J.Participant
Average
I’ve been successfully trading with IG for the past year and I like the broker very much. I think most people here also use IG for trading, but I was wondering if anyone uses it for long-term investing.
I want to create a long-term investment portfolio that I can hold and add to for for the rest of my life. I calculated my margin and max losses if the entire portfolio would go bankrupt or drop 60% in price, which is unlikely, but I always like to prepare for the worst. I calculated that I wouldn’t get into margin call territory until the portfolio would drop with 51.6%, but I could also reduce the sizes so I can take even more drawdown without getting called out.
Big reasons for using IG for me would be that with the margin I can get more shares for a more diversified portfolio. Also if my portfolio grows overtime I’ll still have money in my account to buy more shares with leverage.
However I could also use a broker like Degiro which doesn’t use leverage on stocks, but where I also can’t get margin called out. However my portfolio would be smaller and all my money will be tied up in the stocks.
Are you using a leverage broker like IG for long-term investing, or do you use a broker without leverage? I’d like to hear your experiences.
Buying stocks with leverage is mathematically identical to buying stocks on credit. So be careful. Interest for your stock credit is called “overnight cost” with IG.
J.Participant
Average
Thanks. I indeed saw they had overnight costs on their website.
EricParticipant
Master
Futures with automatic roll over enabled
Spread betting and trading CFD’s is a short term way of betting the market. Overnight fees can make this a very expensive way of long term investing/betting. Long term investing is better done by buying a stock or a range of stocks (usually via exchange traded funds) through a broker and paying a fee to buy and a fee to sell for each of them. Managed funds to do this for you come with additional fees that can make them a very long term hold and not necessarily perform any better than doing it yourself via ETFs.
My point is that there are many investment tools and spread betting is not a cost effective one for long term investing.
My best ever long term investment was buying a market via an ETF several years ago both for the gain in value and the dividends. My best ever short term investment was via spread betting markets for a few days.
Investing is like engineering – you need to choose the right tool for the job… and if you don’t know how to use the tools then pay someone else to do the job.
