Investing on margin is a very difficult and risky investment to make unless
you are a seasoned investor. Oftentimes, there are investors who are just
starting or have very little experience in investments who are talked
into investing on margin. This often means they don’t have the money
to take the risk and this investment can result in large, significant
losses. Unfortunately, investing on margin can leave you with an empty
Watch As Attorney Chad Kohler Explains Investing On Margin
By investing on margin, you are essentially taking out a loan with your
brokerage firm. This allows you to have more money in your account for
buying stocks, but it comes with some interest rates and regulations of
which to be aware. It is important for you to understand a few things
regarding investing on margins.
- Margin interest
- Initial margin requirement
- Maintenance margin requirement
The maintenance margin requirement is usually the issue that causes investors
to lose money. This states that your account must maintain 25% of the
current market value of the securities in the account. Should your account
go below the minimum requirement, you may face a margin call. The result
of a margin call is you either putting more funds in the account or having
to sell some of your stocks in order to pay back the amount you borrowed.
This means you can lose more money than you initially had plans to invest.
At Meyer Wilson, our securities lawyers believe that if you do not have
significant funds in order to invest on margin, this is something you
should avoid. If a broker advises you to invest on margin while knowing
that you do not have the money necessary to do so without concern, this
may warrant legal action. We aim to help you recover your losses if you
lost money due to investing on margin as a result of bad advice from a
broker or brokerage firm. Call for your
free case evaluation and discuss how we can help you.