ASB Margin Lending - Withdraw Cash/Equity

Hi,

I was wondering if anybody has experience with ASB Margin Lending,and if it possible
to use it similar to a revolving credit facility?

For example, building up a portfolio in a margin account and having leverage within the required ratio. Then paying down the leverage/loan
through regular dividends and income, and after time transferring cash out of the margin account to fund other investments/expenses?
(obviously staying within the required margin ratios).


Is this possible to do this? As it would be potentially be a good strategy to free up cash/equity from current holdings without having to sell them.
Or is it only possible to use the margin to make additional share purchases?


Thanks in advance,


Styerz

To be honest I have not tried but there is a balance in the cash management account you can transfer to other ASB accounts and spend on whatever you like as far as I am aware. ASB Securities holds your shares as security for the loan so can sell as soon as you breach your margin which can disappear quite quickly in a crash as I found out in 2007-2009.

To find an investment that yields more than what you pay in interest would be quite a feat in this day and age. Actually I take that back 6% on your loan.

I would have thought you would have to be pretty confident in your investing ability to do that. Isn't one of the investing maxims "never borrow to buy shares".

Thanks for your reply Aaron. You make some great points.

The reason I am researching this strategy, is that holding the likes of AIA, SUM and VHP for 10plus years now, my equity gain is high, but dividend yield on current value is low. I do wish to hold these shares for a further 20plus years, and am contemplating if the margin lending is way of releasing capital periodically instead of selling any shares.

I do understand there is risk involved. If I proceeded the loan to equity ratio would be very low to avoid margin calls. I'm am also of the opinion some calculated risk is a good idea to work towards one's individual goals.

Worth noting too, the interest is tax deductible if capital is used to purchase an income producing asset. Effectively giving a considerably lower interest rate.

Just got another 70k available on floating credit @ 5% with Westpac .. what does ASB charge?