12 thoughts on “Questrade Margin Account: Risks and Alternatives to Consider”

  1. Hi GYM, a friend of mine used margin right before the dot com crash, and it was not pretty. I never used margin, and don’t plan to use it either. To me, it’s too risky. I have the same attitude toward options. It’s good to know how they work, but I want to stay away from them. Good information.

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    • @Tom- Do you have something like the Smith Maneuvre in the US? It’s using the HELOC on your home to borrow to invest and then using that interest charged to write off your investment come tax time, and then getting a tax refund.

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  2. I first heard about margin accounts in an investing class and thought why would I borrow money from a current investment account and use it to buy stocks? But I guess if your really confident that you’re going to get a huge capital off it then go for it. But for me invest with the money you have and try not to risk getting into more debt than you already have.

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      • It was a class called “Principles of Investment” I took at the local community college. It was for enrichment only and I really wanted to learn more about the stock market and the terminologies for investing. This was the class that got me started in my interest in investing and personal finance. So happy I took this class and it’s still offered today at the community college.

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  3. I almost never use it but its there for unusual circumstances, such as now with 2020 covid market crash. If your out of cash and one of your long holds dips significantly you will want to add so to reposition yourself at a lower average.(had 100 share at 10, after all done same 100 share at 8,) of course risk is the share dont bounce back then your holding paying interest until they do but that where experience comes in. Plus dividend payouts can cover some to all that cost depending on the equity.

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    • @jayman- As long as the dividend isn’t cut. 🙂 Thanks for sharing your experience. I’m working on a post about borrowing to invest in a down market.

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  4. I use margin but it is a tool with an end goal. Just like buying a big ticket item like a car I borrow but on my terms. Example I like BNS it pays 5% so I put in 100k with 75k being my money. I then pay the other 25k (margin) by the dividends and regular deposits like a loan payment except it is saving. For the long haul it gets paid off and I get the benefits of larger returns earlier. I then repeat the process. I do it in small increments as I am conservative and never extend what I can’t pay off in 3 years. On a 15-20 year plan this grows the portfolio to be much larger than just saving on monthly basis. This has worked well for me and results have made life a little more comfortable.

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    • @Stephen Ward- Thanks for sharing, for those that are comfortable with risk it can pay off. I think Freedom 35 Liquid is doing something similar and he’s done very well.

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