Margin Loan

| by RateCity Staff

A margin loan allows you to borrow money to invest in shares and managed funds, whilst using your cash or shares as security for the loan.

Margin loans allow you to invest in more shares than you could normally afford, which is known as gearing. This means that you can potentially achieve higher returns, but it also increases your risk of higher losses if the value of your portfolio drops. If your investment value falls below the amount that you have borrowed, you will experience negative equity, in which case you will need to repay more than what you have left in shares.