Thanks for the idea but you are correct I hope to keep the margin loan.
If I lose this credit line the opportunity cost is quite significant for me. I also paid off my UK mortgage and replaced it with a cheaper IB loan.
There is no problem to own FS at IB if you don’t want a loan. Indeed I noticed it might now be advantageous to do so because it seems we might now be able to buy the cheaper Investor class shares without needing to own £5M (tbc)
I agree. Hopefully next week I will get confirmation that the current problem has been solved by my choice to change to Portfolio Margin.
But it has shown me that we cannot safely rely on the margin loan facility from IBKR. As @PhilMongoose pointed out rules can be changed unilaterally by any bank at any time. In the case of IB without communication (website still says 50% margin is required not 100%) or recourse and it has taken 10 days to understand why
The 5 rules are only to qualify for the safe-haven.
Well IB is the easiest to borrow money on margin and and you can do it by just a click in any currency you want.
Anyway if you shop around and have accumulated a decent amount of money you can do as good with swiss banks. Some offers lombard loans at 0,8-1% + SARON. Even with 0,25-0,3% deposit fees it could be worth it.
VZ charge only 0,07% and offer lombard loans from 50k but they are rather conservative and will let you borrow 25% of your asset.
By Raiffeisen or cantonal banks they start at 30k and let you borrow 50-60% of your equities.
I don’t have currently any lombard loan and all my equities are by IB but I am aware of this for my future situation 
9 posts were split to a new topic: Posting unedited AI output
The absolute values for the rates don’t really make sense? Or is that meant as benchmark + mark-up?
What’s a “decent amount”, I guess in the millions?
So yea, if you already “won the game” you have access to some cheap loan to finance whatever else. But probably not something for the average Joe accumulator.
I’d also would bring box-spreads into the conversation. You’ll probably not be abel to get a bette rate than this anywhere. Not tax deductible though and a bit challenging to execute.
For those who have studied it, are the terms for cantonal banks really that different? i.e.: they can’t liquidate your position without warning and/or they can’t easily change how much collateral is required and/or what counts as collateral?
All banks can change the terms and the collateral rules. I had the experience at a Raiffeisen (not a cantonal bank, of course)
The limitation with IB is that they don’t have anything akin to client advisors and there is no escalation path. You get what you pay for. Even if you were a HNW client that other banks would fight to attract (I am not) you have no levers to pull
if I was to change I would reassurance that I have an escalation path and someone who would look out for me in the event of such a change. So that I can sleep well during RE
Nope rather 200k with VZ, and 100k for cantonal banks, Raiffeisen or CIC.
Do you know that they give spreads as low as 0.8-1% spread on investable assets this “small”? It would be really great
Of course but that involves some hard work. If you have less than 5M investable assets many will not even return your call
Pictet, Julius Bär, and Credit Suisse (UBS) cannot be compared to brokers like Interactive Brokers (IB) because they offer wealth management services. These services include portfolio management, international tax advice, dealmaking, and more. They are designed for high-net-worth individuals.
[1] Margin Rates and Financing | Interactive Brokers LLC
[2] Reddit Search Tool
[3] https://www.raiffeisen.ch/content/dam/www/horw/pdf-dokumente/dienstleistungspreise-2024/dienstleistungspreise-anlegen-ab-01-2024.pdf
[4] https://www.szkb.ch/docs/default-source/private---manuell/konditionen-im-anlagegeschaeft.pdf?sfvrsn=596f3bdf_12
[5] Gebührentarif
[6] Account fees (CH) | Swissquote
I think they key is not necessary a private bank, but if you want secured financing you need to get a non-callable credit line.
That’s what some bankers tôle me when I was Shop around for mortgage. Never contracted anyway.
Typical offer was from cantonal bank:
They told me same rate as for RE Hypotek. Saron flex + 1% cancellation whenever you want. Custody fees 0,3% + once 300 frs administrative fees.
This was without any négociation I bet 0,8% with lower custody fees is achievable.
It’s hard to find a good banker nowadays but I think for someone who must wait a bit to refinance hypothek with higher amount to use a maximum leverage, Lombard loan could be a powerful instrument if uses reasonably.
PS: never did but consider it for future projects
Are Swiss banks actually offering this for the normal mortal human being ?
Not sure about Swiss banks, but US HELOCs, current account mortgages and offset mortgages might come close to achieving the same thing.
I think probably mortgage is the best way to do it as there’s a defined pipeline and standardized products and a just big enough value to get it done.
Otherwise companies do it regularly, but I guess those are typically multi million facilities where the costs of drafting the agreement can be covered.
Can we get a recent update on this @Barto. Were you able to withdraw the funds from IBUK? Thanks
Since many years I have a strategy that is based on margin loan. The money management includes a margin loan to rise the risk and the performance. It is a stock-only strategy.
Everybody in Switzerland (or almost everybody) takes a mortgage when buying real estate. Since the 80’s there has not been a bust in real estate, so a whole generation does not know what that is. However there were some bear markets in equity.
Around the world there were many real estate bubbles just like the current one in Switzerland and they did pop at one time or another.
The risks are not foreseeable, not in stocks and not in real estate, anything can (and probably will) happen. Once the market value goes down the bank/broker will ask for more money or sell your house/stocks.
Now, stocks are more liquid than real estate and can be sold in parts; so the risk is easier to manage than with a mortgage on real estate.
Portfolio margin at Interactive Brokers gives you up to 800% margin, which is insane. But you need reserve, so the higher the better. I control the risk real time with an easy calc-sheet. I define how much margin I take at the beginning and how much margin I will allow. That must be way under the limit the broker sets. I call this my personal stress tolerance. Once the maximum margin is hit I start selling myself, way before the broker would.
Formulas: D=Debt, Mmax=maximum margin before you have to act, Vmin=minimum value your positions may fall to, V=actual value, ST=Stress tolerance. That much your positions may lose before you have to act.
Vmin=D*Mmax/(Mmax-100%)
ST=(V-Vmin)/V
Example: you have 100’000 and want to invest 120% on margin. You want to get out at 300% margin. You need a margin loan of 20’000.
Vmin=20000*300/(300-100) = 30000
ST=(120000-30000)/120000 = 75%
You have a stress tolerance of 75%. Bear in mind that in this example you lose 90% of your capital before you have to take action! The stocks did only go down 75%, but the margin leverages that. Without margin you can lose close to 100% without having to take action and therefore have a stress tolerance of almost 100% (the broker probably would close your account if all your holdings go to zero and there is no cash left…).
Finally a few words on tax: debt is added when deciding if you are to be considered a professional trader. No difference if the debt is a broker margin loan or a mortgage, none. If your taxable income from those investments on credit is lower than the debt interest you pay you may be considered a professional investor. But this happens very rarely, I don’t know any case. And it may change soon when we cannot deduct debt interest any longer…