A friend recommended this article here, and it seems to be quite interesting !
In a nutshell, you can borrow from IB with a very small interest : 1.41% - 2.66% and do whatever you want with the money, including investing, or paying off other, more expensive credits.
What to you think about it ?
Retail customers can now keep a trading account on a long term basis and still have the things that they want to buy right now, as well as settle overpriced loans from banks, or clear a mortgage for next to nothing as Interactive Brokers launches a...
Almost two years ago, so not that „new“ a product.
But seems to be rather inexpensive.
Debit card is only available to US customers. I think they have by now removed from their web site previous references to plans of introducing the card for Canadian and European customers in 2019.
Margin trading has been available for decades, it’s not new. All time low interest rates is relatively new, tho.
Centuries, if you go all the way back to tulips.
I wouldn’t invest money that is not mine / is borrowed.
But to each their own.
Paying off other more expensive credit (in the same currency) might make sense, depends.
Investing on margin is an absolute no-go for me.
If you invest on margin, you can be qualify as a professional investor by the tax office. This imply tax gain on capital.
DeGiro Margin is cheaper 1.25% for EUR.
If you want to borrow EUR then Degiro is indeed cheaper with 1.25% vs IB at 1.5%
If you want to borrow CHF however, Degiro is 3% and IB 1.5% currently.
I hope we agree that you want to borrow in the currency in which you plan to spend the money to avoid FX risk on margin… otherwise this is a long-term bet on a particular FX pair
Not if the amount of dividends you get exceed the interest paid.
Sorry nievity, so borrow at 1.5%, buy dividend stock at 1.5% yield which pays for margin loan, take any increase in share value as profit?
And don’t forget you will pay taxes on the dividend so if your Grenzsteuersatz is 30% you’ll only get 1% dividend
Is it available in Europe at all? Does anybody have first-person experience with this service?
Deduct interest on debt from taxable income:
Saving 30% marginal rate taxes on the interest you paid.
It then becomes a zero-sum equation (assuming loan interest = dividend rate).
There might still be the question of whether you are considered a professional trader.
Be careful, you might not get the 15% of WHT taxes back, if you have a loan.
At most you get back (dividends-interest)*marginal tax rate
Did not try but I think so… basically, instead of buying securities on margin you “withdraw” money (by sending it it to your linked bank account) from your IB cash balance and send the said balance in the negative numbers…
I thought about it as an alternative solution to car leasings whose rates are quite expensive
You have to keep in mind that this is a variable rate and that if your securities decrease you may be in for a margin call or your securities will be sold. This is not a standard fix rate loan and it’s not risk free.