Margin Lending

Borrowing to invest

As we all know, ‘it’s money that begets money,’ or in other words, it is easier to make money when you already have money. Investing with a margin loan involves putting a sum of your money together with a sum of money borrowed from the margin lender and investing the combined amount in either shares…

Loan To Value Ratio (LVR)

Loan to value ratios (LVRs) on shares and managed funds sound complicated but they’re not. Just think of this ratio as the amount the lender is willing to cough up. So if the LVR is 70 per cent, then the lender is willing to lend you 70 per cent of the total value of the…

Shares buffer

Let’s say that you pledge $30,000 of your own shares and borrow a further $70,000 from a margin lender and invest the entire amount, $100,000, into a portfolio of shares. Your LVR in this example is 70%. If the value of the portfolio falls from $100,000 to $90,000, the LVR of 70% will be exceeded…

Margin Call

Let’s say that you pledge $30,000 of your own shares and borrow a further $70,000 from a margin lender and invest the entire amount, $100,000, into a portfolio of shares. Your LVR in this example is 70%. If the value of the portfolio falls from $100,000 to $90,000, the LVR of 70% will be exceeded…

Margin Loans

A margin loan is special type of interest-bearing loan secured by shares. Such loans are available from banks, but they are also marketed by organisations associated with some stockbrokers. A minimum loan size is usually imposed. Whether such a loan is suitable for you will depend on your circumstances. Margin loans are not really suitable…