Investor can open margin account from the brokerage firm, which allow them to borrow money to invest in the share market. However, certain amount of interest (about 8-9%) will be charged towards the amount borrowed.
As for me, margin account is definitely a big NO.
If you target to a profit of 15% from your investment, you need to pay back the 9% interest, which left you with just 6% profit. With the 6% profit, I would suggest to put that money in Amanah Saham, which will yield interest within the same range (and it is capital guaranteed by the government).
My advise is to start to save money from this moment. Build up your cash reserve before you get into the stock market. Make sure the money that you want to invest is the extra cash that you would not want to keep in the turtle-rate of normal savings account. If you invest with your money, the worst scenario is you will lose all the money you invest. You will still have your house and car. That is the worst scenario.
Smart investor will know how to use internet and the all the available resources to minimize their risk of losing money.
As for me, margin account is definitely a big NO.
If you target to a profit of 15% from your investment, you need to pay back the 9% interest, which left you with just 6% profit. With the 6% profit, I would suggest to put that money in Amanah Saham, which will yield interest within the same range (and it is capital guaranteed by the government).
My advise is to start to save money from this moment. Build up your cash reserve before you get into the stock market. Make sure the money that you want to invest is the extra cash that you would not want to keep in the turtle-rate of normal savings account. If you invest with your money, the worst scenario is you will lose all the money you invest. You will still have your house and car. That is the worst scenario.
Smart investor will know how to use internet and the all the available resources to minimize their risk of losing money.
I have a friend who lost his house due to playing margin. He lost the money that he borrowed.
I almost opt for margin account when I started. Luckily I didnt get one.
to dan,
You should learn from your friend's story.
Don't ever play margin.
to pauline,
Luckily you didnt get it. Playing margin is very risky.
I been investing since 1997. One rule I keep till now - never invest with borrowed money as far as equity investment is concerned. Never beg on contra and hoping that the market will bring you quick money. After 10 years of investment, I learn the only way to grow your wealth is via long term investment. The time in the market matter most!
to jean chai,
You are wise not to invest with borrowed money. However, many people out there borrow money because they are confident that they can win big money. This is the biggest mistake investor should not make.
Skfco,
I can't afford to borrow. All my investments are long term...so no quick money for me to repay. :) If want to earn big money in short term ...i guess the odd is the same as going to Genting.