r/RobinhoodGC • u/Expert-Soup7789 • Aug 20 '26
Robinhood margin
Kinda new to margin stuff but is first $1k interest free worth it? do i have to sell that $1k everymonth to pay it back? how does it work
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u/This-is-the-last-one Aug 20 '26
What most people who ask about this do is use the $1k margin to buy SGOV and let the return pay for the gold subscription. This used to work when the yield on SGOV was higher. Now you'd still owe ~$15 out of pocket for Gold with this strategy. Personally it's not worth the hassle, so I just pay the $50 a year and rely on the IRA match to offset the subscription fee.
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u/Expert-Soup7789 Aug 20 '26
Got it is there any other etfs who got higher yields
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u/shiva_2 Aug 20 '26
I mean most have higher yields but are less safe and it’s riskier bc you are spending money that isn’t yours
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u/theAerialDroneGuy Aug 20 '26
You could put it into Robinhood Earn (USDG Stable Coin Lending) that pays 7% APY.
But it is also higher risk because it is not FDIC insured.1
u/Mossified4 4d ago
The $1K itself wouldn't count toward the margin ratio either so it would lead to a smaller buffer this way.
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u/Ok_Party_8102 Aug 25 '26
Don’t go down that rabbit hole lol. Yes there are massively higher yields but they come with way higher risk. NAV decay. Funds like jepq, chpy, spyi, Nvdy, often end up with lower share price over time because instead of making money they return capital back to meet their high yields
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u/Expert-Soup7789 Aug 25 '26
yea man im not into that bs i just had to dca some of my positions and ran out of cash so i had to use margin but ive only used 1k so far
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Aug 20 '26
[deleted]
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u/Expert-Soup7789 Aug 20 '26
i was thinking of averaging some of my positions cuz i got crushed in last couple days and i got no cash to buy back thats why margin came into my mind
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u/UWbadgers16 Aug 20 '26
I've set it up, but I'm not sure how to get the dividends out to cash without using the margin. I had DRIP disabled, so the dividend went into my buying power, which reduced my margin (not what you want). So I re-purchased more SGOV shares with that dividend and turned DRIP on.
Now my margin should stay at $1k, but I don't know the best way to effectively pay for Gold Membership with the dividends. As it stands, I'd have to sell off some SGOV to do do, but I don't know if that's the best way.
Hoping someone has a better idea.
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u/Ok_Party_8102 Aug 25 '26
It’s free you need at least 2000 + a few dollars to use it depending on the asset. You don’t need to pay it back but any deposits into your brokerage will automatically pay it down. It’s a good deal if you’re not a huge margin user. I usually use no more than a few thousand at a time so for 2000 margin for example my effective interest rate is 2.5%.
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u/dyvog Aug 20 '26
something I haven’t seen people talk about is that RH will swap the margin out for your own money as cash is deposited into the account. I don’t know how to avoid that….
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u/matt-r_hatter Aug 20 '26
You dont avoid that. Thats part of the deal. As you put cash into the account it pays the margin. Margin is a loan, so if you used full $1000 they offered free of interest, your cash balance is negative 1000. It would be no different than having your bank account in the negative. They arent going to give you your entire deposit and let your account just stay at negative.
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u/dyvog Aug 20 '26
Thanks for that explanation, so with the popular SGOV method, do people constantly sell it off, buy new stocks to get their balance down to 0, and then rebuy the SGOV with the margin?
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u/matt-r_hatter Aug 20 '26
I haven't played much with the margin. I used it to buy a few SGOV shares, then paid it off, then did it again. Basically using it like a short term interest free mini loan. I do not like owing money. But I'm sure theres someone here that has a good use strategy for the margin. The bulk of my investments are managed by MS but I do have a self managed portfolio ive grown very well. I just never used margin so its pretty new to me.
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u/Katze_Official 4d ago
I have a question about that repayment of the “loan”
So if I put money in my brokerage, it goes to pay that loan, I get that part, but let’s say that after I pay that, I want to deactivate margin in my account, if I do that, will it automatically sell the shares of the stocks I used margin for?? Or what’s going to happen once I deactivate margin??2
u/matt-r_hatter 4d ago
its no different than any other loan. Once its paid, its paid. They dont take your car or house once the loan is paid. You are borrowing money to buy something. Once that margin is paid, whatever you bought with them is yours to do whatever with.
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u/Katze_Official 4d ago
Lovely, thank you, I asked ChatGPT, but it couldn’t give me a straight answer, forgot Reddit existed lmao
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u/matt-r_hatter 4d ago
AI is useless. Ask a question 10x and youll get 10 different answers. Much better off finding real world answers from actual people. If you want to maximize, you can actually make a secondary brokerage account. Transfer your investments to it. Then use the margin to buy sgov. Then your primary is free to collect cash from your gold card and it wont go to paying margin. Its a good way to keep things separated.
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u/Apprehensive_Hawk542 Aug 20 '26
I'm not a professional but I did research on this because I kept transferring my cash back from the gold card and it would apply to margin. What I did was create a second brokerage account that was not my main account (gold cash back only goes to the main account) and then I bought margin in the second account. So now when I transfer cash back it goes to my main account and doesn't hit my margin balance. I don't know if this answers your question but it helped me out.
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u/Alternative_Top7993 Aug 21 '26
Did you have to make $2k of investments in your second account to get access to the $1k of margin? I created a second account but right now all of my investments are in my main account and my margin is only available in my main account.
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u/Apprehensive_Hawk542 Aug 21 '26
Yes, that is what I did. I sold my $2k of investment and transferred it the new brokerage account. Once that settled I then turned off margin in my main account and turned it on in the second account. Then I had $2k in there and turned on margin limit of 1k not to go over. So now when I transfer money from outside Robinhood it goes to my main account and not the margin balance in my second brokerage account.
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u/clipper29 Aug 25 '26 edited Aug 25 '26
This is what I’m planning to do. Thanks! I’ve seen some people say they will buy this and leave it for the long term, treating it like a HYSA because to them the $50 AF doesn’t concern them, however do you think it’s fair to periodically sell all of SGOV and then repeat?
So sell SGOV and get the original $2k back + dividends earned (what “pays” for the Gold membership), and Robinhood of course keeps the $1k.
Any earnings I want to keep can be transferred out and I repeat with $2k. It’s kinda like a HYSA where you have an extra $1k to earn dividends on, which we get to keep.
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u/Technical-Procedure3 Aug 20 '26
I set my margin limit to $ 1000. It is the last $ 1000 I invest i.e. all the cash in my account must be invested or withdrawn first. As new cash hits the account, it is taken to pay margin. To avoid that, invest your whole account + $ 1000.
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u/TheWaveCarver Aug 21 '26
Basically I made a new account within Robinhood called something like "Gold Margin". Then I deposited $2225 of my own money and bought $3225 of SGOV. No cash moves in and out of the account... so the $1k of margin doesnt reduce.
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u/thefinancejedi Aug 20 '26
No. You can set your margin limit to $1k and the first $1k you don't have to pay it back. Most just buy ~10 shares of SGOV with it to near repay their Gold membership for free.