I might soon take out a sizable junk of money as a margin loan, since it’s the first time I’m doing this my question would be, how does one control or pay-back the margin loan? I haven’t found any obvious controls in the WebUI to use cash for paying back a margin loan, is there some secret menu or trick required?
If you just transfer back the cash ?
When balance > 0 you are ok I guess…
And does one see the interest rate, the point when they would margin call etc.?
Interest rate: I don’t remember the frequency of invoicing. I think you have to run the report to see it. I only went on margin with minor amounts (10-15 k) so I did not bother to check.
Also for the margin I think you have to keep it under control in the dashboard.
Your loan is basically your negative balance + the interest accrual for the month. You send money, or you sell assets or you get dividends to pay it.
They bill the interest for the month on the ~4th of the next month. You can see how much it is when looking at the interest acrual in the report.
You can see the margin requirement on the top of the page on the web version. It is the total requirement. If you already have a margin account, you can already see it. If you want to see the requirement per asset, you can run the margin report (in other reports), but that would be for the day before. You get notification when they increase margin requirement. Usually if you can borrow 75% (in the maintenance margin requirement), they will tell you that in 1 opened day it will be 50%, in 3 openend days it will be 25% and in 5 openend days it will be 0%.
Huh? Does that mean there’s some short term payback expectation? My Margin Req. Right now says 32k which is roughly 15% of the portfolio value. The withdrawal area says I could take out ~192k on margin with a portfolio value of ~250k. I plan to take out ~60k which will be repayed within 12 months or less. Any caveats I’m missing?
The debt is callable. If they suddenly don’t like your assets anymore, they politely ask for their money back. They are so kind that they give you a few days. If you have ETF’s or blue chips, the probability is low. The risk of such events is more probable with “small” caps.
The portfolio is 75% in VT so I guess that risk is also low…
I think if you remain within 1/3 of your assets you should be quite safe (if VT as a collateral drops so much within the next 12 months we’all be in big troubles…)
What kind of margin model do you use? Reg T or portfolio margin? What percentage of your portfolio value is your purchasing power?
If you start working with margin, you might be considered a professional trader by the tax office. Trading with margin is one point on their checklist. Worst case: you might get taxed on capital gains.
Is there any benefit to separate the margin loan into an other account?
- I thought about moving my blue chip ETFs to a sub-account , and do use them as collateral for the the margin loan.
- If I near the margin call, I’ll move my other stock there