Should I borrow money to invest in stock market? Actually, the concept is the same as borrow money to buy car or house. Just that car and house is a must for our daily life and not stock. Most of us cannot afford to buy car and house in cash. And need to borrow from bank with interest changes. Same apply to share margin financing. With proper finance management, borrow money to invest in stock market does bring more revenue.

I am using Public Bank Online Share Trading with Share Margin Financing account. The minimum amount to borrow is RM50k (last time is RM100k) and with BLR – 1.8% (around 3.8% based on current BLR) per annum interest rate. Public Bank will borrow you 1.5X money based on what you have in that account ~ cash or stock value. For example, if you have RM100k cash there, you can borrow up to RM150k margin to invest. So total up as RM250k. Same apply to stock value. However, the stock value is determined by bank and not the market value. Some of the stocks do not have such value and bank does not want to take risk to lend you too much money. And if you are not able to pay back the loan, bank can force sell your stock.

Choosing the correct stock to invest is important. You don’t want to invest on a stock have only 2% dividends and without any capital gain at all. Then you need to pay 3.8% to bank. End up you are losing money at 1.8%. So make sure you pick the high dividend yield stock to invest.

Timing is another factor. With economy getting better and in the recovery road, having more money to invest is a nice move. You can easily earn more than 100% during this time. Why? Most of the stocks are undervalue and at a very attractive price. Some stocks can even go up to 300%. Therefore, you can earn a lot more with this extra money.

Borrow money == Make more money

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I am a Public Bank supporter. I have its 1 saving account and 2 share trading accounts (Collaterised Trading and Share Margin Financing). Too bad that I don’t own Public Bank stock. Okay, back to the topic ~ Public Bank Online Share Trading. Most of the brokers and banks provide online share trading facility. However, not all of them are the same.

Public Bank share trading account is nominate account. There is 30% discount on brokerage rate (minimum brokerage of RM12.00) when we trade online. For contract value RM100K and below, the brokerage rate would be 0.42%. While for contract value above RM100K – the brokerage rate would be 0.21%. The brokerage rate for intraday transaction will remain the same at 0.15%. Good for short-term traders.

The bad sides… I cannot buy Initial Public Offering (IPO) with this account. There is RM5.50 service charge when receive dividend payment. You will get the payment in your PB Sharelink account directly. (No need bank in the cheque yourself)

I have Maybank Online Stock account and OSK share account (OSK188) too. How about you? Do you invest in stock market?

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