SMF - What & Why about Share Margin Financing ?

 What is Share Margin Financing (“SMF”)

 Share Margin Financing is a facility that allows investors to borrow money from the brokerage firm to leverage for a large investment position. This enables the investors to increase your financial power and boost your investments in  shares by magnify the investment exposure in which can increase the potential returns (or losses) from a trade.  This facility is designed for active and intelligent investors to take advantage of the market opportunities arise from time to time to expand the portfolio.

All you need to do is to place either cash, fixed deposit or marginable securities as collateral for the credit facility applied for.

  

Why use SMF?

 “You may often heard about don’t borrow to invest in stock market, you may end up to lose big.”

In business world,  the company do borrow for business expansion. They will do their due diligence, market research to come out with a business case to evaluate the potential risk and return. When the projected return is satisfactory and completely understand the risk involved, will start borrow to run the project. Without borrowing, the company will never grow as fast.

Treat Investing like running a BUSINESS, do your homework  from both fundamental analysis & technical analysis perspective. Fundamentally ,to understand the company’s background,  the future prospect, the owner of the company, the company value, the macroeconomic view. While for technically analysis, find the uptrending stock. If you are confident to earn return more than 6% of SMF interest, you may consider to take up SMF facility.

 The opportunity to leverage assets
When you buy securities on margin, you are able to leverage the value of securities you already own to increase the size of your investment. This enables you to potentially magnify your returns, assuming the value of your investment rises.

A convenient line of credit

Once your account has been approved for margin borrowing, you can take out a margin loan at any time, without any additional forms or applications. This ready access to cash may prove to be convenient in a number of scenarios, such as when you are unemployed, experience an unexpected medical bill, or need a quick way to access cash for any other reason. If your brokerage account includes checking, you can simply write a check.

Low interest rates
The interest charges incurred with a margin loan is lower than than what you would pay for a credit card cash advance or a personal loan which is around 10%-18% interest rate.

Repayment flexibility

So long as your debt doesn't exceed your margin maintenance requirement, you can pay back your loan on your own schedule.

If you are interested to know more about SMF , don’t hesitate to fix an appointment with us. We’ll get back to you asap.😀

Thank you.