BCE Inc T.BCE

Margin

[Newinvestor4562]

Would purchasing more shares of BCE using a margin account be considered too risky? I currently get charged about 5%, with a dividend yield of 8.7% I would be making a profit just holding the stock. Would anyone consider this themselves? Thanks

[nedstar71]

Where are you getting a margin interest rate of just 5%?  Seems quite low, I think TD is currently 8%.

[Newinvestor4562]

With Interactive Brokers. Currently they charge 5.097% for loans of $1.3 million or less, and then the rate goes down a little if you are borrowing more. But they charge one penny per stock per transaction (at least with the settings I have). You can find all of their rates on their website. Click on pricing, then click on margin rates, then look up which currency you are using.

[Newinvestor4562]

They also pay interest on money sitting in your account that is not being used, and the rates are higher than what savings accounts pay in Canada.

[nedstar71]

Interesting thanks

[Newinvestor4562]

You are welcome

[Quintessential1]

Using a margin account for anything is risky. It is even riskier if you're not sure.  I would say a margin is great plan if you're practically rock solid certain about your investment. That would be blue chip dividend payers and even though BCE has been considered one...is it? It used to be but just to gauge your own certainty ask yourself what level did you buy at and what level

[Newinvestor4562]

Thanks a lot for your input Quintessential1. I orginally purchased a ton of BCE at $48.20. My idea was that I could purchase some shares while they are selling at a cheap price (at least it seems cheap to me) and I assumed that the price would rise, especially near the ex-dividend date. If not I could sit back and collect the dividends in the mean time.

[Red_Deer]

""Now ask yourself how would you like to be paying interest on a margin account stock that is underwater and not covering the interest?"" Hey QUINT__Gotta KEEP in MIND That ALL of the Margin INTEREST is 100% Tax DEDUCTIBLE So WHAT This MEANS in Practice For Me IS That THOUGH I AM Getting CHARGED Prime Rate @ 6.45% on my ITrade Margin Account__AFTER TAX in the TOP Tax Tier I

[Newinvestor4562]

Hi Red_Deer, could you please clarify this for me? If I am paying 5.119% using margin with Interactive Brokers, would this mean that after tax I would only be paying about 2.119% in interest? I am new to this, thanks

[Red_Deer]

Hey NewInvestor__Your AFTER TAX Interest Rate is Dependant Upon YOUR Tax Bracket__There are 5 of Them__I am in the TOP BRACKET. The HIGHER the Tax Bracket YOU Are IN__The LESS After Tax Interest You Will Pay In Other Words the Higher Your INCOME is__The HIgher WILL BE the $$$$ Value of Your DEDUCTION of 100% Interest Paid Hope this HELPS a Bit eh ???

[Newinvestor4562]

Thanks a lot Red_Deer, I will look into this a little more!

[Red_Deer]

Hey NewInvestor__IF You are in BC__AND You are in the TOP TAX BRACKET THEN Your AFTER TAX Interest Rate Would be 2.38% IF You are in OTHER Province And/Or are NOT in the Top Tax Bracket__THEN Your Interest Rate WOULD Be MORE Than 2.38%

[maplak]

Next time before you ask this kind of questions " introduce " yourself. It would be easier to answer.  Examle: I own about 22 different dividend stocks more less all sectors, some GIC, some mutual funds, potential rental properties etc and retired. So if I would buy BCE on margin and something would go wrong not much would happen. To buy only BCE on margin is very risky. I

[Ocalaman]

Think about it , if you have to ask complete strangers if an investment is too risky using money that you don't have , it's probably more than risky  risky !