Personal Finance

Investing Leverage

  • Last Updated:
  • Aug 16th, 2011 5:30 pm
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Deal Addict
Aug 26, 2004
3724 posts
869 upvotes
Toronto

Investing Leverage

My broker has advised me that they can lend me 1 million dollars on leverage on money I have in my account with a 1.3% interest rate. I understand that leveraging and buying stocks is pretty much worse than suicide. I was wondering if there was an investment that was liquid, that provided reasonable safety from declining in value that I could either buy or invest in that would provide the a nice return for a profit back. I would have to be able to sell it quickly if necessary. Any ideas?
7 replies
Sr. Member
Mar 3, 2010
588 posts
42 upvotes
Since it is against the rules here to recommend stock I'll stick to wide idea, Canadian banks, have specially in mind one from QC, great dividends
Deal Expert
User avatar
Nov 2, 2003
17118 posts
3872 upvotes
GTA
Ally 2% savings account
Deal Addict
Oct 1, 2006
3249 posts
4472 upvotes
Montreal
How the hell can you borrow 1 million for 1.3% a year?
Sr. Member
Nov 30, 2006
924 posts
45 upvotes
Richmond Hill
So yeah, borrow at 1.3% and put into 2% guaranteed savings.

That will leave you at 1million * 0.7% = 7k /year free money.
Banned
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Feb 15, 2008
26318 posts
3242 upvotes
Calgary
Germack wrote: How the hell can you borrow 1 million for 1.3% a year?

That's a good question; even Interactive Brokers doesn't have a rate that low on CAD$ and they're considered one of the lowest cost brokers in Canada. I suspect the rate is quoted in USD$ against US dollars. Add roughly 0.75%-1% for Canada to reflect the differences in the LIBOR rates.
TodayHello wrote: ...The Banks are smarter than you - they have floors full of people whose job it is to read Mark77 posts...
Jr. Member
Aug 3, 2011
104 posts
11 upvotes
AJAX
CDNPatriot wrote: My broker has advised me that they can lend me 1 million dollars on leverage on money I have in my account with a 1.3% interest rate. I understand that leveraging and buying stocks is pretty much worse than suicide. I was wondering if there was an investment that was liquid, that provided reasonable safety from declining in value that I could either buy or invest in that would provide the a nice return for a profit back. I would have to be able to sell it quickly if necessary. Any ideas?

Since your question is strictly one of safety and liquidity. Leverage, other than maybe your mortgage, is not for you at this time.

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