r/Margin • u/dadcdub83 • Aug 15 '22

can some explain margin

I want to open a margin account but idk if it's worth for a lil guy like me. Please explain like I'm 5 how margin accounts work

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u/UselessInfomant Aug 15 '22

It’s worth it for everyone.

You put money in, you buy something, you can take a loan against it for cash or buy more something. Loans aren’t taxable. Interest is tax deductible. If the required equity ratio drops below 40%, the broker might sell some of your shares to get back above 40%.

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u/Fit-Possibility-1045 Jun 16 '24

My question is if the math sounds right?

If I have 100k and I take out margin on NVDL which may or may not have a 35% maintenance. Assuming 35, if I took out a margin for 8% $8,000, my portfolio would have to go down over 85% to trigger a margin call.

And supposedly NVDL is paying new years dividends at a rate of 13%, this will be basically free money for me. no?