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<blockquote data-quote="vin" data-source="post: 187567" data-attributes="member: 9475"><p>The scenario DS laid out is close to buying on margin but it is not exactly the same. A margin account is essentially a line of credit within a brokerage account where the securities (stocks, bonds, mutual funds, etc.) in the account are used as collateral against what was borrowed. If the value of the assets in the account fall below a certain level, the brokerage firm may sell the securities in the account to bring the level back up. The brokerage firm will usually try to contact you to give you the opportunity to deposit more funds or sell securities on your own. They don't have to do this however an may sell any securities in your account without notifying you to meet a margin call.</p><p></p><p>The point I was trying to make earlier was that:</p><p>Is it possible to generate a return of 10% or more year after year?</p><p>Yes it is.</p><p>Can you guarantee that you will get a 10% or more year after year?</p><p>No, and anyone who says they can is either lying or doing something illegal.</p><p></p><p>Again, it is usually a bad idea to borrow money to try to make more money. If you have money and want to try to invest it, that is fine. You can also take out a loan to buy a house, car, start a business or any number of other worthwhile ideas. A loan should <strong>not</strong> be used as an investment even if the tax laws in Canada you can do it. Another thing to consider is can you afford to make the payments on your own if whatever you invest in actually goes down in value rather than up?</p></blockquote><p></p>
[QUOTE="vin, post: 187567, member: 9475"] The scenario DS laid out is close to buying on margin but it is not exactly the same. A margin account is essentially a line of credit within a brokerage account where the securities (stocks, bonds, mutual funds, etc.) in the account are used as collateral against what was borrowed. If the value of the assets in the account fall below a certain level, the brokerage firm may sell the securities in the account to bring the level back up. The brokerage firm will usually try to contact you to give you the opportunity to deposit more funds or sell securities on your own. They don't have to do this however an may sell any securities in your account without notifying you to meet a margin call. The point I was trying to make earlier was that: Is it possible to generate a return of 10% or more year after year? Yes it is. Can you guarantee that you will get a 10% or more year after year? No, and anyone who says they can is either lying or doing something illegal. Again, it is usually a bad idea to borrow money to try to make more money. If you have money and want to try to invest it, that is fine. You can also take out a loan to buy a house, car, start a business or any number of other worthwhile ideas. A loan should [B]not[/B] be used as an investment even if the tax laws in Canada you can do it. Another thing to consider is can you afford to make the payments on your own if whatever you invest in actually goes down in value rather than up? [/QUOTE]
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