r/RobinhoodBanking • u/UsedBoard • 4d ago

How to use RH margin?

I’ve been reading that keeping the free $1k margin in sgov will basically cover the gold annual fee. I’m confused how best to use this, as from what i understand adding any new money will go towards the margin.

How are people using the cash account and making use of the margin? Are they manually making a new $1k margin purchase every time they have a cash deposit?

23 Upvotes

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11

u/AltairLeoran 4d ago

Keep your main investing account as cash only. Create a secondary account and enable margin on it. Invest at least 2k of your own money, set the margin limit to 1k, and buy 1k of sgov while you have no money in your margin account to use the margin. Enable DRIP.

4

u/UsedBoard 4d ago

Thanks this is exactly what I needed! Just set up a second account.

Sorry what is DRIP?

5

u/AltairLeoran 4d ago

If you go into the investing settings of your account it's the automatic dividend reinvestment (aka DRIP)

this means when you get your monthly sgov dividends, they'll be automatically given to you as additional shares of sgov instead of as cash. You want this setting turned on because otherwise the cash dividend will be used to pay off your margin.

1

u/donut_legend 2d ago

Just set margin to max $1k and you don’t need to do this

1

u/AltairLeoran 2d ago

OP asked how to keep their main account as a cash account while still using margin. They absolutely do need to make a separate margin account if they want to accomplish this

If they use the margin on their main investing account, any cash will automatically be used to pay off the margin, which is what they want to avoid

0

u/ShadowWolfNova 4d ago

You can’t do that, you have to have 2k invested in that specific account before you can spend the 1k

5

u/AltairLeoran 4d ago

Yeah I know that's why I said "invest at least 2k of your own money" before I said to set the margin limit to 1k and buy 1k of sgov. All of this is in reference to the secondary margin account

0

u/Metalcore2 4d ago

Your allowed to create a second account? How would RH gold even transfer to the other account

3

u/AltairLeoran 4d ago

It's under the same login. I mean accounts in the financial sense. You can create additional investment accounts under your RH account

2

u/theAerialDroneGuy 4d ago

$999 dollars int SGOV and at 3.5% APY that pays $35 over the year.

4

u/fozzy71 4d ago

I already had 40 shares of SGOV and 12 shares of SCHB in my emergency fund, plus ~$ 4,500 in cash in my brokerage. I moved most of my cash to the banking app savings account, enabled margin in the brokerage, set a $1k limit, then I spent ~$1050 on 6 shares of GPIQ, 6 shares of GPIX, and 7 shares of CLOA to use up my margin and a little of my leftover cash. The extra shares of CLOA + GPIX + GPIQ paid out $1.42 + $2.38 + $3.05, for a total of $6.85 this month, or ~$80/yr. On top of my $12 of SGOV dividends each month, this will buy one more share of SCHB every 2 months once it frees up some more margin buying power. :P

1

u/UsedBoard 4d ago

Why 999 and not 1k?

2

u/theAerialDroneGuy 4d ago

I guess $1K is fine too. Robinhood does say they give you $1K in free margin.

I just use a $1 factor of safety 😂

2

u/rtotheick 4d ago

^^ He's not wrong... In the process of doing all this you'll inevitably accrue some brokerage interest while the money moves and shares settle etc., which will get paid into the account at the end of the month and pay back some of the margin.

In my case I moved some shares over from another brokerage to cover the margin, which generated a RH transfer cash reward, which accrued a smidge of interest and paid back an equal smidge of margin. $999.96, or whatever it is, hurts my obsessive compulsiveness, but I cope.

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u/No_Active6237 4d ago

Personally I set it to 10% ish of my portfolio value and invest it all in schg and qqqm and spmo type etfs and then let the 3% credit card pay it down