What the Interactive Brokers TV commercial - Margin Loans: 3.83% is about.
Interactive Brokers recently launched a new TV spot advocating their margin loans at an extremely competitive interest rate of 3.83%. The ad starts with a dramatic scene of a man scrolling through his stock portfolio online, while a voiceover announces that he invested his entire savings into the stock market. The man's worries are palpable as he starts to sweat and his heart rate increases.
But then, the ad highlights that the man has Interactive Brokers' margin loan, which allows him to borrow up to 50% of the value of his stocks. This means he can buy twice as many shares as he could with his cash savings alone, and thereby magnify his returns. Moreover, the ad emphasizes how the interest rate of 3.83% is significantly lower than what other brokers typically charge.
The actor who played the role of the investor explains how Interactive Brokers made it possible for him to maximize his portfolio with their low interest margin loan, and as the camera pans out from him, we see the tagline: "Invest smarter with Interactive Brokers."
The overall tone of the TV spot promotes the benefits of borrowing money to invest in stocks, which may not be suitable for all investors, but it also highlights the advantages of Interactive Brokers' specific offering. The ad encourages investors to consider how margin loans can help them optimize their returns and presents Interactive Brokers as an excellent solution that helps clients manage their portfolios easily and effectively.
Interactive Brokers TV commercial - Margin Loans: 3.83% produced for
Interactive Brokers
was first shown on television on August 10, 2022.
Frequently Asked Questions about interactive brokers tv spot, 'margin loans: 3.83'
US Margin Loan Rates Comparison 2
| $ 25K | $ 1.5M |
|---|
| Interactive Brokers | 6.83% | 6.28% |
| E-Trade | 13.70% | N/A |
| Fidelity | 13.08% | 9.25% |
| Schwab | 13.08% | N/A |
Margin rates represent the cost of borrowing for an investor for an outstanding margin loan. Each brokerage can set the margin rate differently, it typically reflects the current broker call rate or call money rate. This is the rate that the bank charges the broker for the money used to fund investors' margin loans.
Margin interest is accrued daily and charged monthly when the cash in an account is negative. The interest accrued each day is computed by multiplying the settled margin debit balance by the annual interest rate and dividing the result by 360.
While margin loans can be useful and convenient, they are by no means risk free. Margin borrowing comes with all the hazards that accompany any type of debt - including interest payments and reduced flexibility for future income. The primary dangers of trading on margin are leverage risk and margin call risk.
Margin lending is a flexible line of credit that allows you to borrow against the securities you already hold in your brokerage account. When used correctly, margin loans can help you execute investment strategies by increasing your borrowing power to purchase more securities.
You can repay your loan at any time by depositing money or by selling securities. Margin loan rates are typically low. These types of loans also have low fees also. You will not have to pay annual fees, closing costs, non-use fees, or other fees that traditional loans might charge.
Margin interest
As with any loan, when you buy securities on margin you have to pay back the money you borrow plus interest, which varies by brokerage firm and the amount of the loan. Margin interest rates are typically lower than those on credit cards and unsecured personal loans.
Instead of borrowing the full 50%, it might be better to limit margin loans to a lower percentage of marginable assets. Some investors limit their margin to 25% to 35% of their marginable assets in order to keep a lid on potential losses and reduce the chances of a margin call.
While margin loans can be useful and convenient, they are by no means risk free. Margin borrowing comes with all the hazards that accompany any type of debt - including interest payments and reduced flexibility for future income. The primary dangers of trading on margin are leverage risk and margin call risk.
As with any loan, when you buy securities on margin you have to pay back the money you borrow plus interest, which varies by brokerage firm and the amount of the loan. Margin interest rates are typically lower than those on credit cards and unsecured personal loans.
When this happens, the investor must add more money in order to satisfy the loan terms from the broker or regulators. If the investor is unable to bring their investment up to the minimum requirements, the broker has the right to sell off their positions to recoup what it's owed.
Using a margin loan to amplify your investing power can be an effective way to build wealth, diversify your portfolio and could offer tax benefits as well. However, just as it has the potential to grow your wealth, if stocks go down in value your losses will be amplified as well.
