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What are the risks of investing with margin?
What are the risks of investing with margin?
Updated over a week ago

A margin loan lets you make leveraged investments. By definition, leverage causes the returns of your investments to have a greater impact, whether they are positive or negative.

Yes, it is true that investing with margin could lead you to earn greater profits than what you would have had by investing only with your own money. However, the opposite scenario is also possible, you could lose more money as well.

Leveraged investments expose the investor to greater risk, that's why margin is not always recommended for everyone. Before considering applying for a margin loan, take these points into consideration:

  • Investing with margin could cause you to lose more money than you deposit

  • If the security you invested in loses value, those losses will be deducted from the value of your account

  • If the price of your security falls below the margin maintenance requirement, you will be responsible for any shortfall so you may have to add funds to your account to cover the loss

  • FlexInvest can sell assets in your account without asking for your permission to cover your margin debt

  • FlexInvest may need to change maintenance margin requirements at any time without a previous notice

  • You’re not entitled to an extension of time on a margin call

You can find more information about the terms and risks associated with margin investments in our Margin Disclosure Statement.

Investing in securities or other financial instruments always involves the potential of losing your money. FlexInvest recommends considering your investment objectives and risks before investing. For more information, please read our Risk Disclosures Statement and our Terms & Conditions.

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