Margin Lending
Margin lending is a loan facility secured by a portfolio of shares or units in managed funds.
For many people, the traditional form of geared investment has been property. However, in recent years geared share portfolios have become increasingly popular. Geared share investments can provide investors with increased exposure to capital growth and dividends. In addition, the initial required outlay for a geared share portfolio can be much less than that for an investment property. Geared share investments may also provide investors with tax benefits through negative gearing and the receipt of imputation credits.
Margin Lending (NZ) Limited* can advance, in the form of a margin loan, up to 75 per cent of the market value of more than 300 New Zealand, Australian and International listed securities and a selection of unlisted managed funds. Your deposit, or equity contribution, of as little as 25 percent, may be in the form of cash or approved securities.
The benefits and risks of margin lending
Margin lending offers a number of benefits including:
- An ability to enhance your wealth creation prospects by increasing your investment portfolio and exposure to potentially greater capital growth and income
- Improved portfolio diversification
- An ability to take advantage of market opportunities and
- The ability to structure a tax effective investment.
While greater exposure to the sharemarkets multiplies potential profit, it also increases the risk of loss to the investor should share prices fall. Furthermore, if the value of your portfolio declines, you may be required to provide additional securities or repay a part of your loan.
We suggest you discuss the risks related to margin lending with your adviser and seek independent taxation advice before gearing your investment.
The features of our Margin Lending Facility include:
- Variable loans in either New Zealand or Australian dollars;
- Competitive interest rates and fees;
- Loans of up to 75% of the market value of more than 300 New Zealand, Australian and International listed equities and a selection of unlisted managed funds - up to 100% in exchange for approved cash deposits;
- A margin call buffer of 7.50% of the lendable value of the approved securities held in your portfolio;
- Beneficial ownership of securities submitted as collateral being retained by the holder; and
- Detailed monthly account statements.
Your JBWere investment adviser will be able to discuss whether gearing is an appropriate strategy for your investment goals and needs. For further information regarding margin lending and our facility in general, please contact your JBWere adviser on 0800 555 555.
