Thursday, June 08, 2017

Equity Management #15 : Finally managed to start margin trading today !

Once again, my Equity Management textbook is stuck in my condo but I'm staying at my parent's place tonight so I don't have any advanced equity investing ideas to share with everyone. Right now it seems that everyone has been very excited about the Sanli IPO that made some other financial bloggers very happy today.

I missed out the fun because I saved two quarters of dividend residuals to get my margin account started.

I sure hope that the most challenging part of the process is over.

As there is a decent chance that I would have to start all over again as a rookie in a new industry, I thought perhaps I need a new platform to take on some calculated bets on the stock-market. This time, I am trying to start a small hedge-fund like operation at home.

My first step upon rejoining a new workforce is this :

Build a separate portfolio that yields around $2200 per month at 10-14% yield after leveraging by 100%. This way I would only need a satellite $240,000 portfolio to offset a $500k plus mortgage. My core portfolio can generate around $2k excess savings a month and my new (and very low) paycheck can cover the rest. Because I have access to leverage, I am no longer under much pressure to hunt for yields above 8% which can be very risky. I can now include some 7% yielding REITS which have some amount of growth potential.

So, as of today, my first $10,000 has been committed to this margin portfolio - $230,000 left to go.

Here are the steps I took to get to this stage :

a) First I signed up with Maybank Kim Eng who sponsored my last talk.
b) As the accounts were set-up, I get my ID and pin from them after around 3-5 working days.
c) I figured out how to transfer money from my DBS account into my trading account and do just that.
d) The painful parts come at this stage, the money take days to clear and then lands in my cash account rather than my margin account. I contact the broker to ask him how to move the money into a margin account and act as a collateral. Without doing this, I have 0 limit to my margin trade.
e) It takes a further few days for the money to shift to the margin account. I had to contact the broker today after it has been delayed a couple of times.
f) The broker did something at his backend and I started trading at 4pm today.
g) Right now, I still can't see what's my margin because it will only update tomorrow at 9.30am.

I pushed my money into my account on 31st May 2017 and I made my first trade only on 8th June 2017. I still have some questions in my head :

a) Why can't I have a button to push my cash account into my margin account ?
b) Does the money from the bank always default to the cash account and I will need to call my broker to transfer it ?

( My margin account does have a different number so maybe I have to change the parameters to transfer the money. )

If some folks have gone through this process, please share your experiences and hacks in the comments section.

I will update everyone again next week on how things would have gone.









1 comment:

A Teoh said...

Yes, MKE pre-historic fund transfer process is annoying but I guess it's a way to get your broker to work some what. LOL.