Seems like they give a margin almost equal to your portfolio value at only 2.5% per year. Sounds good to be true. #investments
Someone wise always said “always be prepared for a 50% market drawdown”. If you’re margined at that level…That means you’re wiped out.
So what do you need then
The margins aren’t fixed apr, depends on the amount.
I have my play account on Robinhood and have been using margin on it since June. I would say its a high risk high reward game. I was leveraged like $9k on cryptos and when they took a dump last month i was pretty close to get margin called. If you arent a huge risk taker, Just dont buy risky stocks or cryptos. If you are buying index funds or FAANGS, just go ahead.
Ignoring unique tax situations or social subsidies, borrowing money is always -EV (risk increases more than reward). It's essentially gambling. If you're okay with that, go for it. Personally, levering up to buy safe index funds seems to defeat the purpose. I'd rather just rebalance to riskier assets -- it's more fun.
Is 45% margin risky? The maintenance requirement is 25%. I have used 170k margin and my asset (without margin) is 360k. Including the margin the asset is 530k. Do you think it’s risky?
M1 finance offers 2% for their plus membership (it's easy to offset the cost)
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Don’t maximize it. All it takes is a few constructive red days for you to Get margin called. Although if you’re buying index funds I wouldn’t mind leveraging up to 35%
Even with a 1M portfolio?
Don’t put anything more than 250k in robinhood