Am I ready for margin lending for shares?

[Edmond Dantes]

I've been investing in shares for the past 5 years. Although I've had big losses due to poor selection and too much emotion from my side, I currently have an annualised gain of 20+% across my portfolio.

this % may not be too exciting to some here, but it gives me confidence that I may be following the correct path in share investment.

Unfortunately it's been my own money. I have not geared. So I've lost the opportunity to reap the benefits much more. But there are always still opportunities out there.

I've read a book Margin Lending Explained (reading it again), and it explains the basics and how one can control your exposure by not being to greedy, and more importantly, by investing in sound, strong companies.

I don't invest in emerging companies. Only put my money in companies that I know will be in 10, 20 years time. So they will be stocks with high lending ratios.

Another thing though, I've only invested in US shares. There are heaps of websites in the US with quality information about each company. I still haven't been able to find this wealth of information for australian shares, so I haven't made the move and buy anything locally.

leaving portfolio value aside (it's not much, compared to what others here deal with), will there be a bank that provide me with a margin lend? (comsec, anz) ? I'm not planning to gear to my eyeballs, just a low amount that doesn't disturb my SANF.

thanks

 

[Aaron_C]

You can choose any margin lender. Main ones are ETrade (ANZ) and Comsec (CBA). You can also try Macquarie Prime - they offer a much better investment platform and better leverage plus more competitive rates.

 

[Edmond Dantes]

Thanks Aaron, will look at this.

 

[tobe]

is there a currency risk you need to be aware of with Overseas shares? Or is that hedged effectively because you are planning on doing the margin loan in the US, with US dollars?

 

[Aaron_C]

is there a currency risk you need to be aware of with Overseas shares? Or is that hedged effectively because you are planning on doing the margin loan in the US, with US dollars?

No there is still FX risk because your returns are still going to be converted into AUD. The flipside is that the margin loan rates for USD shares are pretty low since rates there are 0%.

 

[tobe]

so margin loan is just magnifying the current FX risk he has with cash.....

 

[Corey Batt]

Or keep your returns all in USD and have holiday money.

You want to margin into the market after the massive rally? (both US and Aust markets)

I've cleared most of my portfolio bar some speculative stocks for healthy profits. Yields and earnings forecasts were not justifying the increased prices.

Margin facilities are handed out like candy. I'm thinking of moving over the Macquarie Prime who have a decent rate AND great margins on a number of stocks.

These guys are very competitive too last time I checked. Used by a number of traders and investors I know:

http://www.interactivebrokers.com/

Rates:

http://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2

They're quoting 4.46% on 20k margin, cheaper the higher you go naturally. Though they have a funny calc method, benchmark + margin.

 

[china]

I am with BT / Westpac margin lending facility with a yearly pre-paid interest set up. I like the predictability of pre-paid and have found their reporting of stock holdings quite useful at tax time.

 

[scha9799]

Just wondering if there is any good share trading forum or information you guys can recommend ?



I would like to get some exposure to share investment.


Thanks in advance

Taylor

 

[Corey Batt]

www.aussiestockforums.com/forums

Is to shares what Somersoft is to property.

 

[redwing]

Why use an annualised gain isn't that theoretical?

Annualized gain
If stock X appreciates 1.5% in one month, the annualized gain for that stock over a twelve month period is (12 x 1.5%) = 18%. Compounded over the 12 month period, the gain is (1.015)^12 -1 = 19.6%.

20% is better than a high interest bank account, though I think that over the last 12 months, the index's (or is it indices) including dividends, have done very well also.

 

[dryath]

Rates:

http://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2

They're quoting 4.46% on 20k margin, cheaper the higher you go naturally. Though they have a funny calc method, benchmark + margin.

I could be wrong here as I have only looked into IB in the past and not actually used them. But I thought that you couldnt actually margin lend with them unless you had 100k in your account?

 

[Aaron_C]

I am with BT / Westpac margin lending facility with a yearly pre-paid interest set up. I like the predictability of pre-paid and have found their reporting of stock holdings quite useful at tax time.

The Big 4 have really **** trading platforms. It's designed for the retail investor who doesn't even trade and buys one share parcel a month.