Wealth-Coaching

Investing creates wealth, but it also costs.  You can’t invest without money to invest.  So how can you get into investing without having enough money to do so?

Margin Investing is a practice that many people use to buy securities.  Margin is where you use some of your money to purchase stocks and then your investment dealer floats you a loan and pays for the remainder of the security and holds it as collateral.  The ‘margin’ is the investors portion of the transaction.

There are pros and cons for investing on margin.

• Con - You are going into debt.  Debt does not build wealth, so make sure your wealth plan isn’t dependent on margin trading.
• Con - You could lose more than you owe.  If the price of the security falls abruptly, you will be left with a paper loss and a debt.
• Con - Control of stocks purchased on margin are not controlled by you.
• Con - You have to have cash available at any given time to cover any negative balance in your margin account.
• Pro - You are able to get your hands on more of a good stock than if you just bought with your available funds.
• Pro - You can use margin trading as a way to get the securities and then pay the loan at any time.
• Pro - You can use margin loans for more than just buying securities.

Develop a wealth plan and stick to it.  If margin trading is part of that plan, know your risks, rights, and rewards up front.  Don’t get greedy but follow a strict plan of attack to building your wealth.