IBKR have recently increased their margin limit for Australians from $50,000 AUD to $150,000 AUD.
The cost to borrow AUD is currently 6.247%.
Margin Loan Rates ~6.25% p.a. (up to A$150,000) for Retail Investors (Was A$50,000) @ Interactive Brokers
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watwatwat on 16/02/2026 - 13:16 interactivebrokers.com.au (274 clicks)
Last edited 16/02/2026 - 13:29 by 1 other user
Last edited 16/02/2026 - 13:29 by 1 other user
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If you earn >$135k, you're paying 39% tax and a margin loan is a tax deduction. So it would be 6.247*0.61 = 3.81% interest you are effectively paying.
Over the last 150 years (approx. 1871–2025), the S&P 500 has delivered an average yearly total return of roughly 9.5% to 10% with dividends reinvested.
Most of the gains are unrealised capital gains, thus someone could make a spread between earning those gains and paying 3.81% in interest. As an example.
And if it averages negative returns for a few years or averages below 6.25% returns? You are screwed. Best to buy leveraged index etf if your conviction of the S&P500 is so high. No need to worry about interest payments and margin calls.
And if it averages negative returns
People should exercise appropriate risk management so that they are not "screwed".
Best to buy leveraged index etf
This would be very tricky and probably not desirable to have a holding like this if you want to retire. Just imagine de-leveraging that in a tax-efficient way. Also in general, hoping that the fund remains unchanged for 50 years.
leveraged etf's are not something you should buy and hold due to volatility drag
then Trump arrives.
If you can't then you shouldn't be in stocks
You can? Index funds average about that return.
So buy index funds then. Otherwise picking stocks is a lot of risk for not more return
@killingtime: I do already, that's why i asked the question if people are confident beating 6.25% consistently?
@mrvaluepack: Whether it does consistently is not really the point, it's whether it does for the duration of the payback and hold. Most people in ETFs are buy and hold for at least several years if not decades, as part of an ultimate retirement draw down strategy.
I've been tempted by the concept of a margin loan to help accelerate growth and compounding benefits. Riding out a downturn is only a concern for those exceptionally reckless or stockpickers. But hey what do i know, im just an ETF buy and hold peasant.
It’s more a tax loophole, you get this and pay 6.247% claimed on tax, in exchange for a capital gain and CGT concession (50% less tax) when you sell.
I’m not sure it’s technically allowed though - if you’re claiming a loan for shares you likely need to do your tax like a day trader and claim a loss when you buy, then a gain when you sell, with no concession.
i would wait for a dip in s&p500 before mid term and all in with margin loan
But what will trigger the dip? WW3? Alien invasion? AI takeover
WW3 maybe but I don't think anyone wants WW3
Alien - They are already here in AI form
AI takeover - Definitely either this year or next but then they wouldn't make themselves a dip, tech stock at least, except for bitcoin (blockchain).
I read somewhere that you can borrow from IBKR in CHF instead of AUD and pay approx 1% interest. Seems like funds can be used to offset home loans too. However, OP was an expat in HK so account might be set up differently.
Will definitely investigate this further or speak to IBKR about it but wondering if anyone here tried something similar?
Love to know more about that. I have an account there but not much in $ as most of it is with Charles Schwab
Bell Direct is about 9.5% for example :)
@littleburrito I think you might be right. Their website has a currency loans calculator and it has different currency and a different rate rate depending on currency selected. I wouldn't think it would be problem getting a CHF currency loan and using to by say ASX 200 shares. The only added complication would be currency exchange fluctuation with the margin call rate combine. You could loose your shirt quicker if the Aus $ drops but if it rises then it will give you more head room on the margin.
Its definitely complicated and requires very detailed calculations. Wouldn't recommend doing it unless you have a strong finance background.
I'm not sure if it's worthwhile using a CHF loan vs AUD loan to buy stock since interest is tax deductible. Using the above calc @ 39% tax bracket, its 3.81% vs 0.92% (1.5% x 0.61). A 2.89% savings in interest but the AUD appreciated 1.51% over the past month but depreciated 4.66% over the past year. Any savings will be affected by currency fluctuations so bit too much mucking around.
However, a 1.5% CHF loan drawn to offset a 5.5% non-deductible home loan might be a significant cost savings that's worth exploring. Could even place an AUD/CHF trade to hedge to further complicate it.
I suspect there might be rules and regulations cos I'm certain this strategy will be all over instagram and tiktok if it can be done. Some financial influencer will be posting - Stop paying the greedy banks 5.5% interest! Like and subscribe and I'll show you how I pay only 1% interest lol
1.5% CHF loan
I don't think you could get that because IBKR charges Australians an extra surcharge/fee:
Retail customers from Australia are protected by regulations from the Australian government. This apparently means a higher risk and/or higher operational costs for IB. That's why they charge more interest.
The first reddit result I see is a guy wanting to buy a house in USD funded via CHF:
If all your investments are global or USD focused you'd be better to borrow in USD so that you don't have an exposure to a sudden appreciation of CHF. Some years ago CHF went up 20% overnight and blew up many FX accounts.
Having debt in a different currency than the assets adds currency risk. Don't get baited by the low CHF interest rate, the rate implies lower inflation in CHF and appreciation against USD over time.
https://old.reddit.com/r/interactivebrokers/comments/1hgssar…
I never thought about getting this as a mortgage offset but doing that won't allow you to claim a tax deduction but if you have a gain in the dollar then when converting back to CHF, you will be liable for CGT if you play it straight. Definitely a risky tactic but I guess no more if maybe less than using it to buy shares depending on your risk appetize. If the fluctuation is small enough to cover the difference in interest rates then its doable and could be a win especially when the RBA is bias towards raising rate atm. I've done a fair bit of currency trading using a netting facilities. That work out well most of the time but there was a lot of luck involved like all variable investments like share etc.
I believe you have to use brokerage with it and buy shares? Not sure it can be cash?
It would be very odd to have personal loans cashable at this low rate unsecured
Ie can’t be put into offset afaik, has to be put into (and backed by) shares
How’s this look on credit report? Is it considered a secured loan as it’s backed by the shares?
Apparently a good mix of secured and unsecured credit is good for credit score
Bad time for it though imo, interest rates rise during times of war and markets tank. The rate will go up and your returns are unlikely to be great at this time unless you outplay the market.
Can you beat 6.247% return?