Hello, ozbargain friends.
I come to you with a generous and voluptuous deal, delivered to you from the bottom of my heart for the greatness of the community here and its members.
Very recently, IBKR has increased their margin limit for retail investors in Australia from $25k to $50k AUD. This now offers an unbeatable rate on margin in Australia. About IBKR Australia Margin Accounts.
Old post from last year where the limit was $25k: https://www.ozbargain.com.au/node/615679
Referrer gets $200. Referee gets $1 worth of IKBR share (capped at $1,000) for every $100 deposited.
And why is that? I don't think this offer in of itself is risky at all. This is a reputable broker.
Unless you're saying people shouldn't take out huge loans as a percentage of their investment? Well, you could say it is risky for someone to post a deal on ice cream because there is a risk someone will buy 100 tubs of it and then overdose on it.
The $50k is a maximum. It doesn't mean you need to reach it. You could use $5 of margin if you wanted.
Since you asked.:
A margin loan involves magnifying the risk of a stock market investment. For example, if you put in 50k and borrow 50k and the market drops 10%, instead of losing 10%, you lose 10k of your 50k = a 20% loss. In other words, risky.
The investment (and life) maxim of 'too good to be true' applies here. Why are they lending at 1.5%? Sounds a bit desperate. Risky.
Can we see please see the balance sheet of this entity so we can make an informed judgment about its financial position before depositing a large amount of cash. If not, I will stick with Comsec. Less risky.
Why are they lending at 1.5%? Sounds a bit desperate. Risky.
They are a Nasdaq-listed broker with $10 billion in equity capital. Their selling point is having the lowest fees so I don't see anything risky or desperate about this offer. If there is an issue with their product, it's their desktop app which is complex and bloated compared to their competitors.
IBKR offers a wide variety of financial instruments to trade, in addition to having the lowest margin loan rates and lowest fees in the market. Honestly, I don't know what to say when you say you are happy with Comsec. 🤷
Hey mate, you don't know anything about IBKR by the sounds of it. Instead of making arbitrary comments without any knowledge, how about you DYOR and come to an educated conclusion.
They are a top tier broker and their rates are superb. I've been broking with them for 5+ years and have the majority of my holdings with them, over my other accounts with CommSec, Nabtrade, Belldirect. I've also been using their margin lending extensively.
That's not a reason to downvote. Your risk appetite might not be that of others.
And you might not be using the loan to buy risky investments but to avoid selling your current investments to spend some money. This is a great way to not touch your capital and borrow money at extremely low rates.
how can u cash out though? you can't take the loan as cash right?
@superValue: That's not true. I have withdrawn funds from IB while having a negative cash balance. Granted I do have a net positive balance, when you include my equity holdings.
Dmz111, what did you just say about me? I’ll have you know I graduated top of my class in the Navy Seals, and I’ve been involved in numerous secret raids on Al-Quaeda, and I have over 300 confirmed kills.
I am trained in gorilla warfare and I’m the top sniper in the entire US armed forces.
You think you can get away with saying that to me over the Internet? As we speak I am contacting my secret network of spies across the USA and your IP is being traced right now. I can be anywhere, anytime, and I can kill in over seven hundred ways, and that’s just with my bare hands.
Not only am I extensively trained in unarmed combat, but I have access to the entire arsenal of the United States Marine Corps and I will use it to its full extent to wipe misinformation off the face of the continent. If only you could have known what unholy retribution your little “clever” comment was about to bring down upon you, maybe you would have held your tongue.
But you couldn’t, you didn’t, and now you’re paying the price.
@watwatwat: Lol - ok. You probably should stick to what you are good at and stop giving financial tips on the Internet.
@Dmz111: You have a degree in finance and claim others are financially illiterate yet you:
You probably should stick to what you are good at and stop giving financial tips on the Internet.
I don't think I gave any financial advice. You are the one that specifically advised people to not get a margin loan because of current market conditions. Did you carefully consider anyone's financial position or desired asset allocation before giving this advice? No.
@watwatwat: I did not advise against a margin loan. I said it is risky and to be very careful. You have responded in a very emotional way to very conventional financial wisdom. Take care of yourself. I am done for tonight.
I did not advise against a margin loan. I said it is risky and to be very careful.
Wrong. You just said:
"you should not be considering a margin loan"
You have responded in a very emotional way
Yes, you haven't addressed any of my valid points.
I am done for tonight.
Goodnight sweet prince.
@watwatwat: Here is the same advice from the Governmemt's money smart website: https://moneysmart.gov.au/how-to-invest/borrowing-to-invest
I have a PhD in Finance.
@mynameisborat: So you are probably ok to do what you like in financial markets - although tell that to the finance professors in charge of the collapsed Long Term Capital Management: https://en.wikipedia.org/wiki/Long-Term_Capital_Management
I don't doubt you but excelling academically and being a successful investor don't always go hand in hand.
Yes, for the most part, people shouldn't be using a margin loan if they're inexperienced but provided you have experience and being in the market for years, then it's a different story.
Correct me if I'm wrong but the part you mention about "Being in the middle of a pandemic" shows to me that you're not an actual investor yourself. Remeber the markets are forward-looking. Case in point, when the markets hit rock bottom in March 2020, the average investor would have said "Let's wait till the pandemic is over or that the markets are going to fall further because….". But by the time you waited till everything was back to normal or at least better (i.e. Now), you would have missed the entire opportunity…
@chalky: Yep - I am an investor and I have a margin loan
The point is that they are not for inexperienced investors or people who can't afford to lose 50% of their capital. A friend of mine had to bsil out at the bottom of the market during the GFC as he could not afford to keep meeting the margin calls. Luckily a was not in the market at the time because my then girlfriend had spent all of my money on a house.
@Dmz111: I agree you should have said this iniatially, greater reward but greater risk
Margin loans are very risky for the novice investor with high risk tolerance and no idea what to invest in
DYOR and don't listen to not financial advisors online
If you do leverage, do it with a non leveraged ETF.
Not sure why you’re copping so much flack. Margin loans are by their nature risky, especially so in such a volatile market. It’s a good way to lose $50k
Margin from IB is not in the same boat as 'risky' margin from a CFD lender. The ratio of lending very modest, compared to the 100:1 that you used to be able to get from CFD providers.
Margin loans are very risky for the novice investor with high risk tolerance and no idea what to invest in
DYOR and don't listen to not financial advisors online
If you do leverage, do it with a non leveraged ETF.
Flying a plane is a risky proposition if you don't know how to fly a plane
I agree, margin loans are risky. No need to defend your position.
Please excuse the hugely ignorant questions but how do you get 25-50k from the table linked? I see 140k and 1.4m.
- How much do I need to deposit to loan 50k?
- How low can my portfolio drop before a margin call?
- if I loan 50k, how much interest do I pay each year? 1.5% of 50k, so $750 each year?
- How long is the term of the loan at 1.5%? If I loan at 1.5%, what happens if they change to 5% next month?
Hello, most beautiful Interactive Brokers.
This fulsome gift seems almost too good to be veracious. We bow to your felicitous mortgage gods from the depths of our bosoms, knowing how this will contribute to the ultimate deliverance of our magnificent community.
Be mindful about the margin call. Especially now.
There is no margin call. Your holdings will be liquidated off as necessary. I did explore using Margin from IB a year ago or so after they're supported margin loans again but this is what prevented me from taking up one.
Isn’t this the definition of a margin call though? I.e. If your LVR moves beyond the required threshold, and you fail to top up your account when required then they’ll just liquidate your positions to meet LVR requirements again.
I guess it depends on whether they give you the opportunity to transfer additional cash prior to liquidating part of the position to meet required LVR.
They definitely have a margin requirement. I suppose what IB means is that there's no "warning" to top up funds, they'll immediately start liquidating: https://www.interactivebrokers.com/en/general/education/pdfn…
@spamus: Correct, their auto-liquidation algorithm is ruthless if you fall below the margin requirement. It’s not like most other margin loan facilities in australia where they give you 24 hours or similar to top up the account, etc. If the facility goes into margin call, they WILL liquidate immediately to bring the client back to “safe” levels. Something to keep in mind, along with their super low margin rates.
This reads like a spammy scam to me.
This is a proper and legitimate company. It's like buying a home using a loan compared to cash, the investment is proportionally riskier when you use leverage. For margin loans, you need to know what you're dealing with (eg. margin calls) otherwise you might end up in deep shit lol.
I don't have any margin loans because it is out of my risk appetite. But no this doesn't make it a scam :)
Ah, I was wondering why my buying power jumped up by 25k.
So far had a very good experience using Interactive Brokers over the last 2 years
No, this is an actual margin loan. With CFDs you can actually borrow much higher - like 50 to 1 or something.
I don't need this but it sounds like an excellent deal
The 7:30 report story will write itself: "lost my house after finding a cheap margin loan on a website best known for desperados looking to save $10 on a 4 pack of Eneloops'.
But hey, saved $10 on a 4 pack of Eneloops!
Lol. I'm not a fan of margin loan, but with everything you need to do your due diligence… Same for eneloop purchase
Nah, with eneloops - You see you click you buy.
It's only $50k
Anyone thought about doing this and then buying some FMG shares and pocketing the dividend?
A bit late for FMG dividends.
I believe there's an additional 1-2% spread for Australian customers, check the interest schedule page.
how do i get the SOA from?
Can you use the funds to buy QXR ?
For those in the know, is this DMA CFD? Do they also offer normal stock trading account? (Not CFD, but CHESS sponsored account)
I use it as a normal stock trading account (no CFDs).
I personally wouldn't use it for Australian stocks when there is Stake ASX but I think it's good for US.
For the chess question, seems no: https://www.reddit.com/r/fiaustralia/comments/qp7xpa/interac…
With an IB account you can basically trade anything in all the major markets and currency's, no CHESS and i imagine that IB will be on the other side of any CFD trade, as they are market makers.
QYLD gang where you at? We'll be billionaires very soon with this đź‘Ť
I have had an IB account for about 8 years, The real deal, super cheap and super safe - CFD's on the other hand are leveraged derivatives and while they can be useful are certainly not for the faint hearted or risk averse.
How to get statement of Advise for Margin account?? signed by financial advisor
@watwatwat
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Also don't forget to sign up via referral for 1% cashback on deposits (via free IBKR stock).
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ill take a long on the ruble
It's risky but if there is peace its worth a small bet
how do I actually sign up to Margin Lending? I've created an IBKR account, but can't find the form/option anyway. The UI is hideous.
Fairly sure you need to apply, and/or send a letter from your financial advisor/accountant to show you understand what you are doing. They will ask your income, occupation, years of experience trading shares, options, ETF's, CFD's and Financial Qualifications. This is for margin lending and options I recall.
Greater reward but greater risk
Margin loans are very risky for the novice investor with high risk tolerance and no idea what to invest in
Used well they can be a tool to multiply returns on safe investments
DYOR and don't listen to not financial advisors online
Read everything with scepticism, ask yourself why this person is telling you to invest in this stock
Buy the rumour, sell the news
Don't get FOMO and buy the top when +10% up in a day
If you do margin loan leverage, do it with a non leveraged ETF greatly reduces your risk with a basket of shares from a market like ASX, S&P500 or sector based like Lithium, Tech, FANG or Solar. Sector based is riskier/volatile, especially in commodities like Wheat and Oil right now.
All this stuff I've learnt the hard way through bad and good days and this is what I'm sticking with. I'm in a Technology ETF but make your own decisions by looking at ETF Prospectus websites and look at max drawdown before investing. For example if max past drawdown was 30% that means your losses could be 60% or even more before it recovers.
This website may help you select whatever works for your risk tolerance and research
https://etfdb.com/compare/highest-5-year-returns/
Fairly sure you need to apply, and/or send a letter from your financial advisor/accountant to show you understand what you are doing. They will ask your income, occupation, years of experience trading shares, options, ETF's, CFD's and Financial Qualifications. This is for margin lending and options I recall.
I get 9% holding a usd pegged stable coin is it worth it?
Depends on your age, income, investment %, risk tolerance and what website it is
i dont think u can use the margin loan to cash out ?
Do I have to have a job to be eligible?
Probably, or at least a lot of assets/inheritance some other money
A bank is a place that will lend you money if you prove you don't need it
A bank is a place that will lend you money if you prove you don't need it
Interactive brokers is much the same but you prove you won't blow up the margin loan too
Are the Bells ringing yet?!
P.s. DMZ did have some valid points but probably old head falling deaf on young shoulders - those that know will have understood his well intentioned words. The rest … Well everyone learns someday… I'd generally advise against margin loans if youve only invested past the gfc and Bitcoin, diamond hands and hodl are all you grew up knowing….
Anyway on a serious note the margin provided is great for serious retail holders who know what they're doing… Most of which will not and they'll make their money eventually through some unsavoury means… And yes that time will come. They're not doing great margin loans out of charity.. that's for sure.
I'm thinking a T Shirt with "my folks went to Ozbargain and all I got was a $50k margin loan"
IBKR US customers are able to use margin loan to do other investment than buying shares / options (e.g. use a deposit for buying a house next door on sale), due to Australian regulations, IBKR AU won't allow this directly.
can we cash out this loan or we have to use the loan to buy another share?
my current portfolio size is on IBKR around 20K (USD). That means I can't access the margin loan.
I need a minimum investment of 50K to access the Margin loan? Can I use this margin loan for Option selling?
Thank you so much for posting this, wonderful deal, hope it works as expected
so all in on GME?
Just a PSA: It's pretty straightforward to open an IB account pretending to live in the UK; thus gaining access to unlimited margin (including cash withdrawals on margin) and lots of other useful features that they sadly don't offer in the AU. I do actually have a UK passport & SIM card and have family living there (so have an address to use); but when I signed up they didn't actually verify any of these documents.
How do you prove repayment ability if you don't have UK income?
That's not how margin loans work.
You don't have to prove serviceability?
Oh because they'll just sell it on you if you get upside down
Ok cool
And have you traded on the account?
Yes, including substantially on margin.
<1.50% p.a.)
0.004% interest per day is cheap.
I think there's an inverse relationship in that the more time spent on Ozbargain the less wealth a person will have.
Maybe Ozbargain is the risky information hub? 🤔
Margin is a tool, just like anything else, used incorrectly you can hurt yourself. But used well, it's just a tool.
Having hard time finding the minimum maintenance LVR before they start liquidating - 25% equity?
I use IB for mainly trading US stocks but Margin loan gets quite complex for international stock as you have to bare FX risk as well has principal investment risk. DYOR and know how to manage your risk position before you jump into margin calls
voluptuous
voluptuous means what? only 55 + votes so far. wonder how does it compare / what is the average + votes ?
Be very careful. This looks like a very risky proposition.