tag:blogger.com,1999:blog-81818430558745597272024-03-07T23:19:56.771-08:00Life on the MarginWhat happens when a self taught investor tries to use a Margin Account to increase income? Watch the hilarious results. Definitely don't take this as personal investment advice, this guy isn't a professional and certainly doesn't recommend you do anything he does. For mild entertainment purposes only.Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8181843055874559727.post-46483431533438940382023-05-16T15:46:00.001-07:002023-05-16T15:46:23.406-07:00May Margin Update<p>It's been a pretty quiet month for me and I haven't made many changes, April, May and June tend to be months where I'm not generally very active in the markets. I had to do some home renovations as well so I didn't contribute to my margin fund (I will be picking up in June though so I expect to still meet my goals for the year)</p><p>As you can see Total Value has dipped, though largely in line with how the markets been hit over the last little while and I used a little more of the margin I had available. While I've used up a large part of the margin gap, my dividend income is outpacing interest costs, which is the initial goal. Over time, the goal will be for that income to simply act as additional funds.</p><p><br /></p><p><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_mMPU64hY37ky_Uk5v2zw7SviZcyAcLRRCTM-5eQuwhpQ67-z-9ZN8lt_7CxHGdqJt41m2IKaD8os5vbliaeU9-P6PtcccCScJRe-wD5-3EVdIKFoADwYRDNNyPI81G1aL_9MEjXE7GIfFV2J-jYOMcy1NLBcimiP2utcGfpULQihQNcEVFTE8y_DBQ/s328/May15thMargin.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img border="0" data-original-height="162" data-original-width="328" height="158" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi_mMPU64hY37ky_Uk5v2zw7SviZcyAcLRRCTM-5eQuwhpQ67-z-9ZN8lt_7CxHGdqJt41m2IKaD8os5vbliaeU9-P6PtcccCScJRe-wD5-3EVdIKFoADwYRDNNyPI81G1aL_9MEjXE7GIfFV2J-jYOMcy1NLBcimiP2utcGfpULQihQNcEVFTE8y_DBQ/s320/May15thMargin.jpg" width="320" /></a></p><p></p><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><br /><br /><p></p>Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.com0tag:blogger.com,1999:blog-8181843055874559727.post-72725661789209760102023-04-23T10:09:00.002-07:002023-04-23T10:09:27.699-07:00Brookfield Renewable Partners (BEP.UN) review!<p>So why is Brookfield Renewable Partners part of my margin account? There are three primary reasons that I wanted to outline. As I mentioned before, one aspect of holding a margin account for the purposes I intend it for requires being able to cover off interest with the yield from the stocks inside it, so unlike other types of stock accounts intended to save for retirement, there are different considerations I have for picking stocks to place inside it.</p><p>1: <b>Dividend Yield</b> Part of maintaining my margin account requires dividend stocks be able to cover the interest on margin with a gap. Brookfield Renewable Partners is currently at a yield of about 4.33% (at the time I am writing this), which is a pretty fair return. More importantly, they have a strong history of increasing payouts on an annual basis.</p><p>2:<b> Financial Position</b> Brookfield has a solid pipeline of revenue producing projects in a largely regulated industry, which means that while they have a fairly high level of debt, their current revenue stream and revenue growth is protected more than it would be in non regulated industries. In addition, Brookfield Renewable Partners is also under the Brookfield umbrella of companies, and benefits from those ties in terms of access to markets, funding and management expertise.<br /><br />3: <b>Renewable Focus</b> With the globe shifting towards increased reliance on renewable energies, the current focus Brookfield has on that space, as well as their long term experience in managing and bringing to compleition renewable projects, gives them an advantage over utility companies that are only just now starting that shift. </p><p>So that's quick run down of why this is going to be a slow accumulation pick inside my margin account!</p>Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.com0tag:blogger.com,1999:blog-8181843055874559727.post-58078782153440722972023-04-07T08:36:00.002-07:002023-04-07T08:36:12.399-07:00Margin Update!It's been a good week!<div><br /></div><div>First off the account. It continues to have a total value well ahead of schedule, which is positive, although I've borrowed more against it than planned as well due to some high cost expenses that have come up. But again, that's what the account is for. While it does ultimate increase my interest costs, my current dividend schedule should allow that to be comfortable covered.</div><div><br /></div><div><a href="https://blogger.googleusercontent.com/img/a/AVvXsEi3EYZCvCzMFPjiHqlbiz_2HzFOMmxr4tswJn8tfvSo2wILqj3YewEtgbTFaEFCrl7mzHJv4qpd4pXh9kvGV8KKdeC7hzA3ni_3FXiXlhHKxJ44fha4tVuFi_yJUzxu2Fa-y2q5O7nHJOoWHm5ARWLKcqrCAk6hd4DMrZCeODRpOZICH8zB8f54vnndAA" style="margin-left: 1em; margin-right: 1em; text-align: center;"><img alt="" data-original-height="163" data-original-width="328" height="159" src="https://blogger.googleusercontent.com/img/a/AVvXsEi3EYZCvCzMFPjiHqlbiz_2HzFOMmxr4tswJn8tfvSo2wILqj3YewEtgbTFaEFCrl7mzHJv4qpd4pXh9kvGV8KKdeC7hzA3ni_3FXiXlhHKxJ44fha4tVuFi_yJUzxu2Fa-y2q5O7nHJOoWHm5ARWLKcqrCAk6hd4DMrZCeODRpOZICH8zB8f54vnndAA" width="320" /></a><br /><br /><br /></div><div>I also picked up some shares in Brookfield Renewable. Renewable Energy as an asset class got hit hard last year, as did utilities in general, and while they have recovered somewhat this year, many stocks in that sector are still under what I would consider to be a fair price. The added bonus to me is that Brookfield Renewable pays its dividends in US dollars, so there is a bit of a currency hedge in place when you buy the Canadian units on the TSX (TSE:BEP.UN).<br /><br />Currently the markets are still in a space where there is anticipation of a recession, and no one really knows how long, how severe, or even if one will happen at all, and consequently a lot of quality companies have share prices at a point where I personally want to load up on them as much as possible. Some companies that usually have dividend yields in the 3%-4% range are currently at 5%-6% due to price drops, and when you factor in the history of dividend increases those companies have, I feel like it's a good way to get ahead of inflation.<br /><div><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><br /></div></div>Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.com0tag:blogger.com,1999:blog-8181843055874559727.post-49843435839828057702023-04-02T15:26:00.003-07:002023-04-23T10:09:47.952-07:00Power Corp Review (TSE:POW)<p>So one thing I'll do over time is explain why I hold certain stocks in my margin account (as opposed to say a TFSA or RRSP.</p><p>I recently bought Power Corp (TSE:POW) as I felt it is a long term, solid dividend player that's been beaten up along with all the other financials, although it is more of a holding company for financial services than it is a traditional bank. Power Corp has under it Great-West Lifeco (an insurance and wealth management company with several subsidiaries of its own), IGM Financial (wealth management services and mutual funds), Groupe Bruxelles Lambert (a European wealth management holding company), as well as several financial tech companies (including Wealthsimple). This doesn't cover all the ground, but is a good example of how diverse the holdings Power Corp has across the financial spectrum, and why I feel it's taken a significant, but unwarranted hit in the current environment.<br /><br />They also recently raised their dividend, something they've done for at least the last 18 years, through several financial crisis points, which is a pretty solid history. And with the share price having taken a beating, the current yield is 6.08%. For a solid long term performer, that struck me as a really good entry point.</p><p>With what I felt was a low entry cost (as of March 31st it was at $34.54, a range it's been stuck in for the last two weeks), that kind of yield on a large, low growth company was too hard to ignore. It gives my account the opportunity to experience not just a solid dividend to pay the expenses and pad the margin, but also capital appreciation.</p><p><br /></p>Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.com0tag:blogger.com,1999:blog-8181843055874559727.post-54647506459435855132023-04-01T07:51:00.005-07:002023-04-02T15:03:07.559-07:00<p>Well this could collapse in spectacular fashion or work out well, but whatever happens, you guys get to come along for the ride and watch the results.</p><p>For a very long time I've had a Margin Account at a self directed brokerage that I've never done anything with. I've always viewed Margin as a risk I didn't really feel like taking, but as life goes along, I've decided to start playing around with it. And I decided it would be fun to let people watch as I either flame out in a collapse of galactic proportions, or succeed beyond my wildest dreams.<br /><br />I started at the beginning of the year, so you're already coming along for the ride after it's started. A few bullet points before we start.</p><p></p><ul style="text-align: left;"><li>I am not rich, so I'm not putting into this more than I can lose. If you want to see people losing their life savings for a healthy dose of schadenfreude, Wall Street Bets on Reddit is always fun</li><li>Margin is risky. Don't take anything I say or do as investment advice because I am not a professional. This is an entertaining way for me to pass the time and hopefully, maybe, make some money.</li><li>My goal here is to put extra funds into the margin account and use that margin to pay bills and live life, while dividends from the stocks hopefully start to outpace the amount being borrowed. Given these plans, I fully expect the margin amount borrowed to outpace dividends for a good few years, but this is a 5 year plan.</li><li>Let's see what happens...</li></ul><div>So now that we've got that out of the way, I figure I'd start off April Fool's Day showing you folks what's currently in the account, and the format I'll use on a biweekly basis to show updates (I might post more often than that, but that's when I'll give account updates.</div><div><br /></div><div><br /></div><div><b>MARGIN ACCOUNT HOLDINGS</b></div><div><b><br /></b></div><div><b>April 1st</b></div><div><b><br /></b></div><div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigU1ds0E3pWiVGJQ8-pveyHJsaodxLolMMKCzLSj-mE4KWhdSq863TbXp21OrhTD2HADQTP1x9sOe0bIyBrNfJy_hCFLeEAplzI4pteCXEFCkH2gpxe0a7Jw042Vo6xt83Rb8lyiQcBd9FamTN0ivuc7iPPVtQQapOBxlCM-C_eKZG8VW6jVEvqyx6yA/s327/April1stMarginSnapshot.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="280" data-original-width="327" height="274" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEigU1ds0E3pWiVGJQ8-pveyHJsaodxLolMMKCzLSj-mE4KWhdSq863TbXp21OrhTD2HADQTP1x9sOe0bIyBrNfJy_hCFLeEAplzI4pteCXEFCkH2gpxe0a7Jw042Vo6xt83Rb8lyiQcBd9FamTN0ivuc7iPPVtQQapOBxlCM-C_eKZG8VW6jVEvqyx6yA/s320/April1stMarginSnapshot.jpg" width="320" /></a></div><br /><div class="separator" style="clear: both; text-align: center;"><br /></div><br /><b><br /></b></div><div><b><br /></b></div><div>So what does all this mean?<br /><br />First off, the Shares. That's what I have in my account, and the value of those shares can be used to borrow cash on margin. Usually it's at a set ratio of anywhere from 30% to 70%. So if you have shares valued at $1000 with 70% margin, you can borrow $700. Interest on the margin loan is generally pretty decent (some of the information has been removed for security reasons)<br /><br />Now, people use margin accounts for different reasons and may take big risks in them. My goal is to use dividends from the shares to offset the interest I pay and the amount I borrow, so over time you'll see I don't generally buy high risk shares. It will usually be steady, boring companies that pay reliable dividends. I might change my mind. I guess we'll see.<br /><br />The <b>Total Value</b> is the current market value of all the shares. This is what's used to calculate <b>Total Margin Available </b>which is the total amount I can borrow from the account. The plan is to have at least $2000 a month put into the margin account to buy shares (so far I'm over that but things can change), and use a portion of the margin to pay for life in general, while over time the dividends will hopefully start paying for both the interest and amounts being borrowed.</div><div><br /></div><div><b>Total Margin Used</b> is what I've already borrowed against the value of the shares. And the <b>Current Margin Available</b> is what I could theoretically still borrow</div><div><b><br /></b></div><div><b>Interest Cost to Date</b>. Borrowing on margin isn't free. The rates aren't bad, because you're borrowing against an asset you own, but this also means dividends and interest payments you might receive are offset by this. Setting aside any gains from stock prices, if the interest you pay exceeds the <b>Income to Date</b>, you're losing the game.</div><div><br /></div><div>So there you have it. So far it's been an interest start and I'm not behind anything, so I'll take it. As time goes on, I'll go into why I chose the stocks I did, but I think this is a good start.<br /><br /></div><div><b><br /></b></div><div><b><br /></b></div><p></p><p><br /></p>Life on the Marginhttp://www.blogger.com/profile/13193187776650185477noreply@blogger.com0