Search
Search for an ETF or holding
Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
A margin account is a type of investment account that lets you borrow money from your broker to buy securities. You use your existing investments as collateral. This amplifies your potential gains but also your losses.
You have $10,000 in your margin account. With 50% margin, your broker lends you another $10,000, allowing you to buy $20,000 of VFV.TO. If VFV.TO rises 10%, you gain $2,000 instead of $1,000 (minus margin interest).
But if VFV.TO drops 10%, you lose $2,000 plus interest. Worse: if your account value falls below the maintenance threshold, you receive a "margin call" and must add funds or sell securities immediately.
Margin is an advanced tool that is NOT recommended for beginners. Margin calls can force sales at a loss at the worst time. For the vast majority of investors, maxing out the TFSA and RRSP is preferable before considering margin.