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They're loans so where do they get the income to pay off the interest? If I attempt something like this via Interactive Brokers (which generally has the best r

They're loans so where do they get the income to pay off the interest? If I attempt something like this via Interactive Brokers (which generally has the best rates), it would cost me 5-6%: https://www.interactivebrokers.com/en/trading/margin-rates.php https://www.interactivebrokers.com/en/trading/margin-rates.p... I'd figure if you're a billionaire, with multi-millions in collateral, the rate is probably significantly lower, but they still need to pay down the interest.

zie 2y ago
Well, if you are worth billions and only spending millions, then you can borrow for a very, very long time before the interest payments get hard to pay. If you do end up in that position, you can always borrow more to pay the interest(the US govt does this). It's nothing magic here, you even get to deduct the interest you end up paying on your taxes usually. The rates probably not that much lower, the lenders still have to make money and they really don't like to get stuck holding the bag. They have risk departments who (hopefully) carefully analyze how much borrowing they are doing and making sure they are the ones holding all the cards if it ever comes crashing down.
cryptonector 2y ago
> They're loans so where do they get the income to pay off the interest? They borrow more, against other stock. Works as long as you have enough stock.
ywvcbk 2y ago
> the rate is probably significantly lower IBKR is charging Fed Funds rate + 0.5% at >$200k. Why would they ever offer anyone significantly less than that rewardless if they are billionaires or not? They be losing money on those loans..