/biz/ - Business & Finance

I’m considering using a small amount of margin to accelerate my stock returns. I want to run this by the /biz/ brain trust, to see if my calculations are accurate more or less. This example isn’t the actual numbers, just simpler ones so there is less room for error.

Let’s say I have 100k in securities and I want to borrow 15% of that value on margin to buy more.

For sake of simplicity, let’s say the dividends cancel out the interest on the margin loan.

My maintenance margin requirements say that I need 70% equity in the portfolio to avoid a margin call.

Total portfolio value is now 115k.

To get a margin call, the value of the portfolio would need to drop to 50k (-56.5%). So I feel that this would be a reasonable amount of safety seeing as I’m invested in value stocks and not Tesla, biotech, etc.

I am also contributing to the portfolio monthly, at a rate of 7.5% a year.

Let’s say at year end, the portfolio increases by 5%. So that would be 120,750 + 8625 (my 7.5% contribution) for a grand total of 129,375.

At year end, the 15k margin amount is 11.59% of the total portfolio value. At which point, I can rebalance back to 15% (4400$ additional margin) and repeat the process.

Does this add up and make any amount of sense, or have I lost my mind?

>>17390663

I'm feeling the urge to fomo in with everything

I thought I learned my lesson last year, but I guess I'm a dumb greedy faggot.

Here I go.

>>11367293
>>11367461
fuck you cocksucker!!

>>11154397