14 Questions for you before using share margin facilities

Stocks investor sometimes tend to use share margin facilities blindly without looking into their own financial knowledge and ability.

Buying stocks using margin means that you’re borrowing some money from the brokerage company. You must pledge a collateral. It is not a free money.

You should review yourself before you want to use any share margin financing.

Financial Position
1. Do you have any funds that you can access if any shortfall happens?
2. Would you be able to serve the interest and repayment?
3. What much you can afford to lose?
4. How much risk you are willing to take?

Market
1. What is your view of the market?
2. Are you a very knowledgeable investor?
3. Would the potential gains outweigh the interest that you have to pay?

Financial Institution or Stockbroking Company
1. What are the fees and interest charges that you have to pay?
2. How is the margin calculated?
3. What is the margin call level and force-sell level?
4. What sort of shares are acceptable to the financial institution / stockbroking company?
5. How are the shares valued?
6. What are the terms and conditions for withdrawal?
7. How would the transactions be conducted?

These are some questions to be asked to yourself before you’re buying stocks with share margin financing.

Happy investing.