Stock margin
FW30
Posted 12/17/2025 12:52 (#11473542 - in reply to #11473523)
Subject: RE: Buying stock on margin


EC SD
All of the brokers offer "margin accounts" where you can loan money from the broker. The interest rates vary from broker to broker and also lower rates for larger loans.

For speculators, it is a great way to lose a lot of money though, because if the market goes against you, a margin call will trigger and force a sale with deep losses. Of course if you get lucky, the leverage from a margin loan will provide a larger gain than possible without leverage.

For non-speculators, margin can be used as part of a tax avoidance strategy. If you are living off investment gains from a significant nest-egg, instead of selling periodically to get spending money, just borrow instead. This avoids the capital gains tax, since no sale occurred. The interest paid may be less than the tax that would be owed, so in that case, just keep borrowing against the assets held.
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