The rates have dropped since the recent reduction in the federal funds rate. It is the cheapest margin you will get in Australia.
Note that Australians specifically are still limited to $50,000 because the government thinks it is unsafe to invest in the stock market. They would prefer people lose their life savings in crypto or romance scams, or leverage like crazy to get millions of dollars in loans to buy investment properties here.
Referrer gets $200. Referee gets $1 worth of IKBR share (capped at $1,000) for every $100 deposited.
Tried it too but eventually gave up as their support don't respond or can't understand what the issue is.
time to debt recycle
Dumb question, but hypothetically if you wanted to go low risk on this, is there a way to borrow $50k as above, buy $10k of an ETF, then put the remaining $40k in offset account?
If the full $50k is tax deductible you could save $1.2k/year if on highest tax bracket?
Agree, its dumb question
Lol
Mate, even if you could do this, money in an offset account does not constitute investment in an income producing asset.
No worries, so I guess you have to demonstrate the full amount borrowed is invested in an income producing asset?
@brettd: only the 10k portion would be tax deductible as putting it into offset account isn't income earning
@brettd: Yes, I order to claim a tax deduction on the interest paid on the loan, it has to be an asset expected to produce an income.
@Loki556: Cheers for that, guess there aren’t many very low risk options that would make it worthwhile for someone who has a pretty negative view of where the world is headed in next few years (haha)? The ETF’s I saw above have had some decent drops during bad times.
@brettd: If you have a negative view of markets in the future, and you have balls of steel, can buy this gem instead:
ASX BBUS | US Equities Strong Bear Hedge Fund
BBUS seeks to generate magnified returns that are negatively correlated to the returns of the U.S. sharemarket.
No. It’s generally not possible to pull the cash out.
No (to @brettd), because that's not how a margin loan mechanism works.
50k is just the loan's limit. When you first open the margin account you cannot withdraw any of that in cash. Instead, each security has a LVR with the margin lender. Say u wanna buy $10k of a stock with 75% LVR, then u put in (at least) $2.5k of ur own money and the broker lends u 7.5k and now ur loan limit drops to 42.5k, and so on.
If the stock drops you need to put in more of ur own cash (or sell some of the holding) to post margin, and only when the value of ur holding exceed the LVR for it would you be able to take cash out as a cash advance.
Google "debt recycling" this is a safer way to achieve what you want if you have some equity in the property.
Make sure you get some advice to make sure you do it properly as you have to split the loan and then make sure that money goes into shares and nothing else.
I question whether these types of things should be allowed to be posted. They are high risk and marketed to the unsuspecting who wants to make a quick buck without truly understanding the risks. The risk isn't just they lose their initial capital.it is even more than that
As opposed to people buying items they don't need, just because their cheap?
This description sounds like you're talking about CFDs.
As you're not, I think your claims are unsubstantiated. I find their advertising and platform is conservative and targets experienced investors.
It's kinda ridiculous to even make this claim when robinhood and webull offer margin as well.
With a Margin Loan it would take a catastrophic event to lose more than your initial investment. As stocks decrease you get margin calls where you either have to top up the Margin Loan with Cash or the bank will automatically liquidate shares to keep you within your margin limits. basically you could pretty much ride a single share to Zero and not lose more than you invested. The exception to this would be a sudden event that sees all your shares instantly worth zero with no opportunity to sell. Then you can potentially lose your investment plus the value of the loan. But if all your stocks suddenly went to zero you probably have other serious issues and the banks et al will be in the same boat as you. Also important to remember you can only have high leverage rates (high being 70-80%) on what they consider ultra safe bliue chip stocks, anything high risk the leverage available will be very low or even 0.
If you get yourself into trouble, particularly with naked options, a human actually goes into your account and closes positions for you. But, this can be problematic because the market might bounce back the next day as is often the case. They might also close a position, but you would have preferred that they close a different position. You can set positions as "liquidate last", though, which they follow unless you are in big trouble.
This isn't guaranteed, though. In terms of unprecedented volatility like February/March 2020, for example, a lot of people were margin called.
Just curious,
Does it mean I cannot short more than 50Kaud worth of a currency that I don’t have position?
My ibkr is not AU based.
I'm not sure people here quite understand that achieving a 7 percent isn't easy at all. Yes stocks go up over time, but often they can drop and take years to come back. If you're borrowing to buy, then you aren't in a position to hold this position and can easily lose.
Not to mention even if you do beat the rate you are paying, its likely not going to be by much, in which case, is it worth the downside risk?
Buy one ticker and achieve:
"The index has returned a historic annualized average return of around 10.26% since its 1957 inception through the end of 2023.".
Despite doing this for >50 years could it stop tomorrow? Sure. The sun could explode tomorrow, as well.
The sun could explode tomorrow, as well.
No, it's too small to go supernova, and would take billions of years. Unless you're thinking that it already is a contained explosion in which case it will also be happening tomorrow.
Your completely ignoring the human emotion and behaviour involved.
Fact is that the market has regular and large drops that can sometimes take a decade to come back but often several years.
Easy to say just hold on through it, buy the dip etc. Different to actually experience it when every headline is full of panic, everyone is talking about it, people start getting laid off at work or even just hearing of other workplaces doing it.
Reality is most will panic and sell somewhere on the way down. Some will hold until it recovers and then GTFO because that was scary. A few will hold all the way through.
It's like when they survey people on their driving ability and 80+% respond saying they are "above average drivers"… Everyone thinks they will hold/keep investing but history shows they don't.
If you are an actual investor and you panic with a dip then you are a clueless investor that never should have been in the market in the first place, be that with your own money or borrowed money. My mother was one of those, in the crash in 2020 she came to me desperate for me to help her sell all her shares. took me a few hours but in the end convinced her to buy a heap more instead of selling anything. She only ever had shares because she inherited them and I guess there are a lot with similar positions that panic on bad news, these are people that should have other people managing their investments or not be investing in the market at all.
So first it was 'you can't beat that!!' now it's 'oh YOU can but people's emotions!!!'.
lol.
If you're borrowing to buy
If you have the money to buy, it makes no sense not to borrow and enjoy a tax saving
The proper ozbargain approach is to open an offshore IBKR account with a VPN and use a CHF margin loan with no size limit and a 2% interest rate!
Can you use proceeds of loan to buy US stocks?
You can borrow in USD as well but each currency has a different interest rate.
Margin Loan - my first time, googled it, then called the company about how to apply, so to qualify for 50k loan, you have to pass the 2.5m asset test, basically, not everyone can apply for it.
So you called up and got incorrect information. Thank you for that story.
Ah crap, I got halfway through the application, and realised I didn't use the referral code.
Now I have to call up, cancel the account and start again.
"Now is a good time to invest/gamble" famous last words
I applied to convert to margin account, they have sent me a link of basiq which is an open banking platform where i share my bank details. Unfortunately there is no Macquarie bank in supported list. Anybody managed to get past this senario. Thanks in Advance