Living off of margin loans

[BoredAtWork]

I tried running this out long-term under approach of using margin loan proceeds to live off and never repaying the loans. The key positive of this approach in my view is the tax benefit. For higher spenders who may also live in a state with income taxes, your long-term capital gains blended tax rate could be 10% - 15%. This compares to effectively 0% with a margin loan. I had assumed this significant tax savings would make it very attractive. Perhaps I did something totally wrong, but my assumptions were:

Portfolio grows 3% annually
Safe withdrawal rate to live off is 4% based on original portfolio (assumed no inflation to be simplistic)
Margin loan interest rate is 2%
Taxes are 0% under margin loans
Taxes are 15% under normal safe withdrawal approach due to L/T capital gains in a state with higher income tax rates

Running this out 25 years the margin loan approach results in almost double the ending net portfolio than the traditional safe withdrawal strategy. So one can see the appeal; however, the margin loan approach by year 25 the accumulated margin loan balance represents 62% of portfolio. Way too risky. Also to think over 25 years (or longer) you don't run into at least 1 really adverse stock market draw down that blows you up with a margin call seems unrealistic.

The margin loan approach approach starts off great and seems beneficial for several years. In year 1 your margin loan is only 4% of portfolio. Super low risk. But every year since you don't pay off the loan and you take out a new margin loan, it keeps increasing at a rate that is larger as a % than the underlying portfolio is increasing. By year 25 the underlying portfolio has doubled in size, which is great; however, the margin loan now represents 62% of the portfolio.

You can't sell portfolio to pay down margin loan b/c that would trigger capital gains and defeats the whole purpose of the tax savings. The benefit is not paying tax while you live and then upon death your heirs get stepped up basis, pay off the margin loan and pay $0 tax.

My takeaway is margin loans could be used strategically in short term for a big purchase like a house or for several years to bridge to RMD's, Social security, etc. Doing this approach long-term only works for the ultra rich. If your withdrawal rate to live off is <1% like I imagine it is for some of the uber wealthy, then you could actually do this approach for decades and not take on too much risk. For even people who are wealthy but not immensely so though it does not seem to make sense.

 

[Time2]

All I can add is 7% portfolio growth would probably make a huge difference.
Also living on less than 4%. I think that many of us that would even entertain this idea can do that.
Thanks for going through the exercise. It seems it was fairly close even at 3% growth and 4%WR.

 

[BoredAtWork]

My original assumptions may have been too conservative. If I flip it to 4% growth and 3% WR, then you hit a peak point around year 30 of margin loan being 32% of portfolio. Due to the huge portfolio you've accumulated by then your % starts slightly declining thereafter. The risks remain thpugh:

- At constant steady growth rate the margin loan will vastly outperform the traditional safe withdrawal rate strategy. Of course the markets don't work linearly like that and you will be at much greater risk when a large market draw down occurs.
- Assumes interest rates remain permanently low. I did play around with increasing the rate to 3% or 4%. It didn't have that huge of an impact with even at 4% the max margin loan % of portfolio hitting 40% over a 40 year period.
- When you likely get in a jam of either market draw down or rising rates and want to try to de-risk your margin loan plan mid-way through, you could be faced with a situation where capital gains rates have increased since when you started. Whole purpose of this strategy is to reduce taxes so that would not be good.
- However, all this said with some of these assumptions over a multi-decade period the margin loan approach starts to so enormously outperform the traditional safe withdrawal strategy that even if you run into an adverse situation and have to dig your way out of it, you may still come out ahead.

One other thought I had is since this is tax focused, let's say you are married filing jointly. Up to $83,350 of L/T capital gains you pay 0% tax. You could do a traditional withdrawal strategy where you take out that amount each year (note in certain states you will start paying state income taxes still though as the thresholds are lower). Then you fill in the remainder of your spending needs with a margin loan. You end up paying 0% taxes and have much less at risk in terms of margin loan.

 

[Sunset]

.....
One other thought I had is since this is tax focused, let's say you are married filing jointly. Up to $83,350 of L/T capital gains you pay 0% tax. You could do a traditional withdrawal strategy where you take out that amount each year (note in certain states you will start paying state income taxes still though as the thresholds are lower). Then you fill in the remainder of your spending needs with a margin loan. You end up paying 0% taxes and have much less at risk in terms of margin loan.

I was thinking the same thing, although certainly it would be strange not to have some interest income and dividends from regular accounts.
So would be awkward to have a 0% tax year, as could easily have $40K in dividends from a $2 million account at avg div rate of just 2%.
Use capital gain from selling stock in regular accounts for the 0% rate.
Fill in the rest margin loans.

 

[photofinish]

I must be missing something. There are several things about the “live on margin loans” strategy that don’t make sense.

1) though the LTCG rate is higher than the rate on the margin loan, you only pay it once. You pay margin loan interest every year

2) you only pay LTCG tax on the gain which is always going to be less than the amount borrowed

3) interest payments on the margin loan are due every year, increasing the spending budget

What am I missing??

 

[Time2]

Hopefully the portfolio growth is multiple of the interest on the margin loan.

 

[Time2]

My original assumptions may have been too conservative. If I flip it to 4% growth and 3% WR, then you hit a peak point around year 30 of margin loan being 32% of portfolio. Due to the huge portfolio you've accumulated by then your % starts slightly declining thereafter. The risks remain thpugh:

- At constant steady growth rate the margin loan will vastly outperform the traditional safe withdrawal rate strategy. Of course the markets don't work linearly like that and you will be at much greater risk when a large market draw down occurs.
- Assumes interest rates remain permanently low. I did play around with increasing the rate to 3% or 4%. It didn't have that huge of an impact with even at 4% the max margin loan % of portfolio hitting 40% over a 40 year period.
- When you likely get in a jam of either market draw down or rising rates and want to try to de-risk your margin loan plan mid-way through, you could be faced with a situation where capital gains rates have increased since when you started. Whole purpose of this strategy is to reduce taxes so that would not be good.
- However, all this said with some of these assumptions over a multi-decade period the margin loan approach starts to so enormously outperform the traditional safe withdrawal strategy that even if you run into an adverse situation and have to dig your way out of it, you may still come out ahead.

One other thought I had is since this is tax focused, let's say you are married filing jointly. Up to $83,350 of L/T capital gains you pay 0% tax. You could do a traditional withdrawal strategy where you take out that amount each year (note in certain states you will start paying state income taxes still though as the thresholds are lower). Then you fill in the remainder of your spending needs with a margin loan. You end up paying 0% taxes and have much less at risk in terms of margin loan.

It would be nice if a FIRECALC type analysis could be done. To see how market volatility affects the margin percentage.
It's another one of those things you want to know, but there just so many variables, that even if you can get it working you still don't know where you are, because you don't know what variables you input predict the future.

 

[SecondCor521]

It would be nice if a FIRECALC type analysis could be done. To see how market volatility affects the margin percentage.
It's another one of those things you want to know, but there just so many variables, that even if you can get it working you still don't know where you are, because you don't know what variables you input predict the future.

Well, maybe not exactly on point but there's this analysis by ERN:

https://earlyretirementnow.com/2021/11/16/leverage-in-retirement-swr-series-part-49/

My takeaway from reading it a while ago is that in careful moderation it's fine and probably helpful. But for most here I would also imagine it's pretty much unnecessary.

 

[Markola]

I tried running this out long-term under approach of using margin loan proceeds to live off and never repaying the loans. The key positive of this approach in my view is the tax benefit. For higher spenders who may also live in a state with income taxes, your long-term capital gains blended tax rate could be 10% - 15%. This compares to effectively 0% with a margin loan. I had assumed this significant tax savings would make it very attractive. Perhaps I did something totally wrong, but my assumptions were:

Portfolio grows 3% annually
Safe withdrawal rate to live off is 4% based on original portfolio (assumed no inflation to be simplistic)
Margin loan interest rate is 2%
Taxes are 0% under margin loans
Taxes are 15% under normal safe withdrawal approach due to L/T capital gains in a state with higher income tax rates

Running this out 25 years the margin loan approach results in almost double the ending net portfolio than the traditional safe withdrawal strategy. So one can see the appeal; however, the margin loan approach by year 25 the accumulated margin loan balance represents 62% of portfolio. Way too risky. Also to think over 25 years (or longer) you don't run into at least 1 really adverse stock market draw down that blows you up with a margin call seems unrealistic.

The margin loan approach approach starts off great and seems beneficial for several years. In year 1 your margin loan is only 4% of portfolio. Super low risk. But every year since you don't pay off the loan and you take out a new margin loan, it keeps increasing at a rate that is larger as a % than the underlying portfolio is increasing. By year 25 the underlying portfolio has doubled in size, which is great; however, the margin loan now represents 62% of the portfolio.

You can't sell portfolio to pay down margin loan b/c that would trigger capital gains and defeats the whole purpose of the tax savings. The benefit is not paying tax while you live and then upon death your heirs get stepped up basis, pay off the margin loan and pay $0 tax.

My takeaway is margin loans could be used strategically in short term for a big purchase like a house or for several years to bridge to RMD's, Social security, etc. Doing this approach long-term only works for the ultra rich. If your withdrawal rate to live off is <1% like I imagine it is for some of the uber wealthy, then you could actually do this approach for decades and not take on too much risk. For even people who are wealthy but not immensely so though it does not seem to make sense.

Brilliant. Thank you. Life is unfair. Shocker. What about 1% for, say, older, plain vanilla millionaires who don’t have 25 year life expectancies? 1% would not be enough to live on but might buy the odd car or first class plane ticket. [update: SecondCor521’s article above evaluates my question better than I ever could.]

 

[BoredAtWork]

I must be missing something. There are several things about the “live on margin loans” strategy that don’t make sense.

1) though the LTCG rate is higher than the rate on the margin loan, you only pay it once. You pay margin loan interest every year

2) you only pay LTCG tax on the gain which is always going to be less than the amount borrowed

3) interest payments on the margin loan are due every year, increasing the spending budget

What am I missing??

1) Under traditional withdrawal strategy you will withdraw every year and should expect to pay LTCG since portfolio is growing. There may be certain years you can sell equities that don't have realized gains or you can offset some gains with losses, but generally you are going to be selling equities that have appreciated in value triggering LTCG.

2) Correct. However, the amount borrowed you will owe zero taxes on.

3) Yes and if you pursue this margin loan strategy long-term the cumulative loan can get very large where your interest annually gets considerable. But your portfolio that has be unencumbered with no withdrawals for many years is growing at such a clip that this offsets the higher interest assuming the portfolio growth is greater than interest rate.

 

[BoredAtWork]

Well, maybe not exactly on point but there's this analysis by ERN:

https://earlyretirementnow.com/2021/11/16/leverage-in-retirement-swr-series-part-49/

My takeaway from reading it a while ago is that in careful moderation it's fine and probably helpful. But for most here I would also imagine it's pretty much unnecessary.

I had read this article as well, which was very interesting. ERN's analysis was focused on using leverage in your portfolio though to see if that could allow a higher withdrawal rate and/or reduce sequence of returns risk. Has some overlap with this margin loan strategy as the thesis is same of utilizing leverage to juice growth that outruns a traditional withdrawal approach.

I would say the key difference though is margin loan is a play on reducing taxes to boost the amount you can withdraw. The leveraging of portfolio is taking traditional withdrawal strategy and inserting a component of leverage to try to bump up the safe withdrawal rate. Would be great to see ERN take a crack at the margin loan strategy to see what he thinks.

 

[OverThinkMuch]

Note that IBKR's 1.58% rate is based on interest rates. The market estimates 0.25% to 0.75% higher Fed funds rate, which will likely impact other rates. So a fair guess is 2% IBKR margin loans for under $100k by this time next year.

My takeaway is margin loans could be used strategically in short term for a big purchase like a house or for several years to bridge to RMD's, Social security, etc. Doing this approach long-term only works for the ultra rich.

The most risky time for a portfolio is an early crash. Taking a margin loan then to avoid selling assets might be a better cost-benefit for people below the ultra rich level.

 

[erikest]

I too was hesitant to move my portfolio to IBKR, though from my initial research, they were offering, by far, the very best rates.

For me, the simple rationale of portfolio growth rate > margin rate makes it easy to see the value. You exchange that value for additional risk, so then the question becomes, can you lower that risk to a nearly equivalent or at least acceptable level and still retain enough net benefit to be worth the effort?

As I've come to understand the risks here have a couple of facets.
There's the inherent risk of market decline putting you into a margin call scenario. Then there's some edges around that depending on your brokerage, their stated policy and how knee jerk they are with shortening the timeline should you be in a call. My understanding is that IBKR is heavily leveraged (heck, that's why people go there is to gain access to great rates on leverage) and the call is often completely automated, with sales happening potentially instantaneously or at best in a < 24 hr timeline.

So you've got the risk of margin call based on the maintenance requirement, the amount you borrow and the volatility of your portfolio.

You've also got the risk associated with your choice of brokerage.

Then you've also got the sort of preferential aspect of the trading platform and whether or not you like it. I hear IBKR is not really the cleanest, easiest or nicest to use, for example.

I was really hot on IBKR at first, but kept searching around and came upon another group that was advertising 0.65% margin rate, you may have seen them, Stone Creek Capital. They actually have a couple of different programs they can put you in and the rates vary based on the program, with which brokerage and the amount, but they're really competitive with IBKR at loan amounts > 250k. They provide access to these great rates by charging a yearly fee, which you can then aggregate with the interest payment to get to an effective interest rate and in most cases it will be within 0.5% of IBKR blended rate and they beat IBKR above 250k in the program that gives you the 0.65% with a 50% maintenance.

Now, I'm mostly interested in replacing higher interest debt (consolidation) and investments in real estate and business that are recessionary hedges or otherwise untied to the market. I also want to sleep at night, so want to stay very far away from a margin call. My personal threshold is that I want to be able to weather a 40% drop in my portfolio without triggering a call. That's just math, so you can easily use the maintenance % to back into how much you can borrow and still have that much downside protection. If you have a specific $ amount you're wanting to leverage out of your portfolio, the maintenance requirement then becomes an important factor for how risky that $ amount is to leverage. What I discovered through talking with Stone Creek is that they have a program with TD Ameritrade's Porfolio Margin, which, while a little complicated, basically just analyzes each holding in your portfolio by putting it into one of a few categories, each with it's own test %+/- and then aggregating each holding's margin maintenance requirement into the whole portfolio's margin maintenance. The thing is, those %s are way better than 50%, like stock is 15%, index etfs are like 10/12%. This means on a 1MM portfolio of index ETFs, you could borrow something like 88-90% of the value. Put another way, if you wanted to get 500k from your 1MM, you'd be sweating bullets at IBKR or at most other standard (I think they're called Reg-T) margin accounts, right at the call line, but with portfolio margin, you'd be able to weather a 40%+ drop. Now there is fine print, they can change the requirements a bit or if you're super duper leveraged, they may get more aggressive with a call, but I hear that compared to IBKR, they're timelines are better and because you can borrow the same amount and not be nearly as leveraged, your risk profile is much lower.

This was even more attractive to me than the absolute lowest rate. Now, you don't need Stone Creek to get into the Portfolio Margin program at TD, just have to pass an open book options test and have sufficient balance. However, if you look at their published rates, they're pretty dang high. Which is where this company's value lies - they provide access to those institutional rates. To me, that combination of very close to IBKR rate (maximizing value as the delta between portfolio growth and interest), with a low maintenance requirement (risk reduction), friendlier margin call practices (risk reduction) and a platform that is really good (interface preference), is a sweet spot, and of course I can also set up a rolling hedge with LEAP options structure to provide further protection from negative market movements, the cost of which just raises the effective interest rate in my eyes.

The same caveats that interest rates aren't fix and will be going up somewhat over time from these historic lows is still valid, but hopefully the time horizon is long enough (famous last words) that you should be able to see it coming and then make the moves you need to when the formula turns negative, i.e. your effective margin rate is higher than your expected portfolio growth and out weighs cap gains hit you'd take to clear the balance. It feels like there are a number of ways to prepare for that event and for me, I'm using the money for other investments with solid rates of return, so the idea is that I'll be far enough ahead, that even the cap gains hit would be negligible and as the rates started to rise, I could divert gains from the investments into loan pay down (to the extent that I didn't have better options).

I am pretty new to this in practice, so I'm interested to hear of any other's thoughts on where I may be miscalculating or missing other significant risk factors.

 

[l8_apex]

They provide access to these great rates by charging a yearly fee,

Can you expand on what you know about their fees? I really don't want to go through a long-winded sales pitch with them to get to the nitty gritty.

 

[SecondCor521]

I was really hot on IBKR at first, but kept searching around and came upon another group that was advertising 0.65% margin rate, you may have seen them, Stone Creek Capital.

erikest,

Welcome to the forum.

That's a pretty lengthy first post and comes across to me as possibly a slight shill for Stone Creek.

You may want to post about yourself in the "Hi I am" section of the board so people can get to know you better and where you're coming from: https://www.early-retirement.org/forums/f26/

 

[Markola]

erikest, Sounds like you have built a personal hedge fund. What is your plan in the event of a 40%+ stock market drop?

 

[erikest]

erikest,

Welcome to the forum.

That's a pretty lengthy first post and comes across to me as possibly a slight shill for Stone Creek.

You may want to post about yourself in the "Hi I am" section of the board so people can get to know you better and where you're coming from: https://www.early-retirement.org/forums/f26/

Ya, I was worried it would sound that way. But nah, I'm just "some dude" who is trying to navigate this and found, what seems to be, a sweet spot . I mean, really, google ads for the company found me and then after a couple of reads through the website and some hemming and hawing, I decided, while waiting for pizza after my daughters gymnastics, to just call them up and got ahold of Adam who runs the department that offers that program. This may sound shilly, but there really wasn't a big sales pitch, it was mostly me asking a lot of questions and him describing the different programs they have and how they work. I was honestly skeptical it was some kind of scam because, well those rates were just so dang low. He explained who they're trying to attract and at what loan amount their offering became more competitive than IBKR, etc, and through more discussion of the various options, realized that I could use the combination of Portfolio Margin at their great rates and the very high leverage ration that PM allows to gain access to liquidity at relatively low risk.

In regards to the question about what I'm going to do in a 40% market drop, my answer right now is: nothing. That's kind of the point - I won't be in a call and can thus weather that storm. Then it's just time before the market recovers to the mean. I may include some 'insurance' and buy some 2-3 year options and rotate them to maintain additional down side protection, if and when I get closer to my comfort zone threshold and my plans for the money include investing in things that are untied to the market. One thing I've looked at is laundromats, the classic absentee owner business that I've read do well during recessions and can be run on 10hrs or less a week. Still analyzing the possibilities on that front

I posted in the "Hi I am" section too, just fyi

 

[kgtest]

Ya, I was worried it would sound that way. But nah, I'm just "some dude" who is trying to navigate this and found, what seems to be, a sweet spot . I mean, really, google ads for the company found me and then after a couple of reads through the website and some hemming and hawing, I decided, while waiting for pizza after my daughters gymnastics, to just call them up and got ahold of Adam who runs the department that offers that program. This may sound shilly, but there really wasn't a big sales pitch, it was mostly me asking a lot of questions and him describing the different programs they have and how they work. I was honestly skeptical it was some kind of scam because, well those rates were just so dang low. He explained who they're trying to attract and at what loan amount their offering became more competitive than IBKR, etc, and through more discussion of the various options, realized that I could use the combination of Portfolio Margin at their great rates and the very high leverage ration that PM allows to gain access to liquidity at relatively low risk.

In regards to the question about what I'm going to do in a 40% market drop, my answer right now is: nothing. That's kind of the point - I won't be in a call and can thus weather that storm. Then it's just time before the market recovers to the mean. I may include some 'insurance' and buy some 2-3 year options and rotate them to maintain additional down side protection, if and when I get closer to my comfort zone threshold and my plans for the money include investing in things that are untied to the market. One thing I've looked at is laundromats, the classic absentee owner business that I've read do well during recessions and can be run on 10hrs or less a week. Still analyzing the possibilities on that front

I posted in the "Hi I am" section too, just fyi

I thought about snagging a laundromat. There is only one in town, and likely enough competition where my margin would be low if I competed, so I would need to buy them out. Then I remembered when I owned a 6 plex and all the things that broke in our coin-operated laundry room. The biggest risk was when we were paying someone else to collect the coinage, they were skimming from us. I only found out until I collected the coins myself and realized I was getting way more revenue than when I had someone else collecting it. That wasn't a coincidence as I started collecting when we had some vacancies, so they were taking a bit of the profit. Hard to say exactly ow much but it looked like 20% on top of the pay I was giving them to do the work.

Then we constantly had things breaking. The laundry machines, the coin machines, the gas lines, the water lines. It was more hassle than I think it would be worth. I'm sure if you could scale it you could absorb losses at one location with the other location's revenue etc but it just didn't seem appealing to me. It is not a lot of work for sure, but probably not as good of a return as you think either. I haven't used a laundry mat in over a decade at least. I do use dry cleaners but even then I haven't used it since COVID started since I don't need to wear suits anymore. Well I did recently go to a few funerals so I will need to use it shortly, but I took almost a 2.5 yr break from the cleaners.

 

[erikest]

One of the aspects of laundromats that appeal to me is the ability to go coinless and attendant-less with the use of automated door locks, cameras, etc. And then having contract services for the cleaning and maintenance.

From my research and in the current market, they're selling for about 5x SDE and often can be financed with SBA. So, 1MM acquisition returns 200M in SDE (which of course, includes your hours to manage the business, so it's not 100% passive) and that can be financed, so you can come with, say, 100M down (SBA min looks to be 10%), financing costs will be ~110k/yr on a 10yr loan, which is 90k/yr on 100k invested, but you know you'll have capital expenses, so you hold back 30k/yr for the eventual (which depends on age of equipment at time of purchase) reinvestment in machines. So you net say 60k/yr doing ~10hr/wk. So, 60% ROI, but you work for it, so my goal would be to drive that down to 5hr/wk through automation. So eventually you get to ~ 5hr/wk*52 = 260hrs/yr = $230/hr, which I would be totally fine with a part time job at that rate. After 10yrs, your financing goes away and (for simiplicity assuming revenue increase cancels out inflation) you're at 170k/yr for 260hrs = $653/hr and you have a business worth 1MM to sell when you're ready. That analysis though is brightsiding things a little as invariably complications come up, but the laundromat business overall is straightforward and well understood, so the constellation of possible issues is relatively small. There are operators in the space doing very well though.

Risks of course are general decline in the laundromat industry as more apt and homes are built with in-unit laundry and competition. Some of those seem minimizable by careful selection and buying a premium laudromat that dominates its area and by making sure to look for one with enough financial history to demonstrate continued excellence. Fortunately, most of the ones I see on the various business for sale sites have several years of financials and can be verified and investigated fairly simply using financial statements and utility bills (to correlate stated revenue with actual resource usage to verify numbers aren't cooked).

I think if I'm patient, I can find one that will have a large window of opportunity and profitability. Though, there is a bit of a problem with the rising interest rates and holding out for great, might make me miss good enough.

 

[tenant13]

We are deep into the high(er) interest period. I assume a lot of original participants of this thread adjusted their views on marginal loans. I'd be really curious to hear from someone who is still actively playing with this strategy.

 

[clifp]

We are deep into the high(er) interest period. I assume a lot of original participants of this thread adjusted their views on marginal loans. I'd be really curious to hear from someone who is still actively playing with this strategy.

I still am. I'm basically a bank, I have 3 fixed loans between 15-20 years at interest rates between. 1.875 and 4.5%. Plus a variable pledged asset loan from Schwab (basically a margin loan) at a current rate of 7.47%. I loan the money to various businesses but primarily real estate flippers at rates that vary between 14%-20%, and duration between 3 months and 3 years

I have a couple of slow payers and a company that just emerged from bankruptcy, which will pay me very slowly if at all over the next 5 years.

Even though the cost of my pledged asset loans has increased from ~3% to 7.5%, I have only been able to raise my rates by about 2%, since usuary laws tend to kick in over 20%.

Still with over $1 million in outstanding loans, it is nice little business

 

[Markola]

If the OP’s objective is to avoid taxes and earn about $60K, it can be done without loans and instead manipulating the tax margins. This guy is a master:

“Overall we paid $0 in federal income tax (net $3,000 paid to us in refundable tax credits), $0 in California income tax, and $4,233 in self-employment taxes (which increase future SS income.)
…Income – $60,534”

https://www.gocurrycracker.com/go-curry-cracker-2022-taxes/#more-15604

 

[Time2]

I just checked IBKR margin rates they are around 6%, depending on the amount borrowed. In July 2021, I borrowed $240k to facilitate purchase of a house, the rate then was 1.99%. About 9 months later the kids had the house remodeled and mortgaged with a 3.75% 15 year mortgage. And I was paid back.

Interest rates had just started increasing.

 

[geeky_grrl]

If the OP’s objective is to avoid taxes and earn about $60K, it can be done without loans and instead manipulating the tax margins. This guy is a master:

“Overall we paid $0 in federal income tax (net $3,000 paid to us in refundable tax credits), $0 in California income tax, and $4,233 in self-employment taxes (which increase future SS income.)
…Income – $60,534”

https://www.gocurrycracker.com/go-curry-cracker-2022-taxes/#more-15604

A lot of their tax situation don't apply in my case - they have earned income and are making retirement contributions while I only have dividends and cap. gains. I'm also single with no dependents so my tax bracket is different than theirs.

 

[geeky_grrl]

We are deep into the high(er) interest period. I assume a lot of original participants of this thread adjusted their views on marginal loans. I'd be really curious to hear from someone who is still actively playing with this strategy.

I haven't done any long term margin borrowing (I haven't been spending much the past few years so I haven't needed to), but I'm actually OK with it still at current interest rates. I can still borrow for less than the average stock market return and the fed seems to be slowing down on interest rate increases. Rates are still pretty low historically.