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An account that lets you borrow money to buy more stocks. Risky.
Why It Matters
Margin accounts let you borrow against your portfolio to buy more investments. This leverage can double your gains - or double your losses. Many investors who got wiped out in 2008 and 2020 were using margin.
Key Points
- Required for short selling, options trading, and same-day settlement
- Reg T allows borrowing up to 50% of purchase price (2x leverage)
- Interest rates on margin loans typically range from 6-13% annually
Related Terms
Common Questions
An account that lets you borrow money to buy more stocks. Risky. Margin accounts let you borrow against your portfolio to buy more investments. This leverage can double your gains - or double your losses.
Margin accounts let you borrow against your portfolio to buy more investments. This leverage can double your gains - or double your losses. Many investors who got wiped out in 2008 and 2020 were using margin.
Required for short selling, options trading, and same-day settlement
Reg T allows borrowing up to 50% of purchase price (2x leverage)
Interest rates on margin loans typically range from 6-13% annually