3 reasons why I DON'T LIKE MARGIN LOANS

Margin loans are a way for you to borrow against your shares or managed funds to buy more shares or manged funds. In this reason I explore why I don't personally use or recommend margin loans.
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#investgrowrest #marginloan #investing

[@nicholasjohnson6966]

Just awesome brother! Very good video. Clear and concise. I’m subscribed!!!!

[@GuidedInvestor]

Thanks mate I appreciate that 👍

[@TechUnboxingVideos]

Great video! Thanks for sharing the info on margin loans. Looking forward to watching your next video.

[@GuidedInvestor]

Thanks for watching!

[@GuidedInvestor]

Thank you :)

[@canbefit]

Great advice as always Brad!

[@johndoyle8781]

Yes, great advice, I needed that!

[@smart-brian]

What's the cost difference when factoring in investment property costs, maintenance, real estate, rates and insurance?

[@ptran1126]

Hi, thank you for sharing the information with us. I just have question regarding when does the margin interest kick in.

[@GuidedInvestor]

Hi Phu, thanks for watching. I'm not sure I understand the question....the interest on the margin loan starts immediately. It is normally calculated daily and charged monthly

[@anthonyc8600]

All valid points. However, this video assumes the most risky path which is borrowing 400%+ LTV. Thats wreckless and do no recomend either. The more sensible way to do it which I have learned from Bezos and Musks CPA's is to NEVER borrow more than 20% of your portfolio. They advise usually a 5%-10% LTV per year in loans. Thats extremely safe. My broker allows me to use 70% LTV. But I stay far below that percentage. If you have $1,000,000 in equities and borrow 10% LTV thats $100k at your disposal for the year. (Preferably buy assets). That is all.

[@GuidedInvestor]

Yep, I do agree that if you limit your LVR it reduces the risk of the strategy. As long as the interest rate is reasonable to then it would be a viable option 👍

[@rcforsha]

Good take. By doing this the chance of a call is very unlikely.

[@conner1715]

I used TD Ameritrade and i was debating whether i wanted to use my margin so i looked at the interest rate(9.5%)...yea i'll pass on that, i don't trust my own abilities enough to generate 10% a year consistently and the possible reward just ain't worth that massive cost and massive risk

[@harpreet3318]

When we sell a stock, settlement takes 2 days & we can't buy next stock immediately, any solution? Is there any kind of loan broker gives us that can just sit there with no interest until we use it. In this case we'll use it just for 2 days & according to this, the interest of 2 days will be negligible,. Your thoughts?

[@GuidedInvestor]

Hey Harpreet, thanks for watching. You're right in saying that settlement takes 2 days when you sell a stock but remember this also applies to the buy side. So when you buy a stock, they dont take the cash for 2 days. So essentially you can sell and buy in the same day....

[@willmurray2782]

Interactive brokers is known for offering margin loan interest rates below 1%, could somebody explain to me why this isn’t as good as it sounds? With rates start low margin loans seem like a very good way to accelerate wealth since you only have to beat 1%. What am I missing?

[@REAAX]

They don’t lend to moms and dads only to wholesale investors

[@rcforsha]

You are not missing anything. 1% is basically free money and if you can get anything in the 1-2% range you should take it. This being said, to get rates this low you'll need millions in assets/equities.

[@AussieMoneyMan]

While your points are generally correct there are certainly a few exceptions! Good video nonetheless :).

[@katrinajohnson8092]

Great explanation of margin loans! To expand on that I wanted to ask what happens when you use a margin loan to pay into a down payment for a house?

[@GuidedInvestor]

Hey Katrina, I don't believe you can do that with a margin loan....the whole idea is that the loan is secured against the stocks you are buying. I have seen people use a personal loan as a down payment which is a terrible idea.

[@rcforsha]

Yes you can

[@Mr_Glock19]

@@GuidedInvestor Lol glad I saw this comment before watching the rest of this video. You show right here that you have absolutely no understanding of margin loans. Thanks for saving me the time watching a video of you talking entirely out of your ass if you didn't even know something as simple as it can be used for literally anything including a down payment for a house. Its just like any loan, it just uses your portfolio for collateral. Your welcome. Now make videos on something you actually understand good Lord 😂

[@joeokeefejr]

Hi mate, quick question about the margin loans. If I were to get a margin loan and the market does well for 6 months (and profits were actualised) if the market goes thru a correction and begins to retract, can I sell out of all the securities before the shares drop significantly in Vales and then pay off the margin loan using profits? Or do you get locked into the loan and not able to sell shares? Sorry if this questions seems a bit amateur. I’m new to the margin loan arena.

[@GuidedInvestor]

Hey mate, you can definitely sell out at any time and use the profits to pay out the loan. However, that strategy is good in theory, hard in practice. Market movements are very unpredictable in the short term

[@joeokeefejr]

@@GuidedInvestor awesome! Thanks for the reply. Good quality videos too. May reach out to you in a couple months time for some business. Currently have a portfolio of $300k with no debt but planning some moves in Bitcoin at the moment. Big bull cycle coming. What’s your best email?

[@PassiveIncomeTom]

*Thanks for covering this! It just sounds to risky for me.* 👍

[@GuidedInvestor]

Too risky for me too! Thanks for watching Tom.

[@yuqing2006]

Thanks for explaining it in detail. This is why my dad was worried about me. But my bank reassured me that if i buy shares and those shares drop in price, it will not affect me because I'm using my own money. The HK TV shows has caused an image where if you buy shares and those shares drop, the you will be broke. When i ask my bank what action would depict this type of disaster that drives people to suicide. the bank told me marginal loans. The stocks i bought in 2006 have drop in value but my loss is limited.

[@jerado14]

I took a bad margin loan.. Should I pay off my interest first or pay towards the principal??

[@hulkman4004]

both

[@googlebanmetoomuch2601]

I almost went to zero on margin. Luckily I have good real world skills to make up for the losses.

[@tommyanomaly6193]

Why do investment gurus always recommend margin loans?

[@Unclebuns72]

Robinhood is 2.5% rate on margin

[@RaquelX305]

What happens if you can’t pay your margin losses?

[@GuidedInvestor]

They will force you to sell stock in order to pay the margin calls. If you end up in a situation where you have sold all your stock and still have an outstanding debt then they will likely take you to court if you don't willingly pay the remainder...

[@liljo911xxx]

I'm beginner ...I hate loans...so no margin for me...

[@Unclebuns72]

Can I deduct margin interest on my taxes?

[@lambr0063]

Yes if you use the margin to buy investments

[@patrickmichaelsalomonelbez4318]

Obviously.

[@sprig3432]

I thought margin loans where just like personal loans but you used them for trading and buying shares. I thought there is no risk of liquidation and you hold the position until you are ready to sell? The only risk is paying a monthly fee and interest, given the margin loan of 3 years, you can take your time and spend time in the markets until you have made some profits and then pay the money back slowly. This reminds me the same as leveraged stuff. I dunno if this is a thing with them or I am ignorant

[@thomasa5619]

This is basically how is use my margin loan though, I plan to never be in a position where a worst case margin call (eg GFC or Great Depression) is more than the cash in my offset/mortgage I’ve got the margin loan mostly to take advantage of corrections in the market without dipping into the mortgage (I just don’t like dipping into it, it’s a psychological thing) And I’m 26 in a well paying job, investing in index funds, I can ride out any dips long term

[@GuidedInvestor]

Sounds like you got most bases covered mate. It's really the people without the cash buffer that can be burnt 👍

[@stebarg]

3:21 70 percent of 1,500 is 1,050. I don’t see any sense in your calculation.

[@GuidedInvestor]

It's a 70% LVR not 70% of the initial investment...

[@roryreddog3258]

@@GuidedInvestor Sorry but please explain how you can borrow $3500 against holding of only $1500! If this was a house with value of 1,500,000, why would the bank lend you 3,500,000 to buy it? You screwed up mate and you should have admitted it instead of leading newbs astray…

[@maxb5957]

Max was here

[@roryreddog3258]

@3:30 AHEM please explain how you can borrow $3500 against holding of only $1500! If this was a house with value of 1,500,000, why would the bank lend you 3,500,000 to buy it? You screwed up mate and you should have admitted it instead of leading newbs astray…

[@GuidedInvestor]

In your example (the house), $1.5 million is not the house value its your deposit and yes the bank would lend you $3.5 million to add to the deposit to purchase a house for a total of $5 million. That's a 70% LVR. I'll wait here for my apology 😉

[@salmilici2699]

4.24% with Leveraged Investments

[@APoorMillionaire]

Love your videos, and this one is no different! Excellent content about a subject that isn't often covered on these channels. I subscribed and liked the video, so if you have a chance, head over to my channel and do the same if you enjoy it. Thanks and have a great day!

[@GuidedInvestor]

Thanks, I appreciate the support!

[@habibaroyees]

😱😫

[@stebarg]

I guess you’re not a millionaire yet.

[@GuidedInvestor]

I don't get it....is that suppose to be an insult?