The reason someone would borrow millions on margin is to avoid selling their investments. To avoid a large tax bill.

@BrendanEvan

2 ай бұрын

I guess I assumed they would intend on paying back the loan, which undermines my understanding of the motive. I don't want to get charged 5-7% margin fees for the rest of my life because I paid myself to avoid a one time capital gains tax. But maybe that's why I'm not super rich and playing that game!

@delbomb3131

2 ай бұрын

​@@BrendanEvanmargin interest is a write off.

@milleniallgt9715

2 ай бұрын

You can also use it to purchase rental properties also

@delbomb3131

2 ай бұрын

@@milleniallgt9715 another really big factor to consider is that many of the people with massive portfolios aquired many of their shares as options from their employment. You're given millions in shares tax free then take out margin to live your life on and write off the interest. Even better if you're on the board and get the company to pay dividends so the shares pay off your margin for you.

@seanwilliams7264

Ай бұрын

I’m l😊pp😊😊

To avoid capital gains tax if all one’s money is in assets.That’s what margin can be used because interest is less then paying taxes

Couldn’t you use the $1000 interest free to buy say JEPQ ETF with a dividend payout of 10.88% that pays monthly and make $9.06 a month off of it? If there is no interest on it when do they expect to get their $1000 back? Is it essentially if your brokerage account falls below $2k you need to pay it back? Seems odd they would essentially let you borrow money indefinitely. It also looks like a way to earn your $5 subscription fee with the right dividend yielding stocks and put a little back into your pocket.

@BrendanEvan

2 ай бұрын

In theory it seems that way, but I assume they have some way to make sure they aren't losing money on the deal.

@oleksandrbuksha4741

2 ай бұрын

Дайте руский перевод. Спасибо

Good video. The only thing you're wrong about is how margin calls work. In theory they could move the maintenance to 100% but if youre diversified correct that would be just one stock and your portfolio wont drop to a margin call

They will not loan out your stock or sell it until you drop down below the margin maintenance

Instead of selling stock, borrow at 5-6% of interest vs pay the IRS 15%-20% with long term capital gains

You have not showed us HOW to use margin.

@BrendanEvan

2 ай бұрын

I’m not a big fan of margin for the average investor, hence my lack of instruction

@jeremybrummel3254

2 күн бұрын

It would depend on the brokerage, their apps and websites have different formats. I'm not "too" worried about it. Since it's the stocks at stake essentially, I feel the worse case is starting from scratch in investing (as losing so much that selling all your stocks isn't enough to meet the margin debt feels extremely unlikely). Still, not planning on quitting my day job anytime soon until QQQY gives me enough Dividends to pay off my monthly expenses 4 fold.

Maybe they do it to avoid taxes

Your not seeing debt as a tool, debt is a tool it does require a different mindset. For most ppl they should first use margin to rid themselves of credit card debt. Then use that extra money to reinvest and pay off the margin

@CygnusHomes

Ай бұрын

This 100%

@keephiscommandmentsandlive9860

21 күн бұрын

Wow can you tell me how that works because I have a BIG credit card debt??

@CygnusHomes

21 күн бұрын

You open a margin account, deposit cash and get your margin limit. The. You withdraw the margin and pay CC of with it. Word of warning make sure you have a significant buffer and a portfolio of solid stocks to avoid margin calls. I always hold 10% portfolio in sgov paying 5% but also very stable to help cushion any market downturn we're seeing this week.

I increased my portfolio by 50% using margin during covid.

Great Video Brendan!! Quick Question: If 2 traders open identical 1 standard lot and 1 person has 1:2 leverage whilst another has 1:1000 leverage. Trade goes out-of-the money by 100 pips and both close their positions, who loses more? or do they both lose $1000 since both positions sizes were identical.

I guess the question is, why would they loan it out to us rather than take the risk themselves, if it’s a good option? Seems odd to me

@robertkiddington4652

7 күн бұрын

Diversification of risk

I’m confused so to get margin called does your portfolio have to go down 25% or 50%? PLEASE HELP

@Blackjesussp

Ай бұрын

No I used like 90% 11k outta 14k . I know someone used 100% of margin . $250k. So I say it depends what you have total and money in case + what you invest in ❓

@Blackjesussp

Ай бұрын

Oh and I withdrew $2035 ( I pay about $2 a day %

@samyguindy3457

20 күн бұрын

@@Blackjesussp If you had 100,000 thaen borrow a 100,000 would they allow you to take 100,000 out and then just use only 100,000 to invest and pay the monthly bill or whatever it is

It's pretty standard for your initial margin on most investments to be 50%. Then maintenance margin is typically 25% before you get a margin call. And that's for Reg T margin. If you get approved for portfolio margin, you may be eligible to borrow a higher percentage if the broker's systems say your portfolio isn't too correlated.

It’s not a losing battle if it’s cash flow that’s good debt.

Can i use the money when I switch to a cash account

Hypothecation is standard practice on margin brokerage accounts! You could only have a margin call if your equity falls below the required maintenance percentage!

LIKED the video, there are good & horrific strategies you can apply utilizing Margin to your advantage generating income consistently, however you must be familiar with good entries, options and most importantly the underlying stock (s) your planning to invest with. Trust me I learned the hard way, but once you figure out a good strategy Margin can become an income generating machine! Good luck to all! Not financial advice!!

Can you use all the margin, or will they come back and say you can only use 50% of it?

Has there been anymore updates as to when the 1% Deposit Match launches? Seems like they're taking a long time to flip the switch on that.

@BrendanEvan

2 ай бұрын

I haven’t seen a date yet

@averyminya

Ай бұрын

I just started getting them a week or two ago, so it seems like it's finally out

So will need balance on my account. I don’t have any because it’s all on stocks

IBK Pro margin rate is in line with Robinhood?

Can you use margin and withdraw it cash?

@preciadojaws

Ай бұрын

No

@CFH298

Ай бұрын

If you have dividends that are deposited into your account you can. But you can’t just have a margin amount set and withdraw to cash.

My Robinhood account says 6.5% margin rate currently. I guess that means I'll be paying more, if I choose to use it (unless I borrow over $100K).

How do I give the money back

@BrendanEvan

Ай бұрын

Pay off the margin. Deposit money

@user-id8ux5fk3n

8 күн бұрын

@@BrendanEvan I deposit money and it doubles my deposit why that happens? I am on margin

I'm getting 2k interest free with Gold?

@mikeskordynski

2 ай бұрын

Same

@matthewkesky8150

2 ай бұрын

I am as well. But I'm also using 90k.

@c0nconc0n18

2 ай бұрын

Found the explanation - limited time for select gold members. Lucky me

The only interest I have in margin is that first $1,000 for interest free, and you can set your margin limit to $1,000. From what I understand, it seems like you can basically get a free $5 (paying for Gold) by investing that in a high monthly dividend (USFR, TFLO, or SDHC or whichever). Then when you're done with RH Gold, sell that dividend stock and repay the margin? I'm also new to margin, I've just come across this in my research, but it seems like the only downside would be that margin call you mentioned. Is that something that's common?

@BrendanEvan

22 күн бұрын

Maybe so! I am actually tempted to try it...

@averyminya

21 күн бұрын

@@BrendanEvan I can't say for sure because I'm not tax expert, but from my understanding it seems like there are few drawbacks, if any. It seems like the only potentially "risk" could be when/if they do a margin call. However, I am under the impression (again, no expert) that is a circumstance that might happen if you use the margin on volatile stocks, like the tech stocks right now, and that getting margin calls is less common on non-volatile stocks and ETFs, like USFR as mentioned. If you happen to do any research on this and come across something definitive, I would love to hear your opinion! All that said, I do think they try to make that $1,000 margin as a perk for paying for Gold, so outside of the margin call my main concern would just be the tax implications. Something else that's funny which I didn't realize is they base your margin off your ability to pay it. I applied out of curiosity once and my maximum allotted margin? $12... LOL. Had about $2,100 invested at the time

If you own bonds, it doesn't make sense to use margin because you're both longing and shorting debt, which is inefficient. In other words, using margin is the opposite of owning bonds, which are used to lower risk but also lower average returns.

@mere_cat

2 ай бұрын

Tell that to the banks! LOL

No thanks on the margin. Great explanation and I agree with your final decision.

@BrendanEvan

2 ай бұрын

Thanks!

lol I did it and it said I can borrow 0 yet I got 12k in rh

@xavierjones9777

Ай бұрын

Because you need to make more money 💰

@BigcountryReactions

Ай бұрын

@@xavierjones9777 yea I make enough I’m good don’t need to borrow anything

How do I close down the margin account? I don’t ever want to use it nor get taxed interest on it.

@Josh_Livi

13 күн бұрын

Pay off the margin and then disable the account

@BrendanEvan

12 күн бұрын

You can also switch from a margin account to a cash account

It's because they are in bed with with hedge funds, with cat system coming out they will have to be accountable for finding real shares to cover synthetic shares

Can’t you take that free $1,000 in margin and put it to work in T-Bill ETF?

@yorxs2

2 ай бұрын

I put my interest free margin (you get $2000 interest free for the next 3 months) in SGOV. It's dividend covers my Gold fee plus then some and it is low risk.

I too would like to know who is using margin on a $50 million account. Maybe leveraging up their call options on GameStop? 😂 But seriously, you could just take the free $1000 and put it in the brokerage account earning 5%. Or buy some $BIL or $TFLO. Not really advisable for anything else except maybe an emergency.

Where's the liquor and ladies? 😂

Rich people use debt to there advantage..

You get charged per day, it shows how much you get charged each day, and you pay every month, on settings it has a great layout. If you don't have enough money to pay on due date, robinhood has the right to sell any of your stocks and etfs to get their money.

@9thebigcool

2 ай бұрын

Minor clarification. While you get charged per day, but that interest is not due until the end of the month

@jesus-xr9yo

2 ай бұрын

@@9thebigcool yes, it adds everyday, goes up and down depending on how much you use. Pretty simple and fair and before using it, it gives us risks and rewards

Is it worth using margin on the upcoming NVIDIA stock split?

@BrendanEvan

2 ай бұрын

I have a feeling you want to based on asking the question, and I'm not a financial advisor so you do whatever you're comfortable with. Whether you do or you don't let us know how it goes!

@IvanPlayStation4LiFe

Ай бұрын

no

@user-es6zn8re2z

22 күн бұрын

U could’ve made 20%

$1,000 interest free is a great deal....

@BrendanEvan

Ай бұрын

NGL I AM tempted to stash it in something to generate income

lol its still 6.75 nobody putting in that much.

Burrito!! Burrrrritoooo!

30s, I also don’t want to lose my @ss

burrito

🌯 🌯 🌯

I don’t think that’s what they meant by securities. I think securities are considered shares not money.