Margin Accounts

Here’s a look at my Canadian, U.S., and British margin accounts. Margin allows investors to buy more stocks than we can afford with cash by borrowing money from the broker. This is why I have a negative cash value in my margin account. My current blended interest rate on this borrowed money is 2%.

In 2016 I transferred my margin account from TD to Interactive Brokers.ย Using other people’s money to invest can dramatically increase profits but can also exacerbate losses in the same way so it is not recommended for everyone.

Click on image below to enlarge.

 

5 thoughts on “Margin Accounts

  1. Edwin sierra

    Can you do an analysis to show whether or not you are making money after you subtract the interest rate? Thanks!

    Reply
  2. Tim

    Hi, iam Tim from germany – nice blog. ๐Ÿ™‚
    Can you tell me you which leverage you can use at your Margin Account for overnight positions?
    I have only the possibility to leverage by 2 – but than i have no more protection.
    Thats nots that much….. and not very safe…. ๐Ÿ™

    Who does it working for you?
    Thanks for your answer.
    kind regard, Tim

    Reply
    1. Liquid Independence Post author

      Guten Tag Tim! The lending values in my margin account varies depending on what kind of stocks I buy. Large cap, blue-chip companies like Coca-Cola have a lending value of 70%. This translates to a leverage of about 3.3. Medium or more volatile stocks have a leverage of 2. And even smaller companies have just 1.25 leverage. So the riskier the company I buy, the less protection I have. Most of my stocks can be leveraged to 3.3 even though I don’t use all the available margin room because I don’t want to risk a margin call. Let me know if you have further questions ๐Ÿ™‚ Or you can find out more about TD’s lending values in this online PDF.

      Reply
  3. Ryan

    What is the difference between Google C and Google A?

    Reply
    1. Liquid Independence Post author

      GOOG shares have no voting rights while GOOGL shares do have voting rights. The intention for the split between the two classes of shares was to preserve the control of Google’s founders, Larry Page and Sergey Brin.

      Reply

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