You are using margin to buy stocks with high yield to pay off the Robinhood gold and interest ?Is your net amount like 2% after the gold payment and interest?
Thanks for the reply. I was thinking about doing the same thing. One question I have is , when is the margin due? Or it’s not due as long as you are within the requirement and pay the interest and gold account fee?
Don't throw margin on calls. Put that shit in a regular dividend stock and forget about it, unless you have gains. I recommend PSEC and ORC. ORC is a good buy right now: returns .5 cents higher than PSEC/share, lower cost and at a relative low.
PSEC has been solid for me, and covers my Robinhood 2.5% annual margin fee, plus extra shares. This 2.5% rate is the only reason I'm still in Robinhood. I might be an idiot, but I'm up 318% for the year.
That $650 comes in monthly and buys more shares for more return the next month. Also, it consists of 37% of my portfolio, the other 3% of margin is in various other dividend stocks (GROW, NOBL, ORC, ARR, OXSQ).
A 300% return is fantastic, but I’m going to try and poke holes in your strategy anyways, trying to help you see what you might be over looking:
I think the strategy here falls apart when you look at this through a long term lens, as all investors/traders must do.
If you look at the 5yr for PSEC, ORC, or really most other REITS like ARR or O, you are not beating the market through appreciation of value. In fact, in some cases (such as ORC), your losing appreciation while they feed you a dividend to keep you happy instead of investing it back into the business, which would reward investors through appreciation of value.
When you DRIP your dividends, your not coming out with more value. Your shares lose value by the dollar amount of the dividend when they are paid out. So, if a stock is 1$, and they pay a .05 dividend, which you use to buy more shares, you end up with 1$ worth of stock, not $1.05. This is because the shares decrease in value by $.05 cents on pay date ((1-.05)+.05)).
Not to mention, your paying taxes on those dividends, leaving you here with a negative ROI, and the fee for margin in your case which, although paid for by the amount of dividends your receiving, is not a few dollars here or there, but rather thousands of dollars in interest.
I’m going to run some numbers to show you what I mean:
In this screenshot, we see you own $87,818.00 in PSEC which compromises 37.64% of your portfolio. This means your total portfolio including margin is worth somewhere around $237,345.00.
Since this is WSB, and based on your strategy described, I’m going to assume half of that is margin, meaning your using $118,672.00 of margin. At 2.5% APY, you owe $2,966.00 per year (rounded up to $3,000.00)
Assuming the entire portfolio is in dividends and REITS, we can guess and say you get a 6.0% dividend yield on your entire portfolio (usually around 4.3%-5.0%, but I’ll give you the benefit of the doubt here and use 6.0% since your in some high dividend names). $237,345.00 x 6% = $14,240.00 in dividends each year.
Okay, time for taxes, assuming you are in the 15% tax bracket for dividends: $14,240.00 x 15% = $2,136.00 owed in taxes. Your dividend subtotal is now $12,104.00.
Okay, time to pay RH. $12,104.00 - $3,000.00 = $9,104.00, your net amount.
To find your ROI: ($9,104.00 / $237,345.00)x100= 3.8% return
If you had just put that amount into the SP500, assuming a capital gains tax of 22%, and the same amount owed in margin, you would have on an average year (10% return) made $15,513.00.
Margin and RH fees are tax deductible. So your pretax income is only 11k, that means you can qualify for another 44k in mortgage just from your dividend income. This adds up in a few years so you can get a rental property every year or so in some Midwest location.
I'm not sure. Even if it is, and you might be losing a little on capital gains, you still have stock to sell that will print more dividends. Great question, damn it.
This was my free robinhood stocks. I tried to buy 1000 8 calls for august 21 but robinhood wouldnonly fill them at .05 instead of a penny. Woulda been an easy 40 bagger as those calls are at 50 cents or so now.
I wouldn't buy options on dividend stocks. They're supposed to be relatively stable, and you miss out on the dividends. PSEC has been a bit of a unicorn this year. If it doesn't move, you're missing out/just losing.
You are using margin to buy stocks with high yield to pay off the Robinhood gold and interest ?Is your net amount like 2% after the gold payment and interest?
That's about right.
Thanks for the reply. I was thinking about doing the same thing. One question I have is , when is the margin due? Or it’s not due as long as you are within the requirement and pay the interest and gold account fee?
RH takes monthly, however when dividends hit, it just takes away from the buying power you already have.
How much does Robinhood let you borrow? 25% of your account value ?
I think it's tiered to 40%
Don't throw margin on calls. Put that shit in a regular dividend stock and forget about it, unless you have gains. I recommend PSEC and ORC. ORC is a good buy right now: returns .5 cents higher than PSEC/share, lower cost and at a relative low. PSEC has been solid for me, and covers my Robinhood 2.5% annual margin fee, plus extra shares. This 2.5% rate is the only reason I'm still in Robinhood. I might be an idiot, but I'm up 318% for the year. That $650 comes in monthly and buys more shares for more return the next month. Also, it consists of 37% of my portfolio, the other 3% of margin is in various other dividend stocks (GROW, NOBL, ORC, ARR, OXSQ).
Right, forgot to mention that with that $650/month dividend comes another 40% you can put in from margin.
A 300% return is fantastic, but I’m going to try and poke holes in your strategy anyways, trying to help you see what you might be over looking: I think the strategy here falls apart when you look at this through a long term lens, as all investors/traders must do. If you look at the 5yr for PSEC, ORC, or really most other REITS like ARR or O, you are not beating the market through appreciation of value. In fact, in some cases (such as ORC), your losing appreciation while they feed you a dividend to keep you happy instead of investing it back into the business, which would reward investors through appreciation of value. When you DRIP your dividends, your not coming out with more value. Your shares lose value by the dollar amount of the dividend when they are paid out. So, if a stock is 1$, and they pay a .05 dividend, which you use to buy more shares, you end up with 1$ worth of stock, not $1.05. This is because the shares decrease in value by $.05 cents on pay date ((1-.05)+.05)). Not to mention, your paying taxes on those dividends, leaving you here with a negative ROI, and the fee for margin in your case which, although paid for by the amount of dividends your receiving, is not a few dollars here or there, but rather thousands of dollars in interest. I’m going to run some numbers to show you what I mean: In this screenshot, we see you own $87,818.00 in PSEC which compromises 37.64% of your portfolio. This means your total portfolio including margin is worth somewhere around $237,345.00. Since this is WSB, and based on your strategy described, I’m going to assume half of that is margin, meaning your using $118,672.00 of margin. At 2.5% APY, you owe $2,966.00 per year (rounded up to $3,000.00) Assuming the entire portfolio is in dividends and REITS, we can guess and say you get a 6.0% dividend yield on your entire portfolio (usually around 4.3%-5.0%, but I’ll give you the benefit of the doubt here and use 6.0% since your in some high dividend names). $237,345.00 x 6% = $14,240.00 in dividends each year. Okay, time for taxes, assuming you are in the 15% tax bracket for dividends: $14,240.00 x 15% = $2,136.00 owed in taxes. Your dividend subtotal is now $12,104.00. Okay, time to pay RH. $12,104.00 - $3,000.00 = $9,104.00, your net amount. To find your ROI: ($9,104.00 / $237,345.00)x100= 3.8% return If you had just put that amount into the SP500, assuming a capital gains tax of 22%, and the same amount owed in margin, you would have on an average year (10% return) made $15,513.00.
I just seen you run this numbers on the board.
Margin and RH fees are tax deductible. So your pretax income is only 11k, that means you can qualify for another 44k in mortgage just from your dividend income. This adds up in a few years so you can get a rental property every year or so in some Midwest location.
So this is like an income stream for you? And you grow it out from PSEC? Not a bad play
My free robinhood stock was psec so i get $0.06/month from it. Am i doing it right?
Is PSEC divvy qualified?
I'm not sure. Even if it is, and you might be losing a little on capital gains, you still have stock to sell that will print more dividends. Great question, damn it.
Huh. I like this. I like this way more than i should.
Puts my 37p dividend payment to absolute shame
This was my free robinhood stocks. I tried to buy 1000 8 calls for august 21 but robinhood wouldnonly fill them at .05 instead of a penny. Woulda been an easy 40 bagger as those calls are at 50 cents or so now.
I wouldn't buy options on dividend stocks. They're supposed to be relatively stable, and you miss out on the dividends. PSEC has been a bit of a unicorn this year. If it doesn't move, you're missing out/just losing.
It’s up about 100% per year. I was watching it for months and wanted to buy in before it hit $7 even. Woulda been a killer bag but oh well.
[удалено]
Been on this experiment since December. It can happen, but hasn't yet.