Hmm .. interesting!
Is there something with Maths below?
Powerful ROC from leveraging?
For example; if one has $110K capital to invest.
Without margin account:
One can fully invest $110K for e.g. 7% dividend yield
Leverage on margin account :
1. One can invest $100K for e.g. 7% dividend yield.
2. Leverage $40K on margin account at net 3.5% dividend yield after offsetting 3.5% interests payable to broker.
3. $10K as cash reserve to top up margin call when necessary
Does leveraging on margin account to improve yield on own capital look fantastic?
Or something wrong with the Maths?