Margin Loans - Fidelity (2024)

FAQs

How much can I borrow on Fidelity margin? ›

Based on a review of your account holdings, you're initially eligible to borrow up to 50% of your balance – so $137,500.

Initial margin requirement

Margin accounts require a minimum of $2,000 in net worth to use the margin feature.

There is no monthly principal payment required (although interest will be due periodically) and no term in which you need to repay the loan, although you're allowed to repay part or all of your loan at any time. Potential tax advantages. Margin loan interest may be tax deductible depending on your situation.

The biggest risk from buying on margin is that you can lose much more money than you initially invested. A decline of 50 percent or more from stocks that were half-funded using borrowed funds, equates to a loss of 100 percent or more in your portfolio, plus interest and commissions.

How it affects your credit score. If you open a margin account, the lender may run a hard inquiry — this will temporarily decrease your credit score.

You can access cash without having to sell your investments. Pay back your loan by depositing cash or selling securities at any time.

A good faith violation occurs when you buy a security and sell it before paying for the initial purchase in full with settled funds. Only cash or the sales proceeds of fully paid for securities qualify as “settled funds.”

Fidelity makes it simple to use your accounts as collateral to access cash for real estate, tuition, or other major purchases. Unlock the potential of your investment portfolio to meet your borrowing needs. To get started, speak with a representative. Give us a call at 1-800-Fidelity and ask for "Line of Credit."

Fidelity requires customers to maintain at least 25% equity in the account as collateral at all times. It can set higher “house” margin requirements based on its assessment of risk and can demand more collateral by issuing a margin call.

If your positions lose value too quickly and your margin loan balance exceeds the proceeds from the securities your broker closed out, you could end up with no securities at all, but still owing money.

Is it worth getting a margin loan? ›

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 Basics:

Interest is charged based on the amount of money you borrow. You must maintain a required equity level in your account. You can repay the loan at any time by depositing cash or selling securities. There is no set repayment schedule.

How does margin work? Brokerage customers who sign a margin agreement can generally borrow up to 50% of the purchase price of new marginable investments (the exact amount varies depending on the investment).

How can you make $5,000 turn into $10,000? Turning $5,000 into $10,000 involves investing in avenues with the potential for high returns, such as stocks, ETFs or real estate. Another approach is to use the money as seed capital for a profitable small business or side hustle.

Borrowing on margin can provide a number of advantages other borrowing solutions don't—like quick access to cash without having to sell your investments. Margin loans can also be a cost-effective way to access cash or liquidity, often with interest rates lower than those for credit cards or unsecured loans.

An investor with a margin account can usually borrow up to half of the total purchase price of marginable investments. The percentage amount may vary between different investments.

You can withdraw funds from a margin account, but there are often limitations. For example, you are usually limited to withdrawing the cash value of your margin account, usually up to 50% of the value of the securities in your account.

Fidelity makes it simple to use your accounts as collateral to access cash for real estate, tuition, or other major purchases. Unlock the potential of your investment portfolio to meet your borrowing needs. To get started, speak with a representative. Give us a call at 1-800-Fidelity and ask for "Line of Credit."