing account holders: To trade share instalments, please:
2. Click on the other products menu
3. Select share instalments registration.
Download the brochure which explains in detail how share instalments work and how to get started trading them