Margin Account for stoozing?

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  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    1300 views but no discussion?
  • Ben8282
    Ben8282 Posts: 4,821 Forumite
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    This appears to be a US product intended for investors in the stock market and is of no relevance whatsoever to stoozing.
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    Ben8282 wrote: »
    This appears to be a US product intended for investors in the stock market and is of no relevance whatsoever to stoozing.

    IB is a US broker, but offers FSCS broker services including margin account from their UK subsidiary, as do many other brokers open to UK citizens

    Stoozing is borrowing money and utilising it in a way that generates income that more than pays for the interest charged

    Whether that borrowing be from a traditional credit card company or here a stock broker

    The fact it is a stock broker, might well give an avenue for easy investment that returns more than the interest charged
  • abz88
    abz88 Posts: 312 Forumite
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    I don't think I fully understand this account, it looks like you can borrow as much as you have invested with them "Mr Sanders explained that clients can take out small or large loans. “The limit is based on how much stock you put into the account,”", so if I have £10,000 invested, I can borrow £10,000? What if my £10,000 invested funds tank in value, do I need to repay the loan to cover the trading losses?
    Regardless of that, I would say no, its not suitable for stoozing based on "Borrow money from Interactive Brokers at between 1.41% to 2.66% APR." If you are borrowing at 2.66% you aren't going to make much profit out of this in savings, regular savers, short term investments etc.
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    abz88 wrote: »
    I don't think I fully understand this account, it looks like you can borrow as much as you have invested with them "Mr Sanders explained that clients can take out small or large loans. “The limit is based on how much stock you put into the account,”", so if I have £10,000 invested, I can borrow £10,000? What if my £10,000 invested funds tank in value, do I need to repay the loan to cover the trading losses?
    Regardless of that, I would say no, its not suitable for stoozing based on "Borrow money from Interactive Brokers at between 1.41% to 2.66% APR." If you are borrowing at 2.66% you aren't going to make much profit out of this in savings, regular savers, short term investments etc.

    Good question, to be honest never used a margin account previously, so I don't know how it works!

    Those rates are similar to "2nd" deals on CC (eg. 12m 0% for 3% fee) or a mortgage
  • Ben8282
    Ben8282 Posts: 4,821 Forumite
    Combo Breaker First Post Newshound!
    I would add that a golden rule of stoozing is to earn interest on the money somewhere where it is safe. Investing stoozing money in this way introduces an element of risk. Stoozing should be risk free.
  • stphnstevey
    stphnstevey Posts: 3,224 Forumite
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    Ben8282 wrote: »
    I would add that a golden rule of stoozing is to earn interest on the money somewhere where it is safe. Investing stoozing money in this way introduces an element of risk. Stoozing should be risk free.

    I disagree

    I know many stoozers, many from the old stoozing.com forum, who would invest the money in anything that was profitable!

    BTL, stock market, P2P, own business etc.

    It is difficult to find a decent "safe" bank account now that would cover the loan interest costs or even make stoozing worth the effort
  • Nebulous2
    Nebulous2 Posts: 5,115 Forumite
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    There are degrees of risk. Last year I had.over £15k in zopa.getting around 4.8%. It was in their classic account which was protected. They withdrew that product and as I got repayments they were invested in core. This is riskier, particularly in a downturn, but I've gradually been withdrawing money to manage that risk.
  • Nebulous2
    Nebulous2 Posts: 5,115 Forumite
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    Ben8282 wrote: »
    I would add that a golden rule of stoozing is to earn interest on the money somewhere where it is safe. Investing stoozing money in this way introduces an element of risk. Stoozing should be risk free.


    You don't do it, and dont believe people who do. What lets you be the person to define it?
  • abz88
    abz88 Posts: 312 Forumite
    First Anniversary Name Dropper First Post
    Ben8282 wrote: »
    I would add that a golden rule of stoozing is to earn interest on the money somewhere where it is safe. Investing stoozing money in this way introduces an element of risk. Stoozing should be risk free.
    Nebulous2 wrote: »
    You don't do it, and dont believe people who do. What lets you be the person to define it?

    Because borrowing money on a 0% interest card that has a high interest once the 0% period runs out (usually 20-28 months these days) and making a short term market bet is not really stoozing, but closer to gambling. You risk not only losing your money on stock markets (even if you go with low risk index trackers these are long term investments due to market short term volatility) but then have a large some of money earning daily interest if you cannot get a decent balance transfer card. Ben8282 isn't saying you can't do it, he's saying don't do it an call it stoozing.

    And he is referring to the MSE definition of stoozing, "The most important thing is that you put it somewhere with 'easy access' meaning you can withdraw the cash whenever you need it and clear the debt."
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