Hi all,
I have international and domestic shares across a few different brokerage firms, some based in AU and overseas. I'm looking for views from others on good brokerage firms that offer international share trading so I can consolidate to one provider and also look at margin lending options.
Thanks all.
Etrade
NAB Trade for me… interface is easy to use and navigate and I get free access to Morningstar reports and some other stuff… Trading rates are better than Westpac, Commsec, and ANZ when I last checked. Plus, having a NAB cash account, I can move money in and out instantly without moving it around from other banking providers.
As for margin lending, I don't bother. If I can't afford or can't afford to risk it, then I don't bother borrowing to risk-on trading.
Yeah I understand your point of view however, it's less about not being able to afford it and more for tax reasons and not wanting to use cash which is set aside.
While I don't know your plan, or intention, and I'm not a financial adviser of accountant, I wonder if you are missing a few details with this concept.
You make money, you get taxed regardless if you borrowed it via an offset or LVR.
You loose money (like many of us did with the recent /now not so recent Virgin death), then you can offset it.
I'll leave the rest up to you and whoever is providing advice to you… Just know, it's not as simoly as you may think. LVR is essential like borrowing against the equity you have in any other assets (if approved). Easiest way I can explain it. You are still liable. The LVR can change as the provider sees fit (essentially).
Don't margin borrow. You'd be better off refinancing your house and using that money. If the market tanks your home loan won't get called in and you can invest in whatever you want not some approved list of securities that LVR can change at a moment's notice.
But you won’t get tax deductions for home loan used for trading…?
It depends on whether to disclose it as income?
If you got 100k refinanced and it went straight into a share account then what do you think?
ATO can't ask you for profits if they don't let you claim the legit deduction.
100k didn't come out of nowhere.
I’m not asking about whether you are honest or not.
I’m suggesting that unless you structure your loan appropriately, which is legally complex if you mix it with your home loan you probably can’t deduce the interest expense.
If you want to lie about everything then there’s no discussion to be had really.
legally complex
Is what everyone taking a fee wants you to believe and pay them a fee.
Slightly harder to track but then the price of convenience is the interest difference paid to margin lenders
Is what everyone taking a fee wants you to believe and pay them a fee
That is what the ato thinks, if you want to pay the ato a fee feel free with GIC and penalty. But the case law on this is extensive. Or get a margin loan and the law is clear cut.
Why you would wonder on to the shadows of legality when there is a clear option bewilders me.
It’s like buying car insurance and ticking no you don’t use it for commercial use and then occasionally drive for Uber. Yea you can lie when you crash and say no I don’t drive Uber.
@cloudy: Okay if you want to be that clear cut.
So ATO is going to give a fine for paying $20k on 1m loan for a share portfolio rather than you borrowing at 5.5% at CommSec.
That would just be ATO shooting themself in the foot.
@cloudy: https://www.ato.gov.au/law/view/document?docid=TXR/TR20002/N…
Or just don't mix personal/investment use and it saves all the calculations
Of course you will, if you use the money redrawn out for share trading(ie. producing assessable income). Its quite common now and the term to google is "debt recycling" ie. recycling non-deductible debt(ie. your ppor home loan which is a private expense which is not deductible) to deductible debt(where the funds are used for investments, which makes the interest on those funds tax-deductible)
Just to keep it simple, keep the tax-deductible portion separate from the non-deductible part of the home loan, usually done by creating a separate loan split. Otherwise it gets messy and you want to avoid contaminating the purpose of the loan.
You can actually get a tax deductible portion of your home loan. It is called debt recycling and what I have been doing. I take money from my offset, throw it into another loan portion and take the money back out for shares.
I tend to agree with you provided the investment loan has a good enough rate. That said, if you have a joint mortgage and want sole margin account, this gets problematic.
Why don't open a joint trading account too?
Interactive Brokers. Gives you the most access to international markets and also the lowest margin rates around.
Thanks, I've never heard of these guys before. I took a look and they look quite good. They only offer $25K in margin lending though. I'm going to give them a call later today to find out more.
If you qualify as a sophisticated investor(ie. wholesale or professional) and invest through a company structure(or corporate trustee of a trust) then they offer unlimited margin lending, just has to be secured by your investments held with them. Just need 250k p.a. income or 2.5 mil in assets I believe. I thought everyone on ozbargain was on 250k+ salaries? :P
2nd interactive brokers
3rd interactive brokers
Me, transfer me over all your money through IScrew Money Transfer
Sure. Why don't you post some images of your current passport, divers licence and bank details in this chat so I can start the transfer.
You only need ISCREW account number: 1-W111-5CR3W-Y0U. Off you go. For transfer over 10K we have a special at the moment: you get 5000 MYDOLLARS put on your account. Looking forward to run with invest your money.
muppet
There's tastyworks which looks to be incredibly complex, but that's for options/puts/hedging. Their margin rates, assuming you'll be borrowing for long periods, seem pretty crap at 7%.
So interactive brokers might be the better choice for long term borrowing.
Yeah agree. Interactive Brokers seem like the way to go. The only downside is the hassle you need to go to for borrowing above AUD 25,000. Outstanding rates though.
I actually didn't find the hassle too onerous. I already had a corporate trustee for my family trust setup so I just created an account under that structure and with qualifying to be a sophisticated investor, I just got my accountant to sign a form attesting to my income/net worth. Submitted the form to customer service and that was it, 1-1.5% interest rates, here we come!!
Yeah true. Do you know if they accept securities as the initial collateral for the ML? Also, is there anywhere online that you are aware of where they show their approved investment menu? I just tried calling them to ask these questions and dear god, that was not a productive call and got nowhere.
@djames: Yeah you can just transfer your existing ETFs/shares from your current brokers, CHESS or otherwise, into IB and they’ll then serve as your equity/collateral against which you can then borrow against.
If you’re looking for an approved investment menu which shows what shares/ETFs they’re willing to lend against and the relevant LVR, I don’t think there is such a thing. Their margin lending product doesn’t work like how most(all?) of the rest of Australia’s margin lenders work where they have a list of acceptable investments and max LVR for each one. They use an American style of margin lending called portfolio margin, which is kinda based off the basic Reg-T American style margin lending, but the initial and maintenance margins vary depending on the contents of your whole portfolio
It's bad risk management to use mortgage repayments or rent money to save a few % on interest when stonk leverage trading.
The RoR would've to have to be at least more than 100% to risk the possibility of ending up on the street.
Commsec