HSBC InvestDirect Plus Cash reserve/Trading Reserve

Ronaldo_9

Any one know how this actually works. I'm looking at the figures online but not really understanding it.

Say i upgrade my investdirect account to investdirect plus, they open a cash account for trading.


So say i wanted to invest 50K in shares, am i paying this back monthly? whats the total i'm paying back?

Its just out of interest as i want to know how it works.

Thank you

The Trading Reserve is a secured overdraft facility based on the value of 
your eligible investments available on your Sterling, US Dollar or Euro
Cash Account. You can use your Trading Reserve to enable you to take 
advantage of investment opportunities as soon as you spot them. Indeed 
you can use this facility in any way you wish, you are not limited to buying 
shares. 

The Trading Reserve is competitively priced because it is secured
against the eligible investments in your Investment Account (other
than those in your PEP and ISA). You can borrow up to 50% of the
value of your eligible investments. 

For details of the current interest rate applicable to the Trading Reserve
go to Rates and Fees.
 
 "
" Credit Interest Rates | Debit Interest Rates 
Interest on all the accounts shown below is calculated daily on the cleared balance, and applied monthly.



HSBC InvestDirect Plus Cash Account/Savings Account 
Effective from 02/03/2009  
 
  Balance Net Gross AER 
 
 Up to £50,000  0.16% 0.20% 0.20% 
 
 £50,000+  0.16% 0.20% 0.20% 
 
 £100,000+  0.16% 0.20% 0.20% 

premierfella

I've never used my trading facility, but I have one. You need to apply for a trading reserve limit in advance (I think you need to sign a paper application form).

It is in effect an overdraft secured on your existing investments and interest is charged in a similar way to that which applies to overdrafts.

The sterling trading reserve rate is currently 0.55% monthly / 6.75% EAR. Interest is of course only charged on the amount of the trading reserve you actually withdraw - there are no charges for simply having a trading reserve limit available.

A couple of reasons why you might use this trading reserve:
- it is cheaper than a standard loan or overdraft if you have a sudden need to access cash but don't want to sell your shares for whatever reason;
- take advantage of buying opportunities immediately where, for example, the savings you have to fund the buying opportunity are not readily available (e.g. tied up in a savings bond or notice account). Again it is assumed that you also don't wish to sell existing investments held in HSBC investDirect Plus to fund the buying opportunity.

Ronaldo_9

premierfella wrote: »

I've never used my trading facility, but I have one. You need to apply for a trading reserve limit in advance (I think you need to sign a paper application form).

It is in effect an overdraft secured on your existing investments and interest is charged in a similar way to that which applies to overdrafts.

The sterling trading reserve rate is currently 0.55% monthly / 6.75% EAR. Interest is of course only charged on the amount of the trading reserve you actually withdraw - there are no charges for simply having a trading reserve limit available.

A couple of reasons why you might use this trading reserve:
- it is cheaper than a standard loan or overdraft if you have a sudden need to access cash but don't want to sell your shares for whatever reason;
- take advantage of buying opportunities immediately where, for example, the savings you have to fund the buying opportunity are not readily available (e.g. tied up in a savings bond or notice account). Again it is assumed that you also don't wish to sell existing investments held in HSBC investDirect Plus to fund the buying opportunity.

Thank you for the post. Can i pick your brain a bit more?

Say i set this up and use 50K to buy some shares now do i start making repayments after a month or when i sell those shares and pay the interest?

So on 50K i pay back 53375?

I have made couple of investments but also have been looking at few other stocks and if i had the money i could have made a solid 30% already this week (i'm pretty new).

I do have a good credit history.

Thank you

premierfella

When you say set this up and use £50k to buy some shares, this indicates that you already would have a portfolio of eligible investments with HSBC InvestDirect Plus in excess of £100k and HSBC have approved the £50k trading reserve limit (I state this just to make sure you are aware that you are borrowing against your existing investment portfolio rather than unsecured).

Note: the following is how I understand it works, but as I have not used mine I cannot say for certain how exactly it works in practice.
I do not believe any regular repayments are required on the Trading Reserve as long as the balance (including accruing interest) remains below the Trading Reserve limit. In your example, if your eligible investment portfolio suddenly takes a dive and falls below £100k, HSBC would contact you with respect to lowering the Trading Reserve limit and would demand payments to bring the Trading Reserve balance within the new limit (or would sell investments to do this).

gt94sss2

If you qualify for a HSBC Premier account (i.e. have £50,000 of savings, investments or shares with HSBC) then their Invest Direct/Invest Direct Plus offer might be of interest (if you don't already have a sharedealing account with them)

From memory, once you open a HSBC Premier account you had 6 months to reach the £50,000 criteria.. and they include InvestDirect balances in that figure.

Regards
Sunil

Ronaldo_9

cheers lads

I have a investdirect account and have invested about 25K.