The lowest margin loan rate I've found is 4.75% - not sure if any other lender can go lower than that?
Is there any other type of loans if margin loan is not the best type of loan to go with share investing?
Best Interest Rate for Borrowing to Invest in Shares (Margin Loan or Other Type of Loans)
nignucial on 30/11/2019 - 23:10
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The only downside though is that I cannot choose my own portfolio and gearing ratio.
Also, I could potentially gear on geared funds with margin loan! (well, if they are on the list of approved investment).
NAB EB - 4.55 no margin calls
Pretty interesting product… and it's 4.3% now.
But appears to be only managed funds?
Very much a good times loan.
It is a select list - and surely whether it is a good times loan depends on your investing goals? If you have a 10 year outlook with buy and hold it doesn't matter really if it is good times or not
When I had managed funds the ROI was generally less than my margin loan. I find managed funds to be a safe investment with "just average" returns. Maybe at 4.3% the calcs look sweeter?
If you are on a 30% tax rate the effective loan rate is 3.00% after deductions?
So without the loan if you had (for instance) 20k into vanguard index Australian Shares which has given 7.9% over 10 yrs after fees you would have $42,780.
If you leveraged at the max 75% that would be $35k invested giving $74866
loan repayments would be $154/month P&I giving $15k principal & $3482 interest (I couldn't see if there were any account fees) less any tax deductions on the loan interest.
So $3482 risk will give you a potential $13.5k boost based on past performance. (Hopefully I have the correct figures)
That's a lot more compelling than my last margin loan.
If you leveraged at the max 75% that would be $35k invested giving $74866
If you're leveraging 20k at LVR of 75%, it would be a lot more than 35k invested. Run the numbers through this calc and even at 70%(highest the calc would do), 20k with 70% LVR would be 66666
@Kenb0: You didn't link the calculator but I found one.
My caveman sized brain never even thought that you could leverage off the leverage… I'll go back to hunting and gathering.
Looks quite restrictive, very much set and forget.
Interactive Brokers, currently around 2.382%. Will be by far the cheapest margin loan rates available in Australia.
Do they provide margin loans to Australian retail investors? I read that they don't but I could be wrong…
Well, I think I'm a an Australian retail investor and I have margin facilities with them. I just had to provide a declaration from an accountant showing 250k+ annual income to qualify as a "wholesale" investor but beyond that income declaration, I'm no different to any other retail investor. If you were friendly with an accountant, they could probably do that for you easily enough
Got no accountant friend, unfortunately.
Ive currently got a margin loan. The cheapest way to do it, if you can, is to use a mortgage on a property and use that security to get a lower % rate
No home loan, unfortunately.
How did you shop around to get a lower rate?Didn't not worth the hassle to pay to move shares over to the new broker for marginal reduction in interest rate.
If you prepay for a year or more you can get better rates.
I use commsec for the ease of having everything together (margin loan, shares, research, and some banking).
Nab had some ok rates back in the day.
Hopefully you don't mind answer my question. It's a bit out of topic but I'd like to know. Does your margin loan data/inquiry appear in your credit report? My mate has 250k margin loan with BT but showing nothing in his credit report, so when he applied for mortgage he didn't have any problem with the amount he was borrowing as the bank didn't take into consideration that he has 250k margin loan.
Sorry for a slightly off topic question, but why do you want to gear up for shares? Most companies are already in themselves geared.
Eh, to earn even more by earn a bigger return rate than the borrowing rate?
And nothing stops you from having your own controlled gearing on top of the company-controlled gearing in most companies.yea cool, whats your investing style out of interest?
Med-to-long term - mostly buying and holding ETFs and blue chips.
The gearing of the company is important as part of the investment decision but be irrelevent to your own personal level of gearing as part of the investment
Leveraged https://www.leveraged.com.au is the cheapest i've found but I was about to go over to WBC myself and start leveraging again.
Have you considered an active geared fund? They usually pay far lower interest rates and as a result, their total management cost is lower than most margin rates.