> Margin > Benefits & Risks

What is a Margin Loan?

It is additional buying power that the investor can borrow using his investment portfolio as collateral. This loan can be used to buy additional investments, thereby increasing the opportunity to magnify returns.

Advantages of Margin Loans

  • Increase potential returns
  • A magnified ability to capture arising opportunities in the market
  • Increase the buying power of the client

Risks of Margin Loans

  • Financing costs
  • Higher volatility and investment risks
  • Subject to margin calls or liquidation if the value of investments declines below a predetermined value
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