International International equities - slightly more complicated foreign exchange question

Discussion in 'Shares & Funds' started by BingoMaster, 6th Jul, 2016.

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  1. BingoMaster

    BingoMaster Well-Known Member

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    ....whaaaaat? Wow, thats so cheap! Best I've seen here is 4.7% on a limited list of ASX stocks, and most margin loans are around 7%.

    I noticed your location is Barcelona - is this why you get it so cheap, are margin loans cheaper in Europe? Do you think Interactive Brokers would they provide this rate if you were a resident of Australia?
     
    Last edited: 6th Jul, 2016
  2. BingoMaster

    BingoMaster Well-Known Member

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    Last edited: 6th Jul, 2016
  3. Casteller

    Casteller Well-Known Member

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    Wow that sounds dodgy.. like fair-trading corruption. Margin loans in Australia historically a rip-off. Interactive Brokers are very international, not restricted to EU, I opened the account when I lived in Switzerland. The rate is so low because it is in GBP. In AUD about 1.25 % higher. In Swiss francs the rate is only 1%. They also have a system of internal cross margining which can reduce margin requirments according to different positions you have (e.g something might be a hedge). Interesting to me because I used to work in the area.

    Margin loans are generally much safer for the lenders than property loans also since they can be liquidated in a few seconds, rates higher than property mortgages do not make sense, although volume probably affects pricing also. I actually used the IB margin loan to buy a property in Spain since getting another mortgage here was too much hassle so I just withdrew equity from IB at 1.97%. I have had a margin loan in Australia for 22 years but it has a balance of zero the last 7 years since I moved to interactive brokers, I will close it soon.

    Nothing funny about the loan otherwise, I just buy standard FTSE high dividend stocks and funds.
     
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  4. BingoMaster

    BingoMaster Well-Known Member

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    Thanks for the response :) I am definitely going to look into this. I wonder if I need citizenship in a foreign country, or just a bank account...
     
  5. SatayKing

    SatayKing Well-Known Member

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    A big thanks to CSL. Will offset my OS trip costs somewhat. Also a Ta to those LIC's which have CSL in their holdings.