What is margin? Margin lending is a flexible line of credit that allows you to borrow against the securities you already hold in your brokerage account. When used correctly, margin loans can help you execute investment strategies by increasing your borrowing power to purchase more securities. It can also serve as a source of flexible borrowing for other short-term financial needs.

"Investing and trading Margin loans can increase your trading flexibility, allowing you to act on market opportunities when you don't have enough cash on hand. ."

Example: Dan is an investor who closely follows the technology sector. His research showed that a tech stock trading at $10 a share has upside profit potential. With only $1,000 of uninvested cash remaining in his account, Dan was able to purchase 200 shares on margin rather than just 100 shares if he had used cash.

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Short-term financial needs A margin loan may be an attractive solution to meet short-term financial needs that are not related to investing. Example: After injuring his leg while skiing, Mark needed surgery. Having fully invested his portfolio earlier in the year, he didn't want to liquidate his recently purchased shares to pay for this unexpected medical expense. After exploring other financing options, Mark determined that a short-term margin loan would be the best option.

How do margin loans work?
Depending on the type and value of securities in your account, brokerage clients who are approved for margin use can use it to potentially purchase additional shares of securities than could be purchased using the available cash in the account. However, the more you borrow, the more risk you take on. Interest accrues daily and your rate depends on your loan balance and your broker's base rate. To begin borrowing at The West Financial International Bank (WFIGO), your account must contain at least $2,000 in cash or marginable securities. View more important information about margin loan requirements at The West Financial International Bank (WFIGO).
To better understand how margin loans work, let's take a look at a hypothetical example showing both gain and loss scenarios, with and without margin. (For simplicity, we've excluded trading fees, taxes, and interest.)
You purchase 100 shares of a stock at $50 for a $5,000 total investment. If the value of the stock you bought goes up to $70 and you decide to sell, your portfolio is worth $7,000 and you gain $2,000.
If you purchase an additional 100 shares by borrowing on margin, your total portfolio is now worth $10,000. With the 100 additional shares you bought on margin, your total portfolio is worth $14,000 (200 total shares times $70 price). If you decide to sell at this point, you still have to pay back the $5,000 loan, but your gains would be $2,000 more than if you had only used your money instead of margin.

Profit without margin: $2,000
Profit with margin: $4,000
If the value of the stock you bought drops from $50 to $30 and you decide to sell, your portfolio is worth $3,000 and you lose $2,000.
If you purchase an additional 100 shares by borrowing on margin, your total investment is $10,000. With the 100 additional shares you bought on margin, your total portfolio is worth $6,000 (200 total shares times $30 price). If you decide to sell at this point, you still have to pay back the $5,000 loan, leaving you with $1,000 and a $4,000 loss.

Loss without margin: $2,000
Loss with margin: $4,000

Trusted education
Access educational resources to learn more about margin and how it might fit into your investing strategy.

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Competitive rates
Our competitive margin interest rates can make margin borrowing more cost-effective than other lending options like personal or unsecured loans. Scheduling icon
Flexible payment schedule There is no set repayment schedule as long as you maintain the required level of equity Tooltip in your account. Computer icon All in one place As a The West Financial International Bank (WFIGO) client, you can manage your margin loan alongside your investments and other finances in a single, convenient location.