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Loading ...My Financial Planner wants me to take out a margin loan?
April 27, 2008 by Josie Kay
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Q. My financial planner has suggested I take out a margin loan to buy into Australian shares via a managed fund. Is this is a good idea?
Josie’s answer: Margin lending is not for everyone, you need to be a savvy investor and happy to take risks.
Before committing yourself to a margin loan, make sure you have extra income to cover the interest payments, even if the interest rate suddenly goes up or your investment makes a loss.
Most importantly, you must be committed to investing for the long term and emotionally be able to cope with making a loss.
Do you have the temperament to cope with the ups and downs of share market investments? Most importantly, make sure you are a secure job or else you could end up having to sell at the wrong time.
If you decide to go for it, be aware of the current volatile share market environment and have a strategy in place for meeting a margin call.
If you are worried about the advice, highly recommend you get a second opinion and don’t just blindly accept financial advice.
Obviously you are not, so thanks for contacting askjosie.com for an opinion. There is just too much at stake if things go wrong.
More stories about Margin loans from around the web:
Margin loans and interest rates
What is a Margin Loan and How Does it Work?
Dissecting the Use of Margin Loans
Valad says it has no margin loans
Margin loans eat into top end of town
Got margin loans?
Don’t forget that the above information is general in nature and not specific to your goals and objectives. It is recommended that you seek personal financial advice specific to your needs. Also remember, that apathy can end up being your biggest expense!
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