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How to know Stock Lending is right for you

3 mins | Advanced

Summary

Stock lending will be right for you if you understand the risks associated with it, you like flexibility with your investments and you enjoy earning more than just dividends.

So you’ve heard a bit about stock lending and just aren’t certain you want to commit to it yet. We totally get it – unfamiliar territory can be a little nerve-inducing. At the end of the day, choosing to stock lend is a completely personal choice, and one you’ll need to make on your own. To help you decide, here are 4 reasons that it may be suited to you.

You know how safe it is

Investing comes with risks; so you know that stock-lending whilst risky, is no riskier than the investment in the first place. Stock lending won’t affect the price of the shares, so there’s no need to stress about that. 

Plus, if you’re worried that your shares won’t be returned for some unforeseen reason - don’t. Remember the borrower has put up collateral that is worth far more than what your shares are worth. So if something goes wrong, that collateral is all yours.

You enjoy earning more than just dividends

If you lend out your stock, you don’t just earn back the dividends on your shares. You’ll also earn another income stream for lending in the form of fees paid by the borrower. 

You like flexibility

Stock Lending isn’t set in stone - remember it’s just lending, not selling. If you decide during the lending period that you actually want your stock back to sell it, then you can do so. As the stock always stays in your name, you’ll be able to sell them to take back your profit (or losses) at every whim.

The elite financial institutions decided to gatekeep stock lending decades ago to keep all the profits for themselves. But now, thanks to heightened accessibility to investing, we think it's time the everyday investors reap the rewards as well.

Investing involves risk. You aren't guaranteed to make money, and you might lose the money you start with.
Douugh Australia Pty Ltd ABN 76 617 000 138 operates under Douugh Australia Pty Ltd AFS License No. 500063. Although we endeavour to ensure the accuracy of information we provide, we do not accept responsibility of liability for any errors or from any loss from its use. Any information provided is general advice only and has been prepared without considering your objectives, financial situation or needs. We don't provide personalised advice or recommendations. Before making any investment decision you should consider whether it is appropriate for your situation and seek appropriate taxation and legal advice. For more details, see our FSG, Terms of Service and other disclosures.