21st Century Academy

Renting Shares

If you own shares in a company or institution, you can sell what are known as options. Shares options are essentially ways for share owners to collect profit from their shares without selling them. There are many different kinds of options trades you can make, some of which require you to check up on the price of shares multiple times a day. Options have to be traded through a specially accredited broker.

Share renting is essentially a type of options trading that is available to the average person. It can be your entry into options trading (if you get interested and start familiarizing yourself with the way the market operates, you may even want to become a full-time trader–it’s a great way to earn a lot of money in a short amount of time).

How to Start Renting Shares

To rent shares, you must first purchase the shares. The practice works well when you buy shares of well-known companies–comparatively low-risk investments whose value isn’t likely to wildly swing up or down.

The person to whom you are renting the shares pays you a monthly premium. This premium is typically some percentage (about 3% is typical) of the value of the shares. In return, they have the opportunity to buy the shares from you at some predetermined price (higher than their value when you rent them out). Every month, you’ll be raking money in from your shares, while still owning them. If their price does go way up, the renter can choose to buy the shares from you at the agreed-upon price; but you still get the premiums. Otherwise, you get the monthly premiums, and keep the shares! The strategy of renting shares shows that the saying “you can’t have your cake and eat it too” doesn’t always apply in modern economics!

Written by Clint Maher - 21st Century Academy
Complete Wealth Education P/L © 2008