Some midnight rambling...Margin loan.
Like any leveraged product , great in good hand...Disastrous in reckless hands.
Discovered that my effort in the market can return >10% yearly in capital gains (some gurus can make 500% plus).....Dividends is the icing on the cake.
Here is how it works for me.
# I don't pay interest out of my own cash....Interest is capitalized into the loan & added on every month.
# Interest is tax deductible ....Capital gain/loss is settled the usual way.
# I don't take cash out....but I get the dividend.
# I don't aim to make a profit....My only concern is to consistently increase my equity....More like a self sustained & growing animal farm....The only way to grow it is through keeping the healthy animals & weeding the runts.
# Great for long term uptrending names & also works wonders for ST/swing trades.
# No place for complacency...Anytime the PF is in the buffer zone , the culprit animal that pushed it there is slaughtered.....A good tool to enforce discipline & in turn improve the performance of other portfolios.....It forces me to be in harmony with the market...No contrarian nonsense....No hero attitude.
# By doing the right thing , my equity grows & my borrowing power increases ....A virtuous circle.
# Over the last decade , my equity in the start up little farm has grown several fold with no funding on my part....Zero cash out of my pocket....An autonomous vehicle that only needs some maintenance.
# Never had a margin call.
This is my only leveraged play...Don't do CFDs...Don't play the short game...And never hedged my bets.
