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I imagine this is exactly the kind of thing Robinhood is trying to implement for its current user base.

• arcticbull 7y ago
  This is exactly what Interactive Brokers offers today, wherein they issue you a debit card backed by the cash value in your account, and once that's exhausted, by the margin available. Instead of selling securities to pay for your purchases, you can borrow against them (to within your personal risk tolerance) at a tax-deductible rate of 3.05% for the first 100K and 2.55% for the next 900K.
  • zrail 7y ago
    > tax deductible Ehhhh be careful. Margin interest in the US is tax deductible only to the extent that you used the margin loan to buy investment assets. If you use margin to buy a share of Starbucks, great. If you use it to buy a coffee, you’re out of luck.
    • arcticbull 7y ago
      Conceptually, however, if you were to sell a share of Starbucks, use the proceeds to buy a coffee, and then borrow against your margin to restore your position, then just borrowing against margin to buy coffee is net-net the same thing. It would even result in a wash-sale.
  • scottm01 7y ago
    Fidelity also offers this in a "Cash Management Account" which you can tie to a brokerage account. It's possible to maintain a $0 balance in the cash account and use margin or some funds (generally money market) to cover each debit. Works great. I wouldn't be interested in a system that automatically sold equities from a taxable account; too volatile and too likely to cause a tax nightmare.