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Once you have more than about two years worth of salary invested in a brokerage account, you don't need a cash emergency fund anymore. You can withdraw cash fro

Once you have more than about two years worth of salary invested in a brokerage account, you don't need a cash emergency fund anymore. You can withdraw cash from a brokerage account instantly, up to a large percentage of your total balance, without selling anything. This creates a margin loan, and then at your leisure you can sell your investments to pay the loan, only paying a few days worth of interest at most. Or you can keep the loan. The rates are far better than credit cards and there's no minimum payment or required repayment schedule. Interactive Brokers' current margin rate is 1.57%!

OJFord 6y ago
You can withdraw on margin?! I suppose in a way that's arguably lower risk, but still seems weird. Also think that's quite nation/broker specific, pretty sure that's not an option with T212 or IG in the UK (which provide margin for trading CFDs and the latter limited options too). Also shouldn't discount overdrafts, pretty sure mine (as in, available to me) is <1.57% equivalent, and 'arranged' I believe they tend to be cheaper or at least much bigger.
- modeless 6y ago
  Yup. You can buy a house on margin if you like. With Interactive Brokers' rates as low as 0.75% for large balances it doesn't look like a terrible option vs. an adjustable rate mortgage, if your account balance is high enough that you're not risking a margin call. If the house is an investment, the margin loan interest may even be tax deductible, without the 750k limit that the mortgage interest deduction has.
- jfk13 6y ago
  I'm curious where you can find a 1.57% overdraft rate? Looking at https://moneyfacts.co.uk/news/banking/revealed-the-cost-of-new-bank-account-overdraft-charges/ https://moneyfacts.co.uk/news/banking/revealed-the-cost-of-n..., for example, lists (arranged) rates in the range of 15-40%.
  - OJFord 6y ago
    You may be right, I've never had to use one and didn't actually work out the equivalent rate of my unarranged one.
id 6y ago
1.57% is a lot compared to the ease of just leaving a couple grand in a high-yield savings account. Maybe it's just me but it feels wrong to take out a loan against my portfolio everytime I have to replace my MacBook.
- chii 6y ago
  > everytime I have to replace my MacBook. that's not an emergency! And having a few thousand dollars of liquid cash in a bank account is no brainer. A real emergency might be like a roof collapse, where you need 10-20k to fix. Or a medical emergency, or a family issue where a fair chunk of change is needed. Using margin is a good way, and is much lower interest than a credit card, provided you have the witherall to pay it back.

OJFord 6y ago

You can withdraw on margin?! I suppose in a way that's arguably lower risk, but still seems weird. Also think that's quite nation/broker specific, pretty sure that's not an option with T212 or IG in the UK (which provide margin for trading CFDs and the latter limited options too). Also shouldn't discount overdrafts, pretty sure mine (as in, available to me) is <1.57% equivalent, and 'arranged' I believe they tend to be cheaper or at least much bigger.

modeless 6y ago
Yup. You can buy a house on margin if you like. With Interactive Brokers' rates as low as 0.75% for large balances it doesn't look like a terrible option vs. an adjustable rate mortgage, if your account balance is high enough that you're not risking a margin call. If the house is an investment, the margin loan interest may even be tax deductible, without the 750k limit that the mortgage interest deduction has.
jfk13 6y ago
I'm curious where you can find a 1.57% overdraft rate? Looking at https://moneyfacts.co.uk/news/banking/revealed-the-cost-of-new-bank-account-overdraft-charges/ https://moneyfacts.co.uk/news/banking/revealed-the-cost-of-n..., for example, lists (arranged) rates in the range of 15-40%.
- OJFord 6y ago
  You may be right, I've never had to use one and didn't actually work out the equivalent rate of my unarranged one.

id 6y ago

1.57% is a lot compared to the ease of just leaving a couple grand in a high-yield savings account. Maybe it's just me but it feels wrong to take out a loan against my portfolio everytime I have to replace my MacBook.

chii 6y ago
> everytime I have to replace my MacBook. that's not an emergency! And having a few thousand dollars of liquid cash in a bank account is no brainer. A real emergency might be like a roof collapse, where you need 10-20k to fix. Or a medical emergency, or a family issue where a fair chunk of change is needed. Using margin is a good way, and is much lower interest than a credit card, provided you have the witherall to pay it back.