Thinking about margin loans to invest more… good idea or bad?

Hi everyone, I have about $100k in investments spread across S&P 500, tech stocks, global, and domestic ETFs. This year, I’ve managed a money-weighted return of 23.23%. M1 is offering a 5.5% promo rate for margin loans if you have a margin balance of $25,000 or more.

I’m learning about margin loans and trying to figure out if it’s worth it to borrow and put more into my portfolio. If my portfolio grows at a similar rate or even half as much in 2025, it seems like it could pay off.

But I want to learn more before jumping in. What should I watch out for? I don’t want to gamble with my money, but it seems somewhat safe in this ongoing bull market… or am I wrong?

What happens if instead of a positive return, it’s negative? I know, crazy idea—stocks should only go up, right? But it’s worth thinking about.

Using margin is how people end up losing everything. Don’t do it. Just keep working and saving more money.

Margin loans are a good way to wreck your portfolio. Stay away from them.

Don’t rush things. The best way to grow wealth is to keep contributing consistently over time. That way, all your gains and dividends are 100% yours.

Margin loans can really boost your wealth during a bull market with low volatility. But they can also destroy you in a downturn. M1 has different margin requirements depending on the stock, so be careful. At 5.5%, I wouldn’t do it unless you’re absolutely sure the bull market will keep going.

If your portfolio’s returns are higher than the interest rate on the loan, it can work out. But it’s a big gamble if the market drops.

You might want to check out the wallstreetbets crowd for this kind of risk-taking.

The S&P 500 is up 24.75% this year, and VTI is up 24.25%. If your portfolio is underperforming the market, do you really want to amplify that with margin?

It’s a bull market until it isn’t. Markets can crash overnight due to global events or sector-specific issues. I’ve lived through several of these crashes. Don’t assume options or other strategies can always protect you either.

I’ve used margin loans successfully, but I only started during the 2022 bear market when stocks were cheap. My loan-to-value ratio dropped from 50% to 15%, and I won’t take on more until there’s another market dip.

If you think the bull market will run longer, why not try a leveraged ETF instead of margin loans? It’s less risky than a margin call.

Closed-End Funds (CEFs) let you use leverage more safely without risking a margin call. Options like puts and calls are another alternative.

How do you know we have a few more months of bull market left? I’m curious.

This depends on your risk tolerance. I use some margin but make sure I can handle big corrections. A margin call is what you want to avoid at all costs.

Just don’t.

I think others have covered all the important points. If you go ahead with this, please come back in a year and let us know how it worked out. 2025 might be rough, and we could all use the story!

Thanks for all the advice, everyone. I’ve decided against margin loans. This really helped me understand the risks.

I’m borrowing about 20% of my portfolio value right now, and it’s been working well so far. But let’s hope my luck holds!

How’s your cash flow? Can you pay off the loan with your paycheck? If so, and you’re disciplined, borrowing within your means can be worth it. But only consider it during a sustained market dip, and know this isn’t for everyone.