Welcome Guest ( Log In | Register )

Bump Topic Topic Closed RSS Feed

Outline · [ Standard ] · Linear+

 LYN stock market FAQs & Guide, T+3, Dividends, commissions/fees, etc...

views
     
darkknight81
post Mar 22 2010, 01:55 PM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


QUOTE(mopster @ Mar 22 2010, 02:18 PM)
Further to this example,
when KLK declares a Interim dividend 10sen Single Tier..

does it mean my divvy cheque will be nett 10sen and not 10sen-tax ? plz enlighten..  notworthy.gif

so in another way i can treat SingleTier and TaxExempt dividends the same ? as in the amount they declare is the amount we get, no need to consider anymore taxes.
(i'm aware that in actual fact they are totally different things)
*
Single tier = tax exempted dividend.
darkknight81
post Jun 7 2010, 10:06 AM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


I want to understand more about MARGIN ACCOUNT.

As what i understand CIMB margin account is BLR - 2%

So if let say if market downturns. I can leverage up to buy dividend stocks with good yield around 8%. Sounds not bad to me.

Correct me if wrong. Thank you.


darkknight81
post Jun 7 2010, 01:38 PM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


QUOTE(cherroy @ Jun 7 2010, 11:48 AM)
The always fear is the underlying stock price going down, which being margin call.
*
Er. not really know what is margin call. Should be some sort like force sell if the stock price drops within certain percentage right?
darkknight81
post Jun 7 2010, 01:56 PM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


QUOTE(cherroy @ Jun 7 2010, 02:51 PM)
For eg.

You have ABC stock use as collateral for the margin at Rm1.00, which give you 90% margin aka you can borrow RM0.90 or you have used the Rm0.90 to buy xyz stock.

But ABC stock now drop to Rm0.80
RM0.80 x 90% = RM0.72

Either you top up the margin call, aka put cash in the account the differentiate 0.90-0.72 = RM0.18
or face the consequences to force sell the xyz stock.
*
Ic. CIMB gave me RM 200K collateral margin. So that means if i only use RM 100k OF BORROWINGS. It gives me more margin right?

Take for example,

ABC stocks dropped from RM 16.00 to RM 12.00. So i use my margin account to buy 100 LOTS which is RM 120K. Since my collateral margin are RM 200K. So I ONLY USE RM 120K out of RM 200K. Let say ABC stocks dropped to RM 8.00 which worth only RM 80K. So that means i have to make RM 40K payment?

This post has been edited by darkknight81: Jun 7 2010, 02:07 PM
darkknight81
post Jun 7 2010, 02:31 PM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


QUOTE(cherroy @ Jun 7 2010, 03:25 PM)
As long as you don't max out your margin, then there won't be margin call or force sell.

That's why we see some fierce selling when some stocks limit down or drop severely time, as brokerage need to force sell those stocks in the margin account to meet the margin call.

Collateral margin condition can vary from broker house and individual specific issue as well.

Margin call is to protect them (brokerage house) as whenever value of stocks sold cannot repay your existing borrowing
*
Ok. It sounds to be a good tools for leverage especially those dividend counters which can provide at least 8% dividend yield and above as long as you don over max your margin account should be fine already with BLR - 2% which is around net interest of 4% only. Don you agree Cherroy Sifu?
darkknight81
post Jun 7 2010, 03:00 PM

$$$$$$$$$$
*******
Senior Member
3,944 posts

Joined: Jul 2008


QUOTE(cherroy @ Jun 7 2010, 03:41 PM)
You need to see the market condition as well.

If market is under bearish tone and expected to be prolong, it is not a good ideal as well.
It is a good leverage tool when market is deep down and expect to rebound soon.

Some roughly timing is ver important for the leverage to be successful.

Also, bare in mind, broker house can cut the margin given when market condition is not favourable time.
While some stocks may be out of margin account consideration, if the stocks fundamental deteoriate.

You won't get net 8%, after deduct tax issue.
so, roughly realistic about 6%
BLR now 6.05% -2 = 4%

So you are leverage to gain 2% out of it, without consideration of stock price movement.

But we know stock price swing more than 2% easily.

So the most important aspect is to look for the stock entry price, which is the most important factor for the leverage to be successful.
*
Yes. Entry price determine the sucess of marginal account. I will invest every cents i receive from my dividend to buy stocks which provide me yield more than 6% at the moment at least it is better than savings in FD. That means i don want to keep cash. Whereas, when market crash only then i will use margin account to buy dividend stocks at great discount with 8 % yield and above.

I think this should be quite save. Take for example i have annual dividend of RM 25K. Let say i took up margin acccount of 100K during market crash i can easily pay off my debts within 4 years. Taking into considerations the extra dividend i can receive from margin account.

Thanks again Cherroy Sifu for your explanation.

Topic ClosedOptions
 

Change to:
| Lo-Fi Version
0.0208sec    0.45    7 queries    GZIP Disabled
Time is now: 3rd December 2025 - 07:44 PM