6 Unique Benefits Of Having An Axos Invest Margin Trading Account
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July 30, 2024 08:45 AM Eastern Daylight Time
By Gerelyn Terzo, Benzinga
If you’ve been investing for a while and are ready to take your portfolio to the next level, margin trading could be for you. Trading on margin is a strategy available to qualifying investors that offers many advantages. Chief among the benefits is an opportunity to increase your buying power.
Without margin, you’d be limited to investing with your account balance. With the addition of margin, you gain access to borrowed funds based on the amount of cash and equities in your account. This loan, known as leverage, allows you to purchase more securities than you otherwise could without selling holdings or getting cash elsewhere. Yet another benefit of a margin account is not having to miss out on market opportunities for lack of liquidity.
Everything is amplified with margin, including both potential rewards and risks. That’s why it’s so important to choose a platform that’s out for your best interests, like Axos Invest. Axos Bank was also recently named to the 2024 Forbes America’s Best Banks list in what was an otherwise tumultuous year for financial institutions.
If you are interested in margin trading, Axos Invest offers many benefits that allow you to get the most out of this strategy, including the following:
Low Cost
One of the critical features of a margin account to grasp early is the interest rate. This represents the rate at which you pay interest on credit extended by Axos to buy, carry or trade securities. Transparency is key to avoiding surprises down the road.
This is where Axos Invest shines. It offers low-cost, flexible rates with zero hidden fees, all of which are published on the company’s website. Standard rates are commensurate with debit balances: the higher the balance, the lower the rate.
At Axos, your margin rate stays constant whether you’re buying securities or borrowing cash with a line of credit. Axos also offers an Elite program through which qualifying members are eligible for lower margin rates.
Flexibility
One of the key advantages of a margin account is that it gives you more power to chart your destiny. The nature of margin means you only have to deposit the amount you want to invest in a stock or ETF as collateral. The rest is fronted by the broker in the form of leverage, or a loan. At Axos Invest, you can borrow up to 50% of your eligible equity.
Let’s use an example. Say you have $10,000 in a standard cash account with your broker. If the stock you want to buy is trading at $100 per share, you can afford a maximum of 100 shares.
Now, let’s say you’ve got $10,000 in a margin account, including the value of equities. Your broker will lend you more funds, say an additional $5,000, increasing your buying power to $15,000. With the loan from your broker, you can now afford $150 shares. If the stock rises to $120 per share, you may choose to sell your holdings, repay the loan, and pocket the rest minus any fees or interest.
At Axos, you gain access to a universe of stocks and ETFs from which to choose. Plus, considering the time-sensitive nature of the markets, 100% of borrowed funds are available within 24 hours. Additionally, you can use any mutual funds you own to harness more borrowing power. As long as you’ve held the funds in your account for a minimum of 30 days, you can use them to bolster the size of your portfolio and thereby your borrowing capacity.
Options Trading
Another benefit of having a margin account is the opportunity to trade options. There are different ways to use a margin account to participate in options trading, depending on the broker. Margin requirements for options contracts vary from broker to broker.
Trading options on margin isn’t for the faint of heart, as it’s not quite as straightforward as buying stocks. It’s typically reserved for more sophisticated investors. That’s because a margin account allows you to harness more complicated options strategies that are accompanied by greater risk. Axos is among the platforms that let users trade options with a margin account and also offers Elite members a 20% discount upon approval.
Diversified Portfolio
It’s easy to get stuck in a rut with your portfolio, sticking with a single stock or sector. Margin trading allows you to explore more securities so that you can diversify your portfolio. A more diversified portfolio increases the chances that strong performance in one asset can offset any temporary setback in another. The best part is since you’re investing with a loan, you won’t have to sell your original holdings to achieve portfolio diversification.
Loans are Available
Once you’ve received the green light for a margin account, you’ll find it extremely convenient to move your funds from account to account. This means you won’t have to worry about completing paperwork every time you need additional access to funds. If you find yourself in need of a sudden cash injection, your Axos margin account can serve as a short-term line of credit, allowing you to transfer funds to various Axos accounts.
Customer Support At Your Fingertips
If you’re a novice investor, trading on margin might seem out of reach for you. Everybody has to start somewhere, and even experienced investors shouldn’t be afraid to ask for help. Axos Invest has a team of licensed relationship managers available to help you with your margin trading journey. The best part is these representatives are available to speak with you at no cost and for zero commission.
Embrace The Margin
Having a margin account opens up a world of opportunities for savvy investors looking to potentially bolster their returns. Axos checks all the boxes for investors ready to take their portfolios to the next level. Don’t hesitate to contact Axos Invest today if you are ready to embrace all the benefits that a margin account has to offer.
Featured photo by nattanan23 on Pixabay.
Benzinga is a leading financial media and data provider, known for delivering accurate, timely, and actionable financial information to empower investors and traders.
This post contains sponsored content. This content is for informational purposes only and is not intended to be investing advice.
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