Author Topic: Safe(-ish) Margin Leverage - Tell Me I'm Wrong...  (Read 4293 times)

DTEJD1997

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Re: Safe(-ish) Margin Leverage - Tell Me I'm Wrong...
« Reply #20 on: December 16, 2017, 05:40:03 PM »
Hey all:

I think that if you are going to use broker margin....obviously you want to pay the least amount in interest that you can.  Interactive Brokers & TradingDirect have some of the lowest rates...something like 2%.

Then I think that the next thing would be to only lever a portfolio 20% to 30%.  Don't go to the maximum...have some margin of safety.

Then have a portfolio of high yielding stocks.  Try to get them across wildly different industries.  Get some REITS, BDC's, MLP's and other individual high yielding companies.

Finally, use the 1st payouts you get towards lowering your debt.  That is, pay down debt heavily at first, then gradually lighten up.

I think this method would be reasonably safe.


Jerry Capital

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Re: Safe(-ish) Margin Leverage - Tell Me I'm Wrong...
« Reply #21 on: December 29, 2017, 10:01:41 AM »
Before utilizing a strategy of "marginal" (10-30%) margin go read the margin loan agreement you have with your broker... it is quite scary.


fareastwarriors

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Re: Safe(-ish) Margin Leverage - Tell Me I'm Wrong...
« Reply #22 on: December 29, 2017, 10:31:02 AM »
I used margin to buy my house... I used my taxable account as a source for down payment but I didn't want to liquidate certain positions so I used the margin for a few months. The interest was a bit expensive since I don't use IB but it worked out great for me.

SharperDingaan

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Re: Safe(-ish) Margin Leverage - Tell Me I'm Wrong...
« Reply #23 on: December 29, 2017, 11:08:59 AM »
There is nothing wrong with using margin responsibly. We're typically borrowers when prices are cratering and use it average down our cost base; when price returns to average cost we sell off enough to repay the margin. It really comes down to comfort, after-tax interest cost, and the attractiveness of the terms you are offered.

SD