(26-02-2019, 07:58 AM)Choon Wrote: I am a passive investor. Holding a few value and safe stocks for the long term (Apple, Genting Singapore, The Hour Glass). I seldom sell.
I am wondering if there is a way I can 'monetise' value from this passive portfolio? Lending stocks?
Grafetful for any ideas.
There is no free lunch. Monetizing your holdings will likely mean you take on *additional risk*. I'm just free associating here just for kicks.
Here're the theoretical possibilties:
1. Securities Lending (almost riskless). You've already thought of it.
2. Borrow secured money against your shares (say 30% of value). Invest in something with a higher return to earn carry.
3. For US stocks, you may be able to do a covered call with your broker (if your broker is a US one). This means you sell a call option on your stock with a strike at say 10% above current value for say 3 mths. This means you earn the premium if nothing happens in the 3 months or are forced to sell the stock if it runs up 10% in 3 months.
4. Not sure if you can do a similar thing with your SG holdings as #3, but wealth managers do offer equity linked notes to their clients. The underlying derivative has to be backed (hedged) somehow. You may be able to earn an "enhanced interest" (aka premium) by packaging your equity + a derivative and embed into a note. Of course, the bank will take a cut. If you are a PB client, you might want to call your relationship manager.