Its not the banks money. Its the peoples money.
" If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs. "
Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)
well if there was a better system it would have been brought into place
Do you think the bankers would happily give up their power to issue/create money? Not likely.
John F Kennedy tried to reduce the power of the Federal Reserve(a private banking cartel) and look what happened to him!
I believe you only pay interest on what you've borrowed, but you don't earn any "interest" on what you haven't used.
What I did before getting my margin loan with Commsec was I took my list of shares that I own, and figured out which of them Commsec have as accepted shares, put the % of borrowing against each share, threw out ones that they don't accept. and then Transferred across the LOWEST % value. That way I'm hopefully staying as far awar form a margin call as possible.
Sorry Santob, not 100% sure on this could you elaborate.
For instance if I took out a margin loan of $20000. I had $7000 of BHP and $3000 of WES(current market position), and I wanted to gear these up to $10,000 each. So all up using $10000 of the margin loan. Do they calculate the LVR relative to my whole portfolio, or just relative to the actual security.
So say WES had an LVR of 70%, if the share price dropped at all I would suffer a margin call? Or would they say that I have only used 50% of my total margin loan(20000), so the extra 10000 would act as a buffer?
Cheers,
Hello,
Can anyone answer my question regarding the initial cash or shares required as security for the establishment of a margin loan:
Once the loan is established and becomes like a flexible line of credit, can I remove the initial cash or sell the initial share security and still have the margin loan sitting there?
Just wondering about the following situation and any thoughts people may have.
Suppose I took out a margin loan of 100k and bought 100k of BHP shares. If the next day I sold the 100k of BHP shares (they didn't gain or lose value in this time).
I then place the 100k from the sale of BHP shares into my mortgage instead of the margin loan.
Am I still able to claim a tax deduction on my margin loan if a just keep making the interest payments?
If your a beginner (which you have said you are), i would STRONGLY recommend you just using normal cash without leverage for the first year or so.
That way if anything unexpected happens you are shielded.
Learn to walk before you can run etc etc
.........I read a report recently (Commsec, I think) about margin loans increasing significantly. This perceived 'easy money' is going to burn a lot of novices...
Happens all the time when those that "know" what they are doing go and do it. Has been the same since Chris Corrigan introduced margin loans to Australia at the time he was managing director of BT Australia.
I've run out of sympathy pills so I wont be shedding any tears about their investment life stories if it all goes pear shaped for them.
Rather than fear it they should learn how to use it to their advantage.
Leverage is a powerful partner
...when we're in a bull market....
When your on the right side of a trade.
I don't know much about margin loans, but my current thinking is this:
say I have $10,000 in cash. I take out a margin loan of $10,000 to buy shares. That way, any interest on the margin loan is deductible, and if things go very pear shaped, then I can always bail myself out by using my cash to pay for the margin loan, no?
So the benefit from the above situation is that the interest is deductible, as opposed to if I had used my own money?
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