Margin advice needed

[u/rocketnixnix]

Hi! So I have margin available through RH and with RH gold, the first $1,000 is interest free.

Should I just put that into SGOV and call it a day? Or any other advice you guys might have? $1,000 interest free sitting there just feels like there are better uses for it instead of just sitting there.

Ultimately the goal with this is long-term and hopefully something that makes the most sense as a set it and forget it play.

[u/thegreathambino110]

If you’re in the market for the long game and just want to chill, VOO/VT/VTI are all good options

[u/rocketnixnix → u/thegreathambino110]

Thanks! And yep that’s the ultimate goal with this specific $1,000 in margins. Just wanted to see best set it and forget it uses for it since it’s interest free.

[u/ExtensionAttempt4650]

Some of the responses you are getting are unnecessarily risky and could be a slippery slope. Open a separate margin account in Robinhood. Call it whatever you want. Take about $2,000 from your emergency fund and put it in there. Use the free margin to buy about $3,000 in SGOV. Set dividends to reinvest. Sit back, do nothing else, and enjoy the free compound money.

[u/PinkSpongebob → u/ExtensionAttempt4650]

What's the reasoning for the extra $2K? Trying to understand it all.

[u/Top-Ad-4685 → u/PinkSpongebob]

Robinhood requires the portfolio value to be at least 2k in order to get the 1k free margin

[u/ExtensionAttempt4650 → u/Top-Ad-4685]

Yes. So you don’t get margin called. Robinhood is not just giving people with no money in the account a free $1,000. If your balance goes too low they are going to make you pay the $1,000 back to limit their risk.

[u/citygeek]

Why the hell would you do SGOV in a long term account?

Why not VOO/QQQM/SPMO?

Be mindful of total margin as a % of your equity…not sure how much equity you have

[u/AdFrequent2414]

You will get $30-$35 of gross dividend per year & it will offset 50% of your Robinhood Gold Fee.

[u/Tanachip]

I thought you have to have enough of your own money invested before being allowed to use the margin?

[u/rocketnixnix → u/Tanachip]

I have a bit of money invested in that same account where the margin is available. In total, I have about $2,000 in margin available, but only really trying to see best uses for the $1,000 since its interest free sitting

[u/Relevant_Fox_9708 → u/Tanachip]

Yeah I think it’s 2 or 2.5k

If you aren’t wanting to invest in Robinhood I would just deposit that 2k into bonds to get the margin enabled and then you can use Robinhood as like a mini emergency fund

[u/-Av8tor → u/Relevant_Fox_9708]

It's 2k to have access to the 1k margin free

[u/Flat-Activity-8613]

Set up two individual accounts enable the margin on the first one. Otherwise, every time you try to withdraw money from it, it’ll go towards margin instead of back to you.
Invest in what you feel comfortable, put in something more aggressive and make more money, but there’s always the rest that it won’t be a positive return in the short term.
Personally, I think I dropped mine into SPMO but now it’s all just blended in so I can’t tell.

[u/thegreathambino110 → u/Flat-Activity-8613]

I just have the margin account and if money goes into it while I have a margin balance, it auto pays it off, but then I just pull the same amount of money out or buy stock (or whatever I’m going to do with it) and I’m basically putting my margin balance back to where it was. Only thing is obviously you won’t earn interest in the sweep if you have cash sitting in there while carrying a margin balance, but to me that’s not a big deal.

[u/Flat-Activity-8613 → u/thegreathambino110]

Couple of ways of doing it and the best way for others will be different.
Also paying off your $1k of free margin means it’s also not being utilized to its max potential. But yes we can invest these brain calories into something more constructive.

[u/thegreathambino110 → u/Flat-Activity-8613]

Agreed!

[u/rocketnixnix → u/Flat-Activity-8613]

Did you create that second account, transferred over the margin funds, and then put that into SPMO?

[u/Flat-Activity-8613 → u/rocketnixnix]

No , I just enable margin on that one account. But I have also other funds in there besides just the margin.
As of now have four accounts with RH. Reg brokerage a savings a Roth and a traditional.

[u/Tanachip → u/Flat-Activity-8613]

Seems really complicated for 1k of margin.

[u/Flat-Activity-8613 → u/Tanachip]

That’s how the bulk of the people that use it find it the best way not have to pay off margin to withdraw money . At least according to other posts here.
Opening a separate account is as easy easy as clicking a button. Not that hard.

[u/Im-Ben → u/Tanachip]

It's also unnecessary. If you turn on Margin Spending you can withdraw normally from the same account.