Protected Loans - Aussie Stock Forums

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Thread: Protected Loans

  1. #1

    Default Protected Loans

    Enjoy the ups and avoid the downs.

    This is what BankSA have to say

    A BankSA Margin Lending Protected Loan allows you to enjoy the benefits when stock markets rise, without the risk of capital loss on your shares. You borrow money to buy a portfolio of shares and we protect their value.

    You receive the capital gains, dividends and franking credits on the protected shares. However, if the securities fall in value, your portfolio is protected from any loss. As long as you hold the shares, you will continue to receive any associated benefits. The stock price protection remains valid as long as you do not default on interest payments or terminate your loan early.

    If you want to maximise your wealth accumulation and limit your market risk, a protected loan is a smart way to invest.
    How do they protect the value of the portfolio?
    So the interest being paid on the loan is your only main expense?
    If the share portfolio drops by 50%, the only loss of money is through interest repayments of the loan?
    Rebel Leader - IT'S A TRAP!

  2. #2

    Default Re: Protected Loans

    They buy puts

    Interest is VERY high on these

    You will only be protected if you hold the security until maturity. A lot margin lenders have had these. If you sell the stock before maturity you aresnt secured

    Honestly, Ive worked at a broker offering these before, and they are rubush, If you know what you are doing you can do alot better than what they offer

  3. #3

    Default Re: Protected Loans

    There might also be issues with claiming inputation credits from franked dividends from shares purchased in this way.

    If memory serves me correct to claim the imputation credit as a tax rebate the share have to be held "at risk" (no associated put option) for a minimum of 45 days.

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