Margin is a term used to refer to money borrowed from a broker or dealer to purchase securities. The purchase of shares in such a fashion is known as buying on margin.
The main cost involved with this investment strategy is interest on the money you borrow. And of course, when you sell a security that you’ve bought on margin, you must first pay back the loan from your broker.
The main risk of buying stocks on margin is that it increases your leverage. Leverage works two ways: It magnifies your profits when the market moves in your favour, but it magnifies your losses just as effectively when the market moves against you. That’s because the amount you owe on your investment loan stays the same, so every dollar your portfolio loses comes out of your equity.
Margin buying can help you cut your tax bill. That’s because you’ll be able to write off your margin interest in full against ordinary income in the current year. At the same time, you’ll pay less than ordinary income-tax rates on dividends from Canadian stocks. If you buy qualified Canadian stocks, you’ll pay taxes on dividends you receive at a rate that is well below the rate you pay on ordinary income. This tax break alone—getting a full deduction on your interest costs, and paying a lower tax rate on dividend income—adds appeal to margin investing.
All in all, we feel you should focus your efforts on long-term investing and building a well-balanced portfolio—and to do that, follow TSI Network and use our three-part Successful Investor strategy:
The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada, on TSI Network. Claim your FREE copy right now!
On October 16, 2023, the old NCR Corp. (New York symbol NCR) completed its plan to split itself into two separate firms. One (called NCR Atleos) will focus on ATMs, and the other (called NCR Voyix) will focus on digital commerce businesses.
Investors received one share… Read More
Under pressure from the federal government, Canada’s leading grocery chains have agreed to a series of measures to lower prices for consumers. Those include discounts, price-matching campaigns, and price freezes. The government is also looking at ways to get food producers to lower their prices.
We… Read More
A: Celestica Inc., $36.34, symbol CLS on Toronto (Shares outstanding: 112.5 million; Market cap: $4.2 billion; www.celestica.com), is a contract manufacturer that makes various electronic devices on behalf of other companies.
Celestica has two operating segments: Advanced Technology Solutions (41% of revenue) and Connectivity & Cloud… Read More
The re-opening of the world’s economy in the wake of the COVID-19 lockdown spurred strong demand for building construction services and infrastructure projects. Here are three high-quality stocks to help you benefit from it.
CARRIER GLOBAL CORP. $55 is a buy. The company (New York symbol CARR; Conservative… Read More
TOTAL HELIUM LTD., $0.43, symbol TOH on the TSX Venture Exchange, aims to become a significant producer of helium. Its focus is now on a recently acquired interest in the Pinta South helium field in Arizona.
In March 2023, Total Helium announced that it had entered… Read More
INTERNATIONAL FLAVORS & FRAGRANCES INC., $64.27, New York symbol IFF, remains a buy for long-term gains.
The company makes chemical compounds that improve the taste of food and the smell of consumer products.
On February 1, 2021, IFF merged with the nutrition and biosciences business of DuPont (New… Read More
PFIZER INC., $35.02, New York symbol PFE, remains a buy.
The company is one of the world’s largest makers of prescription drugs. Its top-selling brands include Enbrel (arthritis), Ibrance (breast cancer) and Prevnar (pneumonia).
Sales in the three months ended June 30, 2023, fell 54.1%, to $12.73… Read More
Automakers are shifting away from traditional internal combustion engines to battery-powered electric vehicles (EVs). Global sales of EVs will probably increase from 14% of all vehicles sales in 2022 to 18% for this year. That could hit 60% by 2030.
To take advantage of the trend,… Read More
With all the TSX ETF investments available, it’s not too difficult to diversify your portfolio. Here’s how.
There are hundreds of ETF opportunities on the Toronto Stock Exchange (TSX) sponsored by investment managers like BlackRock Inc., BMO Asset Management and Horizons ETFs Management. The best TSX… Read More
A: CF Industries Holding Inc., $61.57, symbol CF on New York (Shares outstanding: 194.9 million; Market cap: $12.3 billion; Resources sector; TSINetwork Rating: Average; www.cfindustries.com), produces the chemical compound ammonia as a fertilizer as well as other fertilizer products. It has the world’s largest and… Read More
Learn everything you need to know in 'The Canadian Guide on How to Invest in Stocks Successfully' FREE Special Report from The Successful Investor.
How to Invest In Stocks Guide: Find 10 factors that make your investments safer and stronger.
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