Margin - Interactive Brokers

[Bankerwithabrain]

Interactive Brokers offers margin of 1:4 at 1.6% interest rate. Seems like there should be some low risk method to make money on the spread.

Does anyone do this?

Sounds like you can invest $100K and borrow $300k. Then if you can earn 2.6% you make $3K on your $100K of cash + $2.6K from the $100K. So your total return would be around 5.6% on your investment.

Any thoughts on investments that would be suitable to make 2.6% without exposing to too much risk in this market?

 

[dallas27]

Is this a troll or something? SEC requires an IM of 50%, so 1:4 is illegal for retail investors.


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[Bankerwithabrain]

Sorry. It was ignorance. 1:4 is only during the day. Overnight is 50%.

Still could make some decent money using margin with such low interest rates. Just not with as much borrowing.

 

[folivier]

Didn't a young fellow get busted doing this 20 or so years ago?