Margin Usage
After reading this article I am curious as to how the PFBlog readership uses margin loans outside of security buying.
Anyone use a margin loan rather than a HELOC or maybe for college tuition? How about to pay down higher interest debt?
On the one hand I guess it's good to use margin because in order to do that you have to have solid taxable savings. That assumes, of course, that you are not neglecting your tax-advantaged savings to get there.
I think you've got to be careful to borrow for only critical needs in this fashion, or only for short term needs where you know you can pay back the loan. A large margin loan for purposes other than investing really represents a mortgage against your savings. It's basically like a secured credit card, but with the bonus of no credit score impact.
Personally, I use margin only as overdraft protection because my brokerage (Fidelity) is my primary checking account. Otherwise I don't think I'd use this avenue to heavily.
Do you?
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